The Quick Read: The cash you bring to a distressed flip is the gap between total project cost and what the lender advances, and across Lendmire’s wholesale network that gap typically runs about 15% of project cost for newer investors, 10% at two or more completed projects, and 7% at five or more, always held under a 75% after-repair-value cap.
- There is no single national minimum. Each lender sets its own program, and the figures vary by lender, property, and experience.
- Experience moves the number most. More documented completed projects means a higher loan-to-cost and less cash down.
- The after-repair-value cap can override the cost-based tier on thin-margin deals and raise your cash in.
- Bridge purchases with no rehab typically run up to 80% of purchase price, so about 20% down.
- Closing costs, fees, and early-draw working capital come on top of the down payment.
What the Minimum Is Measured Against
The minimum down payment is measured against project cost, not against the purchase price alone and not against the finished value. Project cost means the purchase price plus the rehab budget. The lender advances a percentage of that total, and you fund the rest.
What this loan actually costs to carry.
Hard money is sized against the project and priced by time. Enter the deal and see how much the program will lend, the cash required at closing, the carry while you hold it, and what is left at the exit.
Leverage tiers on the current program: 85% with fewer than 2, 90% with 2 or more, 93% with 5 or more completed projects — every tier capped at 75% of after-repair value. Loan amounts up to $5,000,000, larger by exception; terms of 6 to 18 months, interest-only, no prepayment penalty. The rehab portion funds in draws against completed work, not at closing.
Program parameters shown update from Lendmire’s centralized guideline source. Rate, points, and months are editable assumptions, not quoted terms.
Cost cap sets the loan · positive spread
Illustrative estimate only — not a quote, Loan Estimate, approval, or commitment to lend. Rate, points, and months are editable assumptions. Hard money is business-purpose financing for real estate investors, not a consumer mortgage. Leverage on the current program tops out at 93% of project cost for investors with a documented track record, capped at 75% of after-repair value, with rehab funding up to 100% of the documented budget released in draws; actual terms vary by lender, borrower experience, property, and exit. Lendmire is a mortgage broker, not a lender.
That base matters because the same percentage produces very different cash depending on what it is applied to. Some lenders size off purchase price, some off total cost, and some lead with after-repair value (ARV). Asking which base a lender uses is the single most useful first question when you compare quotes.
The structure Lendmire sees most often in its network is loan-to-cost, tiered by how many projects you have completed. Every tier is capped at 75% of ARV, whichever limit bites first. Hard money on investment property is business-purpose credit, so the lender’s program, not a consumer rule, sets the minimum.
How Underwriting Treats a Distressed Property
Underwriting on a flip is asset-based. The lender looks at the property, the plan, and the exit before it looks at your personal profile. Here is how a file typically moves through review:
1. The lender prices the project. It reads the purchase contract, the scope of work, and the rehab budget to get total cost.
2. It estimates finished value. An appraisal or broker price opinion supports the ARV. Conventional lenders appraise a property as it stands today. Hard money lenders underwrite to what it will be worth after the work.
3. It runs two caps at once. The cost-based advance sets one ceiling. The 75% ARV cap sets another. The lower one governs the loan.
4. It sets your equity requirement. Down payment equals purchase price plus rehab budget minus the loan amount. A higher advance means less cash from you.
5. It checks experience and credit. Documented completed projects set your tier. A 620 score is the minimum in the program, with additional conditions below 660.
6. It confirms the exit. A sale or a refinance has to be believable on the numbers.
The documents involved are usually the purchase contract, scope of work and budget, ARV support, entity documents, proof of funds, and a track-record schedule. Every file is underwritten individually, and nothing here is a commitment to lend.
The Leverage Tiers (and What They Mean for Your Cash)
Experience sets the loan-to-cost tier, and the tier sets your minimum equity. These are typical figures from select wholesale-network guidelines.
| Documented completed projects | Loan-to-cost | Minimum equity (% of cost) |
|---|---|---|
| Fewer than 2 | 85% | About 15% |
| 2 or more | 90% | About 10% |
| 5 or more | 93% | About 7% |
Each tier is capped at 75% of ARV, and the top tier is reserved for experienced investors. First-time investors qualify at the lower leverage tiers. Programs differ, so expect these figures to move from lender to lender.
Note the label on each figure: “of project cost.” These are not purchase-price LTVs, and no tier here is a 100% purchase loan.
When the ARV Cap Takes Over
On some distressed deals the ARV cap sets your cash, not the cost tier. This is the part most first-time flippers miss. Here is a modeled illustration, indexed so project cost equals 100. These are assumptions, not market data.
- Thick margin. If ARV is 120, the 75% cap allows 90. The 85% cost advance allows 85. The cost tier governs, and you put in about 15.
- Thin margin. If ARV is 110, the cap allows only 82.5. The cap governs, and your cash rises to about 17.5.
- Very thin margin. If ARV is 100, the cap allows 75. You would put in about 25, even at the top experience tier.
The lesson is simple. A deal with a big rehab or a small discount to finished value needs more cash than the tier table suggests. A deal bought well below value needs less. The down payment is a product of the deal as much as the borrower.
Why a Distressed Property Changes the Number
Condition drives the ARV, and the ARV caps the loan. A distressed property has a low as-is value and a higher projected value, which is exactly the gap hard money is built to bridge. The lender cares less about today’s condition than about whether the finished value supports the loan.
Condition still matters in practical ways:
- Scope and budget. A heavy rehab raises total cost, so the ARV cap is more likely to bind.
- Insurability and title. A vacant or damaged property may need extra steps before coverage or clean title is in place. Those steps can add cash needs before closing.
- Support for the ARV. A thin comp set weakens the value the lender will use. That can reduce the loan even when your cost-based tier is high.
Hard money is also not a fit for every distressed asset. Collateral is non-owner-occupied residential property, one to four units. Commercial, industrial, land or lots, hospitality, and owner-occupied property are not offered.
Cash to Close Is More Than the Down Payment
Your total cash need is the down payment plus everything that lands before the first rehab reimbursement. Plan for each of these:
- Lender and origination fees, which are customarily paid at closing
- Title, appraisal, and insurance costs
- Interest carry, since the loan is interest-only and the clock starts at closing
- Working capital for early construction costs before draws are released
- Reserves the lender may expect you to show
Investors who budget only the down payment are the ones who stall mid-project. The down payment is the visible number. The working-capital cushion is the one that keeps the work moving.
Draws and Holdbacks
Up to 100% of the rehab budget typically funds in draws against completed work. That is a rehab-budget figure, not a purchase advance. The money sits in a holdback and is released in stages as work is finished and inspected.
The same escrow idea appears elsewhere in rehab lending. The FDIC’s summary of the 203(k) rehabilitation program describes renovation funds held in escrow and released as work is completed. Hard money works on the same logic, with a business-purpose structure.
The timing is the catch. You often pay the contractor first and get reimbursed after an inspection. That means your cash is out of pocket for each stage. A clear scope, a reliable contractor, and prompt draw requests keep that gap short.
Where the General Rule Breaks
The tier table is a starting point. These cases push the real number up or down.
Very cheap purchases. On a low-priced property with a modest rehab, the dollars needed can be small even though the percentage is the same. The percentage is not the constraint. Reserves and working capital often are.
Bridge purchases with no rehab. Without a renovation plan, the structure is a plain bridge on the purchase. Leverage typically runs up to 80% of purchase price, so expect about 20% down.
Credit below 660. A 620 score is the minimum, but conditions get added below 660. Expect tighter terms or more equity on those files.
Cross-collateral and partners. Some lenders will take additional collateral in place of cash, and some investors bring in a partner to fund the gap. These are lender-specific structures and add their own obligations.
Government rehab loans. The FHA 203(k) program is built around owner-occupancy, so it does not compete with hard money for investors. HUD’s Handbook 4240.4, Chapter 4 shows only narrow investment-property treatment tied to a 12-month rent-or-lease condition. That is older handbook text, so confirm current rules. For a flip, treat 203(k) as a contrast case.
Can You Flip With Almost No Money Down?
Not on the purchase side. There is no true 100% purchase program. When you see “100% financing,” it almost always refers to the rehab budget funding in draws, not the purchase.
Here is how to read a zero-down pitch:
- Is the 100% a rehab figure? If so, the purchase still needs real equity.
- What is the base? A percentage of ARV and a percentage of cost are different promises.
- Who qualifies? The top tier is for investors with a documented flip record.
- What else is due? Fees, insurance, and carry are still yours to fund.
An investor with no track record who wants to put almost nothing down is asking the lender to carry all the risk. That is not how asset-based lending works.
If You’re Short on Cash
When the numbers do not clear, you have honest options, each with a tradeoff.
| Option | What it does | Tradeoff |
|---|---|---|
| Smaller or cheaper deal | Cuts total cash needed | Smaller profit |
| Better discount | Lifts the ARV margin and cuts the cap squeeze | Harder to find |
| Partner | Funds the gap | Shared profit and decisions |
| Extra collateral | Replaces some cash | Puts another asset at risk |
| Walk away | Protects capital | Lost opportunity |
If the deal only works with the thinnest possible down payment, the margin is probably too thin as well. A project that cannot absorb a budget overrun is a risk to the investor, not just the lender.
Key Terms Defined
Loan-to-cost (LTC): The loan as a share of purchase price plus rehab budget.
After-repair value (ARV): The projected value of the property once the renovation is finished.
Holdback: Rehab funds held by the lender and released in stages as work is completed.
Draw: A release of holdback funds after an inspection confirms completed work.
Equity gap: The difference between total project cost and the loan, which is your cash in.
Cash to close: The down payment plus fees, title, insurance, and other closing costs.
What the Decision Looks Like in Practice
Start with your tier. Count your documented completed projects, then read the matching equity figure from the table. Next, test the ARV cap on the specific deal. If the cap binds, use that number instead. Then add closing costs, carry, and early-draw working capital to find your true cash need.
Last, decide how the project ends. If you plan to sell, the loan term of 6 to 18 months, interest-only with no prepayment penalty, has to match your sale timeline. There are no multi-year options on this program. If you plan to hold, many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. The complete DSCR loans guide explains how that refinance is reviewed. Budget the bridge and the refinance together, since the rehabbed value and the rent both matter at that second step.
If you are buying, rehabbing, or refinancing an investment property and want to see how the numbers work, Lendmire can help you compare hard money options based on the project, the exit plan, leverage, and your goals. As a broker, it arranges these loans through select lenders across 41 markets, including Washington, D.C. Loan sizes run up to $5,000,000 on the current program, and larger by exception.
Frequently Asked Questions
How much do I need down on a first flip?
Typically about 15% of project cost, since the cost-based advance for investors with fewer than two completed projects is around 85%. The 75% ARV cap can raise that if the margin is thin. Closing costs and working capital sit on top of it. Figures vary by lender, property, and experience.
Does the down payment change if I have flipped before?
Yes. The loan-to-cost typically rises to 90% at two or more completed projects and 93% at five or more. That cuts your equity requirement to about 10% and about 7% of project cost. Experience changes leverage, so documented completed projects matter more than credit alone.
Is there a hard money program with no money down?
No true 100% purchase program exists. The 100% figure refers to the rehab budget funding in draws against completed work. The purchase side still needs real equity, and the top leverage tier is reserved for experienced investors.
Is the down payment all the cash I need?
No. Fees, title, insurance, interest carry, and early construction costs come due before draws reimburse you. Many investors also hold reserves. Budget these separately from the down payment.
What changes if the property is in bad shape?
Condition mostly affects the ARV and the scope, and those drive the caps. A heavy rehab on a thin margin is more likely to hit the 75% ARV cap. That raises your cash in, even if your experience tier is high.
About Lendmire
Lendmire (NMLS# 2371349) is a DSCR-focused mortgage broker that helps arrange investor financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR eligibility is generally reviewed by the lender around the property’s rental income rather than personal income documentation, subject to lender guidelines — which works for self-employed investors, LLC operators, and portfolios above four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Many investors treat hard money as the acquisition tool and plan the exit up front – see the hard money loan overview.
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. FDIC: 203(k) Rehabilitation Mortgage Insurance summary
2. HUD Handbook 4240.4, Chapter 4
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Roll Closing Costs Into Hard Money on a Flip? · Should You Ask a Hard Money Lender Questions Before a Fix and Flip? · Is a Hard Money Fix and Flip Loan Worth It for a Business Owner?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.