The Quick Read: A fix-and-flip hard money loan is a short, interest-only note that comes due in full at maturity, and any extension is a contract right the lender writes into the note, not something you are owed. Across Lendmire’s wholesale network, terms run 6 to 18 months. Extension language varies by lender, so you read it before you sign.
- Terms run 6 to 18 months, interest-only, with no prepayment penalty, and vary by lender, property, and experience.
- Fix-and-flip leverage is measured against project cost and capped at 75% of after-repair value on every tier.
- Extensions are written into the note, priced by the lender, and never guaranteed.
- Size the term to the whole project: rehab, listing, and sale, with a cushion.
- Investors who need longer runway usually refinance into long-term rental financing rather than stretching the note.
Hard Money Loan Terms at a Glance
The core structure is simple: a short loan, interest-only payments, and one big payoff at the end. The table below shows how the main terms work on a fix-and-flip file in Lendmire’s network. Every figure varies by lender, property, and experience, and nothing here is a commitment to lend.
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.
| Term | How it works |
|---|---|
| Loan term | 6 to 18 months |
| Payments | Interest-only; principal due at maturity |
| Prepayment | No prepayment penalty on the current program |
| Flip leverage | 85%, 90%, or 93% of project cost, by experience |
| Value cap | 75% of after-repair value on every tier |
| Rehab money | Up to 100% of the rehab budget, paid in draws |
| Credit | 620 minimum, with added conditions below 660 |
| Collateral | Non-owner-occupied, 1-4 units |
Hard money loans are business-purpose loans for investment property. They are reviewed on the property, the plan, and the exit, not on a standard owner-occupied mortgage file. Loan amounts run up to $5,000,000, and larger by exception.
Key Terms Defined
Interest-only: You pay interest each month and none of the principal. The loan balance stays put until payoff.
Balloon payment: The full remaining principal due at maturity. On a flip, the sale or a refinance pays it.
Extension: Extra time added to the term, if the note allows it. The lender sets the length, the fee, and the conditions.
Draw: A release of rehab money after a stage of work is finished and checked. Draws are paid against completed work.
After-repair value (ARV): What the property should be worth once the rehab is done. It caps how much a lender will advance.
Loan-to-cost: The loan as a percentage of the project cost, meaning purchase price plus rehab budget.
DSCR loan: A long-term rental loan that qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Many investors use one to exit a hard money note.
How Long Should a Fix-and-Flip Term Be?
Your term should cover the whole project, not only the construction. That means rehab, listing, buyer’s contract, and the sale itself. Investors who size the term to the rehab alone are the ones who end up asking for extensions.
The national numbers give a reference point. ATTOM’s Q2 home flipping report counts a flip as a resale within 12 months of the prior sale. It puts the typical flip at 161 days from purchase to resale. That is a national midpoint, not your timeline, and it leaves out the time spent finding the deal.
Half of all flips take longer than the median by definition. Your scope of work decides which half you land in.
| Rehab scope | Timeline risk | Cushion to plan |
|---|---|---|
| Cosmetic refresh | Low; contractor availability | Modest |
| Full interior renovation | Medium; material and trade delays | Meaningful |
| Permit-heavy or structural | High; approvals you do not control | Largest |
| Hold-and-refinance exit | Adds lease-up and refinance steps | Plan separately |
A longer term costs more carry, but a term that is too short costs more. If you are choosing between 9 and 12 months on a mid-sized rehab, the extra months are cheap insurance. Because the program has no prepayment penalty, finishing early does not punish you for having picked the longer term.
How Extensions Actually Work
Extensions come in three forms: written into the note, negotiated when you ask, or not available at all. Lenders differ on which they offer. The one you want to find out about is the third, before you sign and not at maturity.
When an extension is written in, the note spells out the length, the fee, and the conditions. Typical conditions include that the loan is current, the rehab is moving, and you can show a credible exit. When it is negotiated, the lender decides case by case, and the lender holds all the leverage. When none exists, the loan simply matures on its date.
An extension is not a favor you can count on. It is a priced option, and the lender has to agree to it. Interest continues during the extension, and the extension fee usually comes on top of the extra interest. Fee levels and increments vary by lender, so get them in writing. Nav’s explainer on hard money loans makes the same basic point: if you cannot repay at maturity, you refinance or face penalties.
Delays that trigger extensions are usually predictable. Slow permits, a contractor who disappears, a failed inspection, and a weaker resale market all push the schedule. The honest planning move is to treat an extension as a budget line, not an emergency.
A Worked Example: On Time vs. Late
Run the numbers on a 9-month note. These inputs are modeled assumptions for illustration, not market data and not a promise of terms.
| Phase | On-time plan | Late reality |
|---|---|---|
| Rehab | 4 months | 6 months (permit and trade delays) |
| Listing to contract | 2 months | 3 months |
| Contract to sale | 1 month | 2 months |
| Total | 7 months | 11 months |
On time, the project finishes two months inside the 9-month term. Late, it runs two months past maturity. The cost of the late version has four pieces.
1. The extension fee, whatever the note states.
2. Extra months of interest-only payments on the drawn balance.
3. Extra insurance, taxes, and utilities while you hold the property.
4. A lower sale price if the delay forces a reduction.
The first three are certain, and the fourth is a risk. Margins are already thin on many flips. ATTOM’s Q1 release notes that its gross profit figure excludes rehab costs, which are commonly estimated at 20% to 33% of after-repair value. A month or two of extra carry can wipe out a meaningful share of what is left.
The cleaner approach is to run the deal both ways before you buy. If the profit only works on the on-time schedule, the deal is too tight. That is a judgment call, though some investors accept thin margins on projects they know well.
How to Request an Extension, Step by Step
Ask early. A request made while the loan is current and the project is visibly moving gets a far better hearing than one made at maturity.
1. Read the note. Find whether an extension exists, its length, its fee, and any notice window.
2. Contact the lender before the window closes. Do this as soon as you see the schedule slipping, not when the loan matures.
3. Document the cause. Permit status, contractor schedules, and inspection reports show the delay is specific and temporary.
4. Show progress. Photos, draw history, and a completed-work list prove the rehab is real.
5. Present the exit. Offer a listing agreement, a buyer’s contract, or a refinance plan with a realistic date.
6. Get the terms in writing. The fee, the new maturity date, and the interest treatment should all be on paper before the old date passes.
Lenders generally want to see that the loan is current, the work is advancing, the value still supports the balance, and the exit is credible. A borrower who has missed payments or stopped the rehab has a much harder conversation.
Draws matter here too. If unspent rehab money is still sitting in the holdback when the loan nears maturity, ask how an extension treats it. Some lenders keep draws available during an extension, and others do not.
Extend, Refinance, Modify, or Sell?
Extending is one option among several, and it is not always the more affordable one. The right choice depends on where the project stands and how much runway you need.
| Option | Best when | Main drawback |
|---|---|---|
| Extend | Rehab is nearly done; sale is close | Added fee and carry |
| Refinance into a DSCR loan | Property is stabilized and rented | Needs appraisal and lease-up |
| Modify the note | Lender agrees to new terms | Fully at lender discretion |
| Sell now | Market is open; delay costs more | May mean a discounted price |
The refinance route deserves a closer look for hold-exit investors. Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. Lendmire’s complete DSCR loans guide covers how those loans work. Many DSCR programs start at 1.00 coverage, where rent matches the full monthly obligation of principal, interest, taxes, insurance, and any association dues, known together as PITIA. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted.
Clearing 1.00 is not the same as positive cash flow. DSCR compares rent to PITIA only, while repairs, vacancy, management, and utilities sit outside the calculation.
The refinance has its own clock. On refinance files, hard money leverage runs up to 65% of value, which can leave a gap if the appraisal comes in light. A weak appraisal at the refinance stage can leave you short of cash exactly when the balloon comes due.
The program has no multi-year option. If your plan needs longer runway than 18 months, the exit is a long-term rental loan, not a longer hard money note.
What Happens If the Loan Matures Unpaid?
Once the maturity date passes, the loan is in default under most notes, and the lender’s remedies kick in. The specifics live in your note and in state law, but the pattern is consistent.
The lender may demand full payoff. Default interest can start accruing at a higher level than your regular interest. A personal guarantee, if the note includes one, lets the lender pursue you personally for any shortfall. Ultimately the lender can foreclose on the property.
The cost of a missed maturity can far exceed the cost of an extension. A lender that has not written an extension into your note may also simply decline to grant one. Some lenders will agree to a short forbearance, meaning a temporary hold on enforcement, but that is a negotiation and not a right.
The cheap move is the early one. A borrower who calls two months before maturity has options. A borrower who calls after the date has passed mostly has bad ones.
Clauses to Check Before You Sign
Compare lenders on extension terms the same way you compare them on leverage. The table lists the clauses worth reading line by line.
| Clause | Why it matters |
|---|---|
| Extension exists? | No clause means no right to more time |
| Length and cap | Sets how much extra runway you can buy |
| Fee and when due | Affects cash needed at the worst moment |
| Interest during extension | Changes total carry |
| Conditions to qualify | Loan must usually be current and moving |
| Notice window | A missed window can void the option |
| Draws during extension | Determines if rehab money stays available |
| Default terms | Defines the cost of missing maturity |
Ask each question in writing. Compare the whole package, since a lender with generous extension language and a tougher leverage tier may cost you more than the reverse.
Leverage deserves the same scrutiny. On a fix-and-flip, Lendmire’s network funds up to 93% of project cost at five or more completed projects, 90% at two or more, and 85% with fewer than two, with every tier capped at 75% of after-repair value. Bridge purchases without rehab go up to 80% of purchase price. The top tier is reserved for experienced investors, and first-time investors qualify at the lower tiers. A tight, cap-limited deal leaves less room to absorb extension costs, so leverage and extension terms should be read together.
Early Payoff and Interest
Paying off early stops the interest, because the interest-only balance is the only thing accruing. Interest runs on the drawn balance, not on the full commitment, so money you have not yet drawn does not cost you carry.
Some hard money lenders charge prepayment penalties or minimum interest periods, so a quick sale can still cost a set amount. The program in Lendmire’s network carries no prepayment penalty, which is one reason to favor a longer term when the schedule is uncertain. Confirm the point on any file, since terms vary by lender, property, and experience.
The market context shows why this matters. HousingWire, citing ATTOM, reports that 61.1% of flips in the first quarter were cash purchases. Financed flippers compete against buyers who carry no note, so every month of carry hurts a little more.
Frequently Asked Questions
Can I extend a hard money loan?
Sometimes, but only if the note allows it or the lender agrees when you ask. An extension is a contract right, not an entitlement. The strongest position is an extension written into the note before you sign, with its length and fee spelled out.
How much does an extension cost?
The note sets the cost, and it varies by lender. Expect an extension fee plus continuing interest on the balance, and add extra insurance, taxes, and utilities to your own budget. Get the fee in writing before closing and build it into the deal analysis.
What if I cannot sell before maturity?
You have several paths: extend, refinance, modify the note, or sell at a discount. Contact the lender well before maturity, since lenders respond better to a current loan with visible progress. If the property is rentable, a DSCR refinance can retire the balloon.
Is the 161-day national median my timeline?
No. It is a midpoint from ATTOM’s data, measured from purchase to resale, so roughly half of flips take longer. Your scope, permits, contractors, and local market set your actual schedule, which is why a cushion belongs in the term.
Does a bigger down payment give me more time?
No. Equity affects leverage and risk, but it does not change the maturity date. The term is a separate negotiated item. Strong files clear both tests, enough equity and a credible exit, and the term should match the exit.
Next Step
If you are buying, rehabbing or refinancing an investment property on a short timeline 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. Lendmire arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. Tax treatment varies, so consult a qualified professional before relying on any deduction.
A more affordable extension is the one you planned for in the loan comparison, long before the schedule slipped.
For current guidelines and terms, see Lendmire’s DSCR loan programs page.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage brokerage specializing in DSCR investor loans, helping arrange financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. The model centers on property-level rental income reviewed by the lender rather than W-2 documentation, subject to lender guidelines, suiting entity-owned and multi-property investors. Lendmire holds Scotsman Guide Top Mortgage Workplace recognition for 2025 and 2026.
Short-term financing tends to work best when the long-term plan is decided early – see refinancing out of a hard money loan with a DSCR loan.
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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. attomdata.com: Home Flipping Profits Continue Gradual Two Year Decline
2. Nav, how hard money loans work
3. ATTOM Q1 release on PR Newswire
4. HousingWire, ATTOM Q1 home flipping coverage
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 Hard Money Cover a Fix and Flip Purchase? · Should You Ask a Hard Money Lender Questions Before a Fix and Flip? · Can You Use Hard Money to Flip a Triplex or Fourplex?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.