Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
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.
Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
The Quick Read: Cash to close on a flip loan typically covers the equity gap, lender and title fees, and insurance, while reserves are separate liquid funds lenders want to see after closing. Amounts vary by lender, property, and experience, and nothing here is a commitment to lend.
- Leverage runs 85% of project cost with fewer than 2 completed projects, 90% at 2+, and 93% at 5+, each capped at 75% of after-repair value.
- A short appraisal can widen your equity gap, so run the deal at a lower after-repair value before you go under contract.
- Rehab money funds in draws against completed work, so you usually front early costs yourself, and those costs sit outside cash to close.
- Reserves are proof of liquidity held after closing, separate from the down payment, and lenders typically treat their minimum as a floor.
- Gather recent statements, entity documents, and a line-item rehab budget early, since files tend to stall on paperwork rather than credit.
Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
The loan is sized on project cost and on after-repair value, so the cash you bring can shift late in the file. Plan for the down payment, the closing costs, the rehab draws, and the post-closing cushion as four separate buckets.
Key Terms Defined
These terms come up in every flip file. Each is defined once here.
- Cash to close: the money that leaves your account at the closing table. It is the equity gap plus fees, title, and insurance charges.
- Project cost: the purchase price plus the rehab budget. Flip leverage is usually quoted against this number.
- Loan-to-cost: the loan as a percentage of project cost. It differs from LTV, which measures the loan against value.
- After-repair value (ARV): the projected value of the property once the renovation is finished. Lenders cap the loan against it.
- Draw: a release of rehab money after a portion of the work is finished and inspected.
- Reserves: liquid funds you show the lender, held after closing, to cover interest and overruns.
- Proof of funds: bank, brokerage, or retirement statements showing the cash exists and belongs to you.
- Interest-only: a payment structure where you pay only the interest each month, with the principal due at payoff.
What Does Hard Money Flip Loan Cash to Close Actually Include?
Cash to close is the equity gap plus lender and third-party charges, minus any earnest money you already paid. The rehab budget is not in this number. Investors who confuse the two usually underfund the deal by a wide margin.
Here is what lands on the table, in the order most files hit it:
| Item | Paid to | Due when |
|---|---|---|
| Equity gap (down payment) | Seller, via title | At closing |
| Lender origination and fixed fees | Lender | At closing, or from proceeds |
| Title, escrow, recording | Title company | At closing |
| Hazard or builder’s-risk policy | Insurer | Before closing |
| Appraisal and valuation fees | Appraiser | Usually before closing |
| Earnest money already paid | Credited to you | Reduces closing cash |
Two notes on that list. First, lenders structure fees differently. Some deduct them from loan proceeds, and others collect them in cash. Ask which one applies before you build your budget. Second, some lenders let you escrow interest at closing. That raises cash to close but lowers what you pay out of pocket each month. Neither approach is better. They just move the same money to a different date.
A common budgeting trap is to calculate only the equity gap. The real total is often meaningfully larger once fees, insurance, and the reserve cushion are added. Treat the down payment as the starting number, not the answer.
How the Loan Is Sized (and Why It Sets Your Cash)
Flip leverage is sized on two tests at once: loan-to-cost and a cap against after-repair value. The lower result wins. Your cash to close is whatever the winning test leaves unfunded.
Across the lenders in Lendmire’s wholesale network, the tiers follow your documented completed projects. These are typical ranges, and they vary by lender, property, and experience:
| Borrower tier | Loan-to-cost | Value cap |
|---|---|---|
| Fewer than 2 projects | 85% of project cost | 75% of ARV |
| 2+ completed projects | 90% of project cost | 75% of ARV |
| 5+ completed projects | 93% of project cost | 75% of ARV |
Other structures use different math:
| Structure | Typical ceiling |
|---|---|
| Bridge purchase, no rehab | Up to 80% of purchase price |
| Cash-out or rate/term refinance | Up to 65% of value |
| Ground-up construction (3+ projects) | 90% of cost, 75% of completed value |
| Rehab budget | Up to 100% of budget, funded in draws |
That last line causes the most confusion. Up to 100% of the rehab budget can fund in draws against completed work. It is a rehab figure, not a purchase figure. There is no true 100% purchase program. When someone says they financed a flip with nothing down, they usually mean the lender funded the rehab, with the purchase equity coming from somewhere else.
Run the Same Deal Twice
Say you are an investor with 2+ completed projects buying a flip. Work in percentages of project cost, with no dollar figures, so the logic stays clear.
Your tier allows 90% of project cost. That leaves a 10% equity gap before fees and reserves.
Scenario one: the after-repair value comes in strong. Say the 75% value cap works out to 90% of project cost. The cap and the tier match, so the loan funds as quoted.
Scenario two: the same deal with a thinner ARV. Now the 75% cap works out to 82.5% of project cost, which is below the 90% tier. The equity gap widens from 10% to 17.5% of project cost. Nothing about you changed. Only the value did.
That is why a thin-margin flip is sensitive to a short valuation. The quoted tier is a ceiling. The ARV cap often decides the real loan. Run this test on your own deal before you commit to the contract, because your earnest money is already at risk by the time an appraisal arrives.
Rehab Money Is Not Cash to Close (But You Still Front Part of It)
Rehab funds are held back and released in draws, so you usually carry early costs yourself and get reimbursed after work is inspected. This working-capital gap is real, and it sits outside your cash to close number.
The typical sequence looks like this:
1. You close. The lender advances its portion and holds the rehab budget.
2. The contractor wants a start deposit, and you pay it.
3. Work gets done and inspected.
4. You submit a draw request, and the lender reimburses you.
5. You repeat for each stage.
Advanced draws, where money moves before work is done, generally go only to experienced borrowers. First-timers should assume they carry each stage before reimbursement. The size of your largest single stage is your real peak exposure. If demolition and framing are the expensive early stages, that is where your cushion gets tested.
Flipping with no cash of your own is tough even with hard money.
Reserve Requirements: What Lenders Want to See After Closing
Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Reserves are liquid funds that remain in your account after closing and the first rehab costs. Lenders want them because interest comes due every month and renovations run over. The amount varies by lender, loan size, leverage, and your experience, so no single national number exists.
Here is how reserves work in practice.
What they cover. Monthly interest while the project runs, early rehab costs before the first draw, and cost overruns. A loan with a longer runway and a larger balance usually draws a bigger reserve ask.
What counts. Recent bank statements are the cleanest proof. Brokerage and retirement balances may be accepted, though lenders often discount them. Equity in a home generally does not count as liquidity. Some lenders may view it differently, so ask before assuming.
How they are documented. Expect a request for recent statements, entity documents if you borrow through an LLC (subject to lender program eligibility), and a line-item rehab budget. Large deposits that are not payroll usually need an explanation. Funds that just landed in your account can raise questions about where they came from.
Required versus prudent. The lender’s minimum is a floor, not a plan. A careful flipper holds more than the minimum, because a delayed permit or a contractor’s change order costs real money on a loan that charges interest monthly. Strict programs want reserves confirmed in the bank before closing. More flexible programs may stretch leverage for a first-timer who shows contractor bids, a realistic timeline, and posted reserves.
Reserves and the down payment are separate asks. Cash you use for the equity gap cannot also be the cushion. Lenders look at what is left after closing, not what you started with.
Cash at Closing Versus Cash After Closing
Your money sits in different places at each stage. Seeing the timeline helps you spot where a shortfall would hit.
| Stage | Where your cash sits |
|---|---|
| Before contract | Earnest money at risk, proof of funds ready |
| Closing day | Equity gap, fees, title, insurance |
| Early rehab | Contractor deposits fronted by you |
| Draw period | Reimbursed in stages after inspection |
| Payoff | Principal due, with interest paid monthly |
Reserves live in the gap between closing day and reimbursement. Can you spend them on the project? Often yes, because early rehab costs are part of what they cover. But a lender that verified your balance expects you to keep a working cushion, so spending the whole reserve on demolition defeats the purpose. Plan the cushion as a standing balance, not a fund to drain.
Where the General Rule Breaks
The formulas above work for a typical file. These situations bend them.
Experience moves everything. Moving from the 85% tier to the 90% or 93% tier shrinks the equity gap. It can also change how lenders treat reserves and draws. The top tier is reserved for experienced investors with documented completed projects.
A short valuation raises your cash. As the two-scenario example showed, when the value cap binds, your equity gap grows. If you are borrowing the down payment elsewhere, a late increase can break the plan.
Borrowed money is scrutinized. Lenders look hard at where cash to close came from. A partner’s capital that is documented and sourced is a different conversation from an unexplained transfer. Ask your lender what they accept before you rely on borrowed funds.
Credit below 660 adds conditions. The minimum score is 620, and below 660 additional conditions apply. First-time investors qualify at the lower leverage tiers. Underwriting stays asset-based, so the property, the plan, and the exit matter most.
Loan size changes the ask. Loans go up to $5,000,000, with larger by exception. Bigger balances usually bring bigger liquidity expectations, and smaller balances vary by lender.
Occupancy matters. These programs are for non-owner-occupied residential property, 1-4 units, with ground-up construction to 10 units. Hard money flip loans are business-purpose investor loans, so they are reviewed differently from a standard owner-occupied mortgage. The CFPB’s summary of Truth in Lending notes that credit extended primarily for business purposes is exempt from consumer-credit rules. For small owner-occupied rentals, Compliance Alliance explains that the exemption turns on the loan’s purpose, occupancy, and unit count. If you plan to live in the property, this is not the right program.
Interest escrow shifts timing. A lender that escrows interest at closing raises cash to close and lowers monthly out-of-pocket. Compare lenders on total cash across the whole project, not on closing day alone.
A Practitioner Note on Where Files Stall
Across the lenders in Lendmire’s wholesale network, the files that stall rarely stall on credit. They stall on paperwork and surprises. Entity documents arrive late. Bank statements are cut off mid-page. A rehab budget is a single lump number instead of line items. Or the valuation comes in short and the investor discovers the cash gap at the title company. The investors who move smoothly assemble proof of funds before they write the offer and keep a cushion above the stated minimum.
Your Pre-Contract Checklist
Assemble the following before you go under contract, in this order:
1. Run the deal on both tests. Check loan-to-cost and the ARV cap, then run a lower ARV scenario.
2. List every closing item. Include fees, title, and insurance, and note whether the lender deducts fees from proceeds or collects them in cash.
3. Map your draw exposure. Identify your largest single stage before reimbursement.
4. Set your reserve target. Use the lender’s minimum as a floor and add your own buffer.
5. Gather documents. Collect recent statements, entity documents, a line-item rehab budget, and any partner agreements.
6. Confirm what counts. Ask which account types the lender accepts and how they treat large recent deposits.
7. Decide your exit. Know whether you sell or hold before you commit.
An illustrative calculator can help you stress-test the percentages. Treat its output as an estimate, not a quote.
What Happens to Your Cash After the Flip
The cash you commit to a flip is not available for your next purchase until the project pays off. Posted reserves stay tied up through the whole term. Terms run 6-18 months, interest-only, with no prepayment penalty. There are no multi-year options on the current program.
If you plan to hold rather than sell, many investors refinance out of hard money into long-term DSCR financing once the property is stabilized and rented. Lendmire brokers that path. Qualification on the exit loan leans on the property’s rental income covering the payment, subject to lender guidelines, rather than on the short-term bridge’s focus on the deal. Lendmire’s how to time a two-step DSCR cash-out after a hard money flip covers the sequencing, and the complete DSCR loans guide explains how the long-term side works.
Frequently Asked Questions
Are reserves paid at closing?
No. Reserves are funds you show the lender and keep available after closing. They are separate from the equity gap and fees, which are what you pay at the table. The lender wants to see a balance remaining after those costs are covered.
Can I borrow my down payment?
It depends on the lender and on how the funds are sourced. Lenders look closely at where cash to close came from, and documented partner capital is treated differently from an unexplained transfer. Confirm what the lender accepts before you build the plan around borrowed money.
Do reserves differ for a first flip?
Often yes. Experience tiers affect leverage, and they can affect how lenders treat reserves and draws as well. First-timers qualify at the 85% of project cost tier, and strict programs may want reserves confirmed in the bank before closing. Terms vary by lender, property, and experience.
Does earnest money count toward cash to close?
Yes. Earnest money you already paid is credited at closing, which reduces what you wire. It is still your cash, though, so it counts toward your total commitment. It is also at risk if the deal falls apart over a short valuation.
What happens if the appraisal comes in short?
The loan may fund for less than quoted, because the value cap can bind. Your equity gap grows by the difference. If you cannot cover it, you may need to renegotiate the price, bring more cash, or walk away, so run a lower ARV scenario before contract.
Planning Your Own Number
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 is a mortgage broker that arranges financing through select lenders in its wholesale network, across 41 markets including Washington, D.C. Loan programs are subject to lender guidelines and are not a commitment to lend.
For a closer look at the cash side of a flip, see Lendmire’s piece Do You Need Cash to Close a Hard Money Flip Loan?.
About Lendmire
As a DSCR and non-QM mortgage broker, Lendmire — NMLS# 2371349 — connects investors with wholesale lending channels across 41 markets, including Washington, D.C. The property’s rental income, not the borrower’s traditional personal-income documentation, is central to lender review, which works for self-employed operators and portfolios beyond four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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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. CFPB’s summary of Truth in Lending
2. Compliance Alliance – Reg Z and Investment Properties
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Meet Hard Money Requirements on Your First Fix-and-Flip · How to Budget Down Payment and Rehab Cash on a Hard Money Flip · How to Get Rehab Draws Released on a Hard Money Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.