The Quick Read: Hard money rehab underwriting is built around the property, the repair plan, and the exit, not around personal income. Lenders size the loan against project cost and against after-repair value (ARV), and whichever limit is lower controls. Credit, experience, and cash still move leverage, but the deal carries the file.
- Typical network leverage on a fix-and-flip is 85% to 93% of project cost, depending on completed projects, always capped at 75% of ARV.
- Up to 100% of the rehab budget funds in draws against completed work, never at closing.
- A 620 credit score is the typical floor, with added conditions below 660.
- Eligible collateral is non-owner-occupied residential, 1-4 units.
- All figures vary by lender, property, and experience, and nothing here is a commitment to lend.
What Lenders Actually Underwrite
A hard money rehab loan is underwritten on the asset. The question is whether the finished property is worth enough to repay the loan if the plan goes sideways. Scotsman Guide makes the same point: the lending decision rests on the subject property, which is why lenders stay conservative on leverage.
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.
Think of it as two lenses. The property lens covers condition, location, comparable sales, the scope of work, and the budget. The borrower lens covers credit, cash, entity, and track record. The property lens decides whether the file is viable. The borrower lens decides how much leverage you get.
Hard money is a short-term bridge. It is not a DSCR rental loan. Across the wholesale network Lendmire works with, terms run 6 to 18 months, interest-only, with no prepayment penalty. There are no multi-year structures on the current program.
Core Requirements at a Glance
Some requirements are gates. Others are dials. Knowing which is which saves a lot of wasted effort.
| Requirement | What the lender checks | Gate or dial |
|---|---|---|
| Occupancy | Non-owner-occupied, business purpose | Gate |
| Property type | Residential, 1-4 units | Gate |
| Scope and budget | Line-item plan that looks realistic | Gate |
| Value support | As-is value and ARV from appraisal or BPO | Gate |
| Credit score | 620 floor, extra conditions under 660 | Dial |
| Experience | Completed projects set the leverage tier | Dial |
| Cash and reserves | Equity gap, costs, fronted rehab money | Dial |
Commercial, industrial, land, hospitality, and owner-occupied properties are not on the sheet. The program also isn’t available in every market. It covers 41 markets, including Washington, D.C., and a few states and cities are excluded.
How the Loan Amount Is Set
Two tests run at once, and the lower one wins. One measures the loan against project cost, meaning purchase plus rehab, called loan-to-cost. The other measures it against ARV. A strong cost percentage means little if the total would blow through the ARV cap.
Here is the network structure on a fix-and-flip, varying by lender, property, and experience:
| Completed projects | Leverage on project cost | ARV cap |
|---|---|---|
| Fewer than 2 | 85% | 75% |
| 2 or more | 90% | 75% |
| 5 or more | 93% | 75% |
Up to 100% of the rehab budget funds through draws. That is a rehab-budget figure, not a purchase LTV. There is no true 100% purchase program. Bridge purchases with no rehab run up to 80% of purchase price, and refinances run up to 65% of value. Loan amounts go up to $5,000,000, with larger by exception.
A worked example. Use modeled assumptions, not market data: a $200,000 purchase, a $50,000 rehab budget, and a $330,000 ARV. Project cost is $250,000. The ARV cap at 75% limits the total loan to $247,500. At the 85% cost tier, the cost test would allow $212,500. The cost test is lower, so it controls. You cover the rest from your own cash, plus closing costs, plus any rehab spending you front before the first reimbursement.
Now the low-appraisal version. Say the appraisal returns an ARV of $270,000 instead. The 75% cap drops to $202,500, which is now below the cost test. The ARV cap controls, the loan shrinks, and you fund the difference or renegotiate the price. Lenders size against the appraised ARV, never your estimate.
That is why sequencing matters. Scotsman Guide notes the appraiser needs the scope of work before the visit. Without it, they value the property as it sits. With a full plan, the ARV can come in far higher. Meet your contractor first, build the line-by-line budget, and hand it over before the appraiser walks in.
Borrower Requirements
Credit. A 620 score is the typical floor, with added conditions below 660. Higher scores give you more room. This is a dial, not a cliff, and underwriting stays asset-based.
Experience. Completed projects set your tier. First-time investors qualify at the lower leverage tiers. The top tier is reserved for experienced investors, and that is where most of the leverage difference shows up.
Cash. Plan for the equity gap, closing and lender costs, and rehab money you front. Draws reimburse finished work. They are not advances. Flipping with hard money still takes your own cash.
Entity. Many investors hold title in an LLC, subject to lender program eligibility. Expect to provide entity documents and ID.
Here is how the two borrower profiles compare:
| Factor | First-time investor | Experienced investor |
|---|---|---|
| Leverage tier | Lower (85% of cost) | Up to 93% of cost |
| Eligibility | Same gates | Same gates |
| Documentation | Plan and budget get more scrutiny | Track record supports the plan |
Property and Project Requirements
The property must be non-owner-occupied residential, 1-4 units. Beyond that, the lender wants three things: a signed purchase contract, a realistic scope of work, and valuation support.
Build the scope by trade, with a contingency line. A vague or missing scope is the item most likely to slow or sink a file, and lenders sometimes stop a deal outright when the property is too far gone or the budget is unrealistic. Gather three to five recently sold, already-renovated comparables nearby for the ARV. US Realty Training describes that comp method, with adjustments for differences between the homes.
Run your own screen too. The 70% rule says to take ARV times 0.70, then subtract repairs. Real Estate Skills suggests 60% to 65% suits slow markets and 75% to 80% only fast ones. It is an investor screening shortcut, not a lender requirement, and the remaining margin must still cover financing, holding, and selling costs. Thin margins hurt: when project cost sits close to ARV, a modest ARV miss can erase profit.
Documents Checklist
Nearly every file: the purchase contract, an itemized scope and budget, entity documents if applicable, ID, proof of funds, and insurance.
Often requested: contractor bids, photos, a title report, and details on your completed projects.
Usually not the focus: pay stubs and traditional personal-income documentation. Qualification here runs on the asset, the plan, and the exit rather than on conventional income paperwork, subject to lender guidelines. Lendmire also covers the full paperwork list in its hard money fix-and-flip documentation checklist.
How Draws Work, and What They Do to Your Cash Flow
The purchase portion funds at closing. The rehab money sits in a holdback and releases in stages. The lender is lending against finished value, so it does not want the full budget spent elsewhere, leaving it holding an un-rehabbed property worth far less than the loan.
The cycle runs like this:
1. You finish a phase and submit a draw request.
2. The package typically includes invoices, an updated budget, photos, and lien waivers.
3. The lender orders an inspection to confirm the work exists. That is not a code or permit sign-off.
4. Funds release for the verified work.
You usually pay first and get reimbursed later, so keep working capital on hand. Draw rules are not standardized. Each lender writes its own into the loan agreement, so confirm the inspection cadence and how interest is handled before you sign.
Contingency matters here. If repairs surface after the scope was submitted, the next draw can come in short. A contingency line, and the ability to shift unspent amounts between lines, protects you.
Why Deals Get Declined or Re-Traded
Most problems are fixable before you apply:
- Vague scope. Fix it with a trade-by-trade budget and bids.
- ARV based on weak comps. Use recent renovated sales and be conservative.
- Too little cash. Count the equity gap, costs, and fronted rehab money.
- A property too far gone. Pick a deal the budget can realistically cover.
- Ineligible collateral. Land, commercial, and owner-occupied property aren’t offered.
Why Renovation Loans Like the 203(k) Don’t Fit Investors
Government-backed renovation loans are built for owner-occupants. A non-owner-occupied flip or rental falls outside them, which is why investors turn to short-term asset-based bridge financing instead.
The Exit: Sale or Refinance
Repayment comes from a sale or a refinance. Many investors refinance out of hard money into long-term DSCR financing once the property is finished and leased, and Lendmire brokers that path. The details are in the complete DSCR loans guide. Draw delays push the refinance back, so a slow rehab extends your carry.
Key Terms Defined
- ARV (after-repair value): The estimated value of the property once the planned repairs are finished.
- Loan-to-cost: The loan as a percentage of purchase price plus rehab budget.
- Holdback: Rehab money held by the lender and released in stages.
- Draw: A release of holdback funds after verified work.
- As-is value: What the property is worth in its current condition.
Frequently Asked Questions
Can a first-time investor qualify?
Yes, at the lower leverage tiers. First-timers typically land at 85% of project cost, still capped at 75% of ARV. A solid scope, realistic comps, and enough cash strengthen the file. Experience moves you up the tiers, but eligibility gates are the same.
Does hard money fund 100% of a buy-and-repair deal?
No. Up to 100% of the rehab budget can fund through draws, but the purchase is not funded at 100%. You still bring an equity gap, closing costs, and cash to front work before reimbursement.
What credit score do I need?
A 620 score is the typical minimum, with additional conditions below 660. It varies by lender, property, and experience, and underwriting stays centered on the property, plan, and exit.
What happens if the appraisal comes in below my ARV?
The loan shrinks, because the cap applies to the appraised ARV. You can bring more cash, renegotiate the purchase price, or rework the plan.
Do I need an LLC?
Many investors use one, subject to lender program eligibility. If you hold title in an entity, expect to supply its documents along with ID and proof of funds.
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.
About Lendmire
A non-QM mortgage broker (NMLS# 2371349), Lendmire arranges DSCR financing for real estate investors in 41 markets — 40 states plus Washington, D.C. Because deals are underwritten primarily on property cash flow rather than personal income documentation, the structure suits self-employed buyers and entity-owned portfolios. Lendmire places loans through wholesale investor lenders; it is not a direct lender. 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. Scotsman Guide, “Take a Tutorial on Hard Money Loans”
2. US Realty Training, “After Repair Value”
3. Real Estate Skills, “Fix and Flip Formula”
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 a Hard Money Lender Uses the Appraisal to Size a Loan · How to Handle a Low ARV Appraisal on a Hard Money Construction Loan · How Rehab Scope Changes the Contingency a Hard Money Loan Needs
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.