The Quick Read: A hard money preapproval is a conditional letter built from a short package of borrower, funds, and entity papers, and the property-specific paperwork comes after you have a contract. Lenders differ on the exact list, so treat the package below as a strong default and confirm it before you apply. The letter shows an offer has financing behind it, but it does not commit the lender to fund.
- Core package: ID and a credit authorization, recent bank statements, entity papers if you buy in an LLC, and a short experience summary.
- After contract: the signed purchase contract with addenda, title work, insurance, and a valuation.
- Rehab deals: add a scope of work and budget, because leverage is tied to project cost and after-repair value.
- Letter limits: it is not proof of your cash and not a loan commitment, so write offers with a financing contingency.
- Name match: the buyer on the letter, the contract, and the bank statements should be the same person or entity.
Why the Paperwork Differs From a Bank File
Hard money underwriting looks mostly at the property, the plan, and the exit. That is why the file is lighter on personal income than a bank file.
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.
A consumer mortgage preapproval leans on the borrower’s income and debts. Bankrate lists the usual consumer documents as pay stubs, traditional personal-income documentation, W-2s, and two to three months of bank statements. A hard money lender cares about those things much less. It wants to know that you can fund your share of the deal, that the buyer is a real entity or person, and that the project makes sense.
Lighter does not mean empty. Credit still matters. Across our wholesale network, hard money programs generally want a 620 minimum score, with additional conditions below 660. Leverage and terms vary by lender, property, and experience.
Preapproval, Proof of Funds, and Commitment: Three Different Things
These three documents get confused constantly, and sellers read them differently. The table shows what each one actually tells a listing agent.
| Document | What it says | Binding on lender? |
|---|---|---|
| Preapproval letter | Lender reviewed you and would consider a loan up to a stated amount | No |
| Proof of funds | You hold the cash, shown by statement or bank letter | Not a lender document |
| Loan commitment | Lender agrees to fund on stated conditions | Yes, once issued |
A hard money preapproval speaks to the lender’s willingness to lend. It does not show your cash. Some lenders send a bare letter, and others review your bank statements first and then issue a fuller preapproval. Benzinga notes that lenders use the terms preapproval and prequalification inconsistently, so ask your lender how it defines each one. Lendmire’s piece Can You Get Preapproval for a Hard Money Loan Before Offers? covers that question in more depth.
The Document Checklist, by Stage
You do not need every document on day one. The table separates what gets you a letter from what the lender asks for once a property is under contract.
| Document | What it proves | Needed when |
|---|---|---|
| Government ID, credit authorization | Who you are; credit profile | Letter |
| Recent bank statements | Funds are yours and seasoned | Letter |
| Entity papers (if an LLC) | Entity exists; who can sign | Letter |
| Experience summary | Prior projects, if any | Letter |
| Target deal profile | Your buy box and typical numbers | Letter (no property yet) |
| Signed contract with addenda | Price, terms, buyer name | Under contract |
| Scope of work and budget | What the rehab will cost | Under contract (rehab) |
| After-repair value support | Comparable sales for the finished product | Under contract (rehab) |
| Insurance evidence | Property is covered | Before closing |
| Title work | Clean ownership and liens | Before closing |
| Valuation | Lender’s view of value | After acceptance |
Lenders vary. One may ask for a personal financial statement, and another may skip it. Send what your lender asks for, and ask for its list in writing before you build the package.
Funds and Reserves
Bank statements are the heart of the letter. The lender wants to see that your down payment, closing costs, and any required reserves are fully yours.
Most lenders look at the most recent two to three months of statements. Send every page, even blank ones, because a missing page invites a follow-up request. Large deposits that you cannot trace are a common stall, so keep a short note and a paper trail for any transfer between your own accounts.
Reserves vary by lender, property, and experience. A lender may want cash left over after the down payment and closing costs, so count only money you will still hold after those two. Ask your lender how it sizes reserves on your project type before you commit to a price range.
The Entity Package
If you buy in an LLC, the lender needs the entity’s papers. Typical items include the formation documents, the operating agreement, the tax ID letter, proof the entity is in good standing, and a clear statement of who has signing authority. Hard money lenders can lend to entities, but the exact requirements depend on each program’s guidelines.
The LLC does not need its own credit or income history. It does need to exist before you send the package. A freshly formed entity is fine for many lenders, but an LLC that is still “in progress” is not.
Names cause most of the rework here. The buyer on your contract, the borrower on the letter, and the owner of the funds should line up. If your cash sits in a personal account but the LLC will buy, tell the lender early so it can explain how the funds move. Many investors also sign a personal guarantee, so expect the lender to review your credit even when an LLC is the borrower.
Experience Record: What to Send, and What to Send With None
Experience decides how much leverage you get. On our network’s hard money programs, fix-and-flip leverage is tiered by documented completed projects.
- 5+ completed projects: up to 93% of project cost.
- 2+ completed projects: up to 90% of project cost.
- Fewer than 2: up to 85% of project cost.
- Every tier: capped at 75% of after-repair value.
Other structures use different measures. Bridge purchases without rehab go up to 80% of purchase price. Cash-out and rate/term refinances go up to 65% of value. Rehab funds can cover up to 100% of the rehab budget, released in draws as work is completed, which is a budget figure and not a purchase loan-to-value. No program funds 100% of a purchase. The top tier is reserved for experienced investors, and all figures vary by lender, property, and experience.
To document experience, gather settlement statements or closing documents from prior flips, a simple list of addresses with purchase and sale details, and photos. First-time investors still qualify at the lower leverage tiers, so a thin record lowers your leverage and does not close the door. A first-timer should send a short plan instead: the target deal profile, the scope approach, who will do the work, and how the exit works.
No Property Yet? The Minimum Package
You can get a letter before you have an address. Send the core package and add a one-page target deal profile. It should state the property types you buy (1-4 unit, non-owner-occupied residential), the price band, whether you plan a rehab, and your exit plan.
The resulting letter will usually name a maximum amount and the borrower. It cannot name a property or confirm a valuation, so it stays conditional until the lender reviews the actual deal. For rental-focused investors, the exit plan matters more than people expect. Many investors refinance out of hard money into long-term DSCR investor loans once the property is stabilized, and Lendmire arranges that path.
How to Use the Letter in an Offer
Attach the letter to your offer, and write the offer as financed, not cash. Add a financing contingency, because the letter does not guarantee the loan. Some listing agents will ask for a bank statement alongside the letter, so keep a redacted statement ready.
Check the letter before you send it. It should show the lender’s contact information, the borrower or entity name matching your contract, a maximum amount, a date or validity window, and a signature. Stale letters and inflated maximum amounts are the two errors that cost investors credibility with agents.
Never dress up a financed offer as a cash offer. Cash offers do carry weight with sellers. But disguising a hard money purchase as cash risks a breach of contract and loss of your earnest money.
Tell the title company about the hard money lender early. The title company has to prepare the mortgage, the note, and the recording documents, and it should not learn about the lender days before closing.
Worked Example: An LLC Investor Builds the Packet
Picture an investor who plans to buy a small duplex in an LLC, rehab it, and refinance it into a rental. She has completed one prior flip. The sequence matters more than any single document.
1. She asks two lenders for their written document lists and compares them.
2. She forms the LLC and collects its formation papers, operating agreement, and tax ID letter.
3. She moves her down payment funds into the account the lender will review, then downloads the latest statements, every page.
4. She writes a one-page experience summary with her prior flip’s settlement statement attached.
5. She writes a target deal profile covering property type, price band, and exit.
6. She submits one organized packet and receives a conditional letter.
With one completed project, she falls into the lowest leverage tier, which is 85% of project cost, capped at 75% of after-repair value. That is fine for a first deal, as long as she plans her cash around it. After she has an accepted offer, she sends the contract with all addenda, her scope and budget, and her comparable sales, and the lender orders its valuation. Only then does the conditional letter turn into real underwriting.
Common File Problems and Fixes
| Problem | Fix |
|---|---|
| Stale bank statements | Send the most recent period, all pages |
| Name mismatch across documents | Align entity name on contract, letter, funds |
| Unexplained large deposit | Add a short note and transfer records |
| Missing contract addenda | Send the full executed set |
| Inflated letter amount | Request an amount matching your real budget |
| Entity not yet formed | Form it before submitting the package |
Where the Usual Rules Break
The general package works for most deals. These edge cases are where it bends.
Valuation method. Some hard money lenders use a broker price opinion or in-house comps instead of a full appraisal. Ask which one applies, because it changes who orders the valuation and when.
Rental refinances. A purchase and rehab deal runs on after-repair value and scope. A rental refinance usually adds a cash-flow test, so lenders compare rent to the full monthly obligation. On a DSCR loan, qualification runs primarily on property-level rental income covering the payment, subject to lender guidelines. The complete DSCR loans guide explains how that test works, and clearing it is not the same as positive cash flow.
Business-purpose framing. Hard money loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. Federal rules in Regulation Z exempt credit extended primarily for a business purpose, and that is why lenders ask for a statement of purpose and entity papers instead of consumer-style paperwork.
Paid proof-of-funds services. Some online lenders charge a registration fee to issue a proof-of-funds letter, and investors should avoid paying for those. A legitimate lender issues a letter as part of reviewing your file.
Altered documents. Some investors send screenshots or edited statements. Do not. Sending a fake proof of funds is a serious problem, and agents and title companies know what to look for.
Property types. Hard money collateral is non-owner-occupied residential property of 1-4 units, with ground-up construction up to 10 units. Anything else is not on the program sheet.
Key Terms Defined
Preapproval letter: A conditional lender letter stating the most it would consider lending to you or your entity.
Proof of funds: Evidence that you personally hold the cash, shown by a bank statement or a bank letter.
Loan commitment: A binding lender agreement to fund a specific loan on stated conditions.
Loan-to-cost: The loan amount as a percentage of the total project cost, meaning purchase price plus rehab.
After-repair value (ARV): The estimated value of the property once the rehab is finished.
Financing contingency: A contract clause letting you exit the purchase and keep your earnest money if the loan does not come through.
Seasoned funds: Money that has sat in your account long enough to be clearly yours and traceable.
Draw: A payment of rehab funds released after the lender sees completed work.
Frequently Asked Questions
What documents do I need for a hard money preapproval?
Send a government ID, a credit authorization, the latest two to three months of bank statements, entity papers if you buy in an LLC, and a short experience summary. Rehab buyers also benefit from a scope of work and budget. The signed contract, title, and insurance follow once you have a property.
Can I get preapproved before I find a property?
Yes, with a core package and a one-page target deal profile. The letter will name a maximum amount and the borrower, but it cannot confirm a property or valuation. It stays conditional until the lender reviews a real deal.
Is a hard money preapproval letter the same as proof of funds?
No. The letter shows a lender is willing to lend, while proof of funds shows your own cash. Some agents want both, so keep a statement ready.
Do I need an LLC, and does it need a track record?
You can buy in your own name or in an LLC. The LLC does not need its own credit or income history, but it does need to exist and match the contract. Using an LLC is subject to program terms and program review.
Will a first-time investor be turned down?
Not automatically. First-time investors qualify at the lower leverage tiers, though a 620 minimum score and added conditions below 660 apply, and every file is underwritten individually. Nothing here is a commitment to lend.
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 is a mortgage broker that arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. Hard money loans run up to $5,000,000 with 6-18 month interest-only terms and no prepayment penalty, varying by lender, property, and experience.
Your first offer will read stronger once the letter, the statements, and the entity papers all carry the same name.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR loans are evaluated by the lender on rental income rather than personal income, subject to lender guidelines — a fit for LLC-owned portfolios, self-employed investors, and operators scaling beyond conventional loan caps. Recognized as a Scotsman Guide Top Mortgage Workplace in 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. Bankrate: Documents for preapproval
2. Benzinga: Mortgage preapproval vs. prequalification
3. CFPB: Regulation Z, section 1026.3
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Is There a Limit on a Hard Money Fix-and-Flip Loan? · Hard Money Fix and Flip Minimum Loan Amount Requirements · Hard Money After Repair Value Loan Requirements for a Flip
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.