The Quick Read: Treat the job as two separate steps: first confirm that a lender is legitimate, licensed where your property sits, and experienced with your kind of project, then put every written offer on identical deal inputs and compare total cost through your actual exit date, not the headline points.
- Vetting asks whether the lender is real and capable. Comparing asks which offer costs less and fits your plan.
- Convert every fee to dollars, and find out what each fee is calculated on.
- Ask how the lender sizes the loan (purchase price, project cost, or after-repair value) and who sets the value.
- Read the draw, extension, and default terms before you read the pricing.
- Plan your exit before you sign. The takeout decides whether the first loan was a good one.
Hard money moves on short timelines, and short timelines tempt investors to skip homework. Don’t. The lender you pick shapes your cash needs, your schedule, and your exit just as much as the deal does.
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.
Why Are Vetting and Comparing Two Different Jobs?
Vetting screens lenders out. Comparing ranks the ones left. Mixing them is how investors end up choosing a more affordable quote from a lender who never should have made the shortlist.
Do vetting first. A lender that fails on licensing, references, or transparency is out, no matter how good the quote looks. Only then do you build a side-by-side on the survivors.
Hard money is also not DSCR financing, and the two are not interchangeable. Hard money is short-term bridge or rehab money. A DSCR loan is long-term rental financing that qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. They often run in sequence on one deal. You will see that in the exit section below.
What Do You Define Before You Call Anyone?
Write a one-page deal summary first. Every lender gets the same page, which is the only way to make quotes comparable.
Include these items:
- Purchase price, rehab budget, and your estimate of after-repair value.
- Property type and unit count.
- Your experience: how many projects you have completed.
- Your planned hold, and your exit (sell or refinance).
- Your contract deadlines.
Know the shape of what you are shopping for. Across Lendmire’s wholesale network, hard money programs for non-owner-occupied 1-4 unit residential property typically run six to 18 months, interest-only, with no prepayment penalty. Loan amounts generally run up to $5,000,000, with larger by exception. Leverage varies by lender, property, and experience. Credit minimums typically start at 620, with added conditions below 660.
Fix-and-flip leverage is tiered by completed projects. Expect roughly 85% of project cost with fewer than two completed projects, 90% of project cost at two or more, and up to 93% of project cost at five or more. Each tier is capped at 75% of after-repair value. Bridge purchases without rehab run up to 80% of purchase price. Cash-out and rate-and-term refinances run up to 65% of value. Rehab funds can reach 100% of the rehab budget, released in draws against completed work. That is a rehab-budget figure, not a purchase loan-to-value.
Quotes far outside those ranges deserve a question. The top tier is reserved for experienced investors.
How Do You Vet a Lender?
Start with legal standing, then track record, then people who have borrowed from them. Each check proves something specific and leaves something unproven. The table shows both sides.
| Check | Where to look | What it proves | What it doesn’t |
|---|---|---|---|
| License | State regulator lookup | Authorized in that state | Good service |
| Entity status | Secretary of state | Company exists | Funding capacity |
| Borrower references | Three past borrowers | Real loans closed | Your experience |
| Escrow officer | Local title company | Who closes private loans | Draw behavior |
| Proof of funds | Written request | Capital exists | Terms stay fixed |
Licensing. Ask for the license number and verify it yourself. Hard money is business-purpose lending, meaning it is made for investment property, not a home you live in. Because of that, hard money loans are reviewed differently from a standard owner-occupied mortgage. State law still decides who needs a license. Some states exempt business-purpose lenders when the loan is made to an entity. Others, per a licensing consultancy, license them in certain structures. A license proves legal standing, nothing more.
Track record. Ask how many loans the lender has made, for how long, and how many went into default. The Investors Edge suggests asking for three borrower references. A lender that balks is telling you something.
The reference call. Don’t ask whether they were happy. Ask what the closing statement looked like next to the term sheet. Ask whether draws arrived when the borrower expected. Ask what happened when the project ran late. Ask whether they would borrow again, and why.
Local escrow. Call a title company’s escrow officer and ask who closes private loans in that county. Escrow officers see lender behavior at the closing table every week. (They also have no reason to flatter anyone.)
Who Actually Funds the Loan?
Find out whether you are talking to a direct lender, a broker, or a capital source. It changes who decides, who answers when something goes wrong, and who controls draws.
- A direct lender uses its own or pooled capital and makes the decisions in-house.
- A broker places your file with a lender in its network. Lendmire works this way, arranging hard money through select lenders in its wholesale network across 41 markets, including Washington, D.C. A broker’s value is comparing many programs at once.
- A capital source behind an intermediary is the case to probe. Ask who funds, who services, and who approves draws.
A broker is paid by the lender, the borrower, or both. Ask for that compensation in writing, and compare full terms either way.
Local versus national is a tradeoff, not a verdict. Local lenders often know your market and can inspect nearby sites with less friction. National lenders usually bring deeper capital and multi-state reach. For a first deal, local knowledge can matter more. For a larger or out-of-state project, depth of capital may.
Which Red Flags Mean Walk Away?
Walk away when terms are vague, fees arrive before any written approval, or the lender can’t tell you who funds the loan.
| Signal | Why it matters | What to do |
|---|---|---|
| No written terms | Nothing to hold them to | Get a term sheet or leave |
| Large fees before approval | Money at risk with no commitment | Ask what is refundable |
| No references | Can’t verify closed loans | Move on |
| Pricing that looks too good | Costs often sit elsewhere | Ask for the full fee schedule |
| Pressure to sign today | Skips your comparison | Slow down |
| No draw schedule | Rehab cash is unpredictable | Require it in writing |
| Terms shift after quote | Predicts closing-table surprises | Compare to the first quote |
No license number is the first and cleanest red flag.
How Do You Compare Offers Fairly?
Give every lender the same inputs, then compare total cost from closing to payoff. A headline number only tells you the cost of one line.
Points and fee base. Points are upfront fees measured as a percentage of the loan. One point on purchase price and one point on the total loan including rehab are very different charges. Ask what each point is calculated on, then convert it to dollars yourself.
Everything else on the sheet. List interest, underwriting and processing, appraisal or broker price opinion, title and escrow, servicing, per-draw inspection fees, extension fees, and any prepayment terms. Lenders disagree about how much of this is hidden. The fix is the same either way: get a written fee schedule.
Loan sizing. Ask whether the lender sizes on purchase price, project cost, or after-repair value, and whether rehab funds are inside the number. Ask who sets the value, whether you can submit your own comps, and whether you can dispute a low figure. Two lenders can quote the same percentage and fund very different amounts.
Draws. Ask whether rehab money comes up front or as reimbursement, how you request a draw, who inspects, and what each inspection costs. Ask whether stored materials are reimbursable. Draws decide how much of your own cash sits in the project. For a deeper look, Lendmire’s piece How to Compare Hard Money Lenders on Their Draw Process covers it.
Extensions and default. Get extension terms before closing. Ask about late-payment charges and whether the loan is recourse (you are personally liable for any shortfall) or non-recourse.
What Does a Side-by-Side Look Like?
Picture one modeled flip, three lenders, identical inputs. The figures below are illustrative assumptions, not quotes, and use no dollar amounts on purpose.
- Lender A advertises the fewest points, charged on purchase price. It adds a per-draw inspection fee and a sizeable extension fee.
- Lender B charges slightly more in points, but on the total loan including rehab. Inspections are included.
- Lender C charges mid-range points on purchase price, with a flat servicing fee and a modest extension fee.
Now run it through the exit date. Assume the rehab runs one month long and you use five draws. Lender A pays out the inspection fee five times and triggers the extension. Lender B’s larger fee base shows up at closing, but nothing piles on later. Lender C lands in the middle.
A more affordable-looking quote was not a more affordable loan. That reversal happens often when you carry the full schedule to the payoff date. Run both the on-time and the late scenario.
How Do You Score Offers When the Math Is Close?
Use a weighted scorecard. Price matters, but so do draw handling, communication, and exit flexibility. Adjust the weights to your project.
| Factor | Weight | What to score |
|---|---|---|
| Total cost to exit date | 35% | Full schedule, on-time and late |
| Loan sizing and valuation | 20% | Basis, appraiser, dispute path |
| Draw process | 15% | Inspections, fees, documentation |
| Extension and default terms | 10% | Cost and flexibility |
| Lender verification | 10% | License, references, funding source |
| Communication | 10% | Written answers, consistency |
Score each lender 1-5 per factor and multiply by the weight. The scorecard won’t make the choice for you. It shows where your gut and the numbers disagree.
What Do You Ask, and When?
Ask in three stages. Each stage filters a little more.
Screening call. Ask who funds the loan, what states and property types they handle, how many loans they have done, and whether they will give three references. Ask for the license number. Ask how the lender sizes loans and what experience level the leverage tiers assume.
Written term sheet. Check every fee against the fee schedule. Confirm the fee base for points, the valuation method, the draw process, the extension terms, the prepayment terms, and recourse. Ask for a written schedule that you can hold against your contract dates.
Closing statement. Put it beside the term sheet, line by line. Anything that moved needs a written explanation. Drift between quote and closing statement is the clearest signal of how a lender treats borrowers. Raise it before you sign, not after.
Draws are where many first flips go sideways.
Where the Rules Break
Hard money is less standardized than most borrowers expect. Here is where the general rules bend.
Federal disclosure rules mostly step aside. The Truth in Lending rule exempts credit extended primarily for business or commercial purposes, per the CFPB’s Regulation Z text. That is why you usually don’t get standardized consumer disclosures on a hard money loan. Your term sheet and loan agreement are the whole protection, so the comparison work falls on you. Exempt does not mean unregulated. State licensing and usury rules can still apply.
Licensing varies by state. Some states exempt business-purpose lenders to entities. Others license them anyway. Owner-occupied or consumer-purpose loans generally pull in mortgage licensing. That is why you verify the license in the property’s state, not the lender’s home state.
Stated purpose can be questioned. The CFPB’s official commentary tells the creditor to judge primary purpose case by case. Occupancy or personal-use facts can reopen the question.
Business credit can later become consumer credit. Official interpretations note that exempt business credit can be rewritten later for consumer purposes. Keep the purpose clean and documented.
Prepayment terms vary by lender. Many programs have none. Others use minimum-interest or step-down structures. Your exit loan may carry its own prepayment terms, so make sure the hold period fits.
First-Timer or Repeat Borrower?
Compare differently depending on your track record. Tiering is built into most programs.
A first-timer should weigh communication and draw handling more heavily, because they have no history to fall back on. Expect the lower leverage tier, roughly 85% of project cost, and expect extra scrutiny of your budget and exit. Ask whether a completed project moves you up a tier. It usually does. Credit minimums typically start at 620, with added conditions below 660, though first-time investors can qualify at the lower leverage tiers. Underwriting stays asset-based: property, plan, and exit.
A repeat borrower should weigh total cost and relationship terms more heavily. Ask whether a lender will price your fifth deal differently than your first. Ask whether draws speed up with a track record. Ask if a repeat borrower gets a single point of contact.
Either way, leverage and terms vary by lender, property, and experience, and nothing here is a commitment to lend.
What Does the Exit Change?
The exit determines whether the first loan was a good choice. A bridge term has to outlast the rehab, any lease-up, the appraisal, and underwriting on the next loan. Every month of delay stacks interest, extension fees, and exit costs onto the payoff.
Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. Before you buy, run the coverage math. The complete DSCR loans guide explains how it works. Then stress-test: can the property carry itself at a realistic exit date, not the hoped-for one?
A takeout that only pays off the balance, accrued interest, and closing costs is commonly treated as a rate-and-term refinance. One that returns cash above that is a cash-out. The two carry different leverage and seasoning expectations. Ask the DSCR lender what applies before you pick the bridge.
How Do You Decide When Offers Are Close?
Stop comparing at three to four solid offers.
When two offers are close, break the tie in this order:
1. The lender with cleaner references.
2. The lender with the simpler fee schedule.
3. The lender with more forgiving extension terms.
4. The lender who answered every question in writing.
Negotiate before you sign, not after. A lender that moved on one term at the quote stage will often move on another. If they won’t move on anything, that is information too.
Key Terms Defined
After-repair value (ARV): the estimated value of the property once the rehab is complete.
Loan-to-cost: the loan amount as a percentage of the total project cost, including purchase and rehab.
Draw: a release of rehab funds after the lender confirms completed work.
Recourse: a loan structure that makes you personally liable for any shortfall after a default.
Takeout: the long-term loan that pays off the bridge loan at your exit.
Business-purpose loan: a loan made for investment or commercial use, not for a home you live in.
Frequently Asked Questions
How many hard money lenders should I compare?
Three to four. That is enough to expose differences in fee structure and draw handling without stalling your deal. Give each the same one-page deal summary so the quotes line up.
Is it normal to ask a hard money lender for references?
Yes. Ask for contact details for at least three past borrowers. A lender with a real track record should hand them over without argument, and your call to those borrowers is the most useful check you will run.
Is a more affordable-looking quote usually a more affordable loan?
Not reliably. Points, fee bases, per-draw inspections, extension charges, and servicing fees can outweigh a small difference in headline price. Carry each schedule through to your exit date, including a late scenario.
Are upfront fees ever normal?
Some third-party costs, such as an appraisal or a title order, may be collected early. Large fees before any written approval are a red flag. Ask what is refundable if the loan doesn’t close.
Should I use a broker or go direct?
Either can work. A broker compares multiple programs for you and is paid by the lender, the borrower, or both. Ask for that compensation in writing and compare full terms. Going direct makes sense when you already trust a specific lender.
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. Reach the team at 828-256-2183. Lendmire’s related guide Should You Compare Fix-and-Flip Loans Before Choosing Hard Money? is a good starting point. Terms vary by lender, property, and experience, and nothing here is a commitment to lend.
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.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your investment property. No commitment required.
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. Cornerstone Licensing, business-purpose lender licensing
2. The Investors Edge, questions to ask hard money lenders
3. CFPB, Regulation Z § 1026.3
4. Cornell Law School LII, Supplement I to Part 1026 (Regulation Z interpretations)
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Hard Money Payoff Requirements When the Loan Matures · Hard Money Multifamily Loan Documentation for Two to Four Units · Does a Hard Money Lender Cap Loan to Cost on a Flip?
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
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.