The Quick Read: Your down payment on a condo flip is the gap between the loan and total project cost, and you bring it in verified cash, along with closing costs, condo-specific fees, and enough reserves to carry the project until the first rehab draw. Hard money is not 100% financing. The cash you need is always bigger than the down payment line alone.
- Leverage is sized on project cost (purchase plus rehab) and capped as a share of after-repair value. Whichever limit is tighter sets your cash.
- Across the network, the tiers run 85%, 90%, or 93% of project cost, tied to completed projects. Every tier is capped at 75% of after-repair value.
- Lenders verify where the money came from. Fresh, unexplained deposits slow files down.
- The condo building can lower your leverage or end the deal. It never raises it.
- If you are short, a partner, a smaller scope, or a cheaper unit usually works better than stretching.
Key Terms Defined
Down payment: the part of the purchase and project cost the loan does not cover. You pay it with your own verified cash.
Project cost: the purchase price plus the rehab budget. Hard money lenders usually size the loan on this number.
Loan-to-cost (LTC): the loan as a percentage of project cost. Loan-to-value compares the loan to a property’s value instead.
After-repair value (ARV): what the finished condo should be worth, based on comparable sales.
Proof of funds: bank or asset statements showing you hold the cash for the down payment, closing costs, and reserves.
Draw: a release of rehab money after the lender confirms the work was done. Draws repay you or your contractor after the work, not before it.
Warrantable condo: a building that meets agency-style standards for owner concentration, reserves, litigation, and insurance. A non-warrantable condo misses one or more.
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.
What “the Down Payment” Means on a Condo Flip
A hard money flip loan is a short-term, interest-only, business-purpose loan secured by the property. Because the lender is betting on the deal, it wants you to have your own money at risk. Your cash is the lender’s cushion if the project goes sideways.
On a typical conventional purchase, the down payment is a percentage of the price. On a flip, the math runs through project cost. Lendmire arranges these loans through a network of lenders, and the leverage tiers across that network follow your track record:
- Fewer than 2 completed projects: 85% of project cost.
- 2 or more completed projects: 90% of project cost.
- 5 or more completed projects: 93% of project cost.
Every tier is capped at 75% of ARV. These figures vary by lender, property, and experience, and nothing here is a commitment to lend.
Two clarifications keep people from misreading those numbers. First, the top tier is for experienced investors. A first flip lands at the 85% level. Second, the rehab budget itself can be funded up to 100% in draws against completed work. That is a rehab-budget figure, not a purchase loan-to-value. No program funds 100% of a purchase on a flip.
A bridge purchase with no rehab works differently. It tops out at up to 80% of the purchase price. Most condo flips have a scope of work, so the project-cost tiers are the ones that matter.
Which Number Binds: Cost or ARV?
You have two limits working at once. The tier percentage applies to project cost. The 75% cap applies to ARV. The lower dollar result is your loan, and the gap is your down payment.
Run it with illustrative percentages, not dollars. These are modeled assumptions, not market data.
- Project cost: 80% of ARV.
- Tier: 90% of project cost.
- Loan as a share of ARV: 72%.
- Result: cost binds, since 72% sits under the 75% cap. You bring 10% of project cost.
Thin margins change the cash requirement even when the tier and the borrower stay the same. When the margin shrinks, the ARV cap can start to bind instead of the cost tier, and that pushes up the cash you bring. That is the pattern to watch. Thin deals do not just earn less. They also cost more cash up front.
Condos make this worse in one specific way. Condo comps can be tight, and the building’s condition affects the lender’s view of resale value. A lower ARV pulls the 75% cap down with it.
The Cash Stack: What Leaves Your Account, and When
The down payment is one line item. Plan the whole stack in the order the money moves.
| Item | When it’s due | Paid to |
|---|---|---|
| Earnest money | At contract | Title or escrow |
| Down payment | At closing | Title company |
| Closing costs and lender fees | At closing | Title, lender |
| Condo items (questionnaire, certificate, transfer fees) | Contract to closing | HOA or its manager |
| Draw float | After closing, before first draw | Contractors, suppliers |
| Interest carry | Monthly during the term | Lender |
| Reserves | Held after closing | Your own account |
Draw float catches many first-timers. Draws release after work is inspected, so you often fund the first stretch of rehab yourself. Lenders also want to see money left after closing for interest and for starting the work. Proof of funds typically covers the down payment, closing costs, and reserves together, not the down payment alone.
Carry grows with time. Terms run 6 to 18 months, interest-only, with no prepayment penalty. Every extra month the condo sits unsold is another month of interest out of your pocket. A slow resale is a cash problem, not just a profit problem.
Condo-Specific Cash Traps
Condos add a second underwriting layer. The lender reviews the building as well as you and the unit. Here are the traps that change how much cash you hold.
HOA dues and assessments. Dues run while you own the unit, rehab or not. A special assessment, whether pending or already approved, can become your bill and can shrink the lender’s appetite.
Questionnaire and certificate fees. Management companies often charge for the HOA questionnaire, resale certificates, and transfer paperwork. They can also be slow. A late questionnaire can push your closing date and burn earnest money.
Master insurance. Lenders look at the building’s master policy. Gaps in coverage can lower leverage or sink the deal.
Litigation, reserves, and investor concentration. Condo-focused lenders generally review all three. A building in litigation or with thin reserves is a red flag. A building with a high share of investor-owned units is one too. Any of these can lower the leverage offered, which raises your down payment. Others can end the deal outright, and your earnest money is then at risk.
Condotels. Many lenders that accept standard non-warrantable condos draw a hard line at condotels. Confirm eligibility with your broker before you sign a contract.
Here is the point many buyers miss. A weak building also hurts your exit. The person buying your finished unit may need a conventional loan, and the Fannie Mae Selling Guide sets the condo standards behind that kind of loan. Fannie Mae’s rules do not govern your hard money loan. They do shape who can buy the unit from you. A non-warrantable building shrinks your buyer pool, and a longer hold means more carry.
In files Lendmire sees, the borrower who gets surprised is rarely short on the headline down payment. The shortfall shows up in the pile of smaller items: questionnaire fees, carry on a slow resale, and the draw float.
Where the Money Can Come From
Lenders care less about the source than about proof. Still, sources are not equal, and policy is lender by lender. This table shows how files tend to read across the network.
| Source | Typical lender view | Paper trail |
|---|---|---|
| Savings or brokerage cash | Generally accepted | Recent statements |
| Partner or JV cash | Usually accepted | Partner statements, agreement |
| Cash-out on another property | Lender-specific | Closing statement, deposit record |
| Cross-collateral on a free-and-clear property | Some lenders only | Title, valuation on second property |
| Gift from family | Lender-specific | Gift letter, donor statements |
| Unsecured personal borrowing | Often questioned | Loan terms, deposit record |
| Credit cards | Unlikely to be accepted | Not recommended |
Two of these deserve more.
Partner cash. A money partner can fund the down payment, and many flips are built this way. The partner’s funds are usually verified the same way yours would be. Guarantor and entity rules vary. For a side-by-side look at the tradeoffs, see Lendmire’s piece Hard Money vs a Cash Partner for a Condo Flip Down Payment.
Borrowed funds. Some lenders accept borrowed money, and some treat it as a warning sign. Stacked borrowing adds a second payment, and that eats into flip margin. Credit cards are the weakest option on the table. Debt service on top of the hard money loan is how thin margins go negative.
What About Gift Funds?
Agency loans bar gifts on investment properties. The Fannie Mae Selling Guide’s gift rule says so directly, and Experian’s explainer on down payment gifts reports the same for conventional loans. Those are agency and conventional rules, not hard money rules.
Private lenders set their own policy. Some will accept a documented gift and some won’t. Do not assume either way. Ask before you count a gift in your plan.
If a gift is allowed, expect a letter stating the money does not need to be repaid, the donor’s bank statement, and proof of the transfer. Tax treatment varies; consult a qualified professional.
Proof of Funds and the Paper Trail
Underwriting on a flip is built around the property, the plan, and the exit. Credit is still pulled, with a 620 minimum score and extra conditions below 660, and cash is still verified. First-time investors can qualify at the lower leverage tier, subject to lender guidelines.
Assemble these before you apply:
1. Government ID and entity documents, if you buy through an LLC (subject to lender program eligibility).
2. The purchase contract.
3. The scope of work and rehab budget.
4. Recent statements for every account holding cash to close.
5. Partner or donor statements and signed agreements, if applicable.
6. A short written explanation for any large deposit.
Large undocumented deposits are a red flag. Money that moved recently needs a trail showing where it came from. Seasoning requirements for hard money differ by lender, so ask about them early instead of guessing. The safest habit is simple: park your cash in the account at least a few statement cycles before you apply, and keep a record of every transfer.
If You’re Short on Cash
Being short is common. The honest options, in the order most investors try them:
- Bring in a partner. You trade a share of profit for the cash. It is the cleanest fix and the most common one.
- Shrink the scope. A lighter rehab lowers project cost, which lowers the gap you must fill.
- Buy a cheaper unit. A smaller deal fits your cash and still teaches you the process. Experience also moves you up the leverage tiers over time.
- Choose a better building. A cleaner HOA profile protects leverage and your exit.
- Wait. Another few months of saving can beat a stretched file that fails at closing.
Skip anything that adds a monthly payment you cannot cover during a slow resale. Stretching on the down payment leaves no room for carry.
The Decision in Practice
Think of it as two tests. First, do you have enough verified cash for the whole stack? Second, does the deal clear both limits, project cost and ARV, without a building problem pulling leverage down? If either test fails, fix the deal before you sign.
Many investors also plan the exit before they buy. Some flips turn into rentals, and Lendmire brokers the path from hard money into long-term DSCR financing once the property is stabilized. The condo’s HOA profile affects that refinance too. The complete DSCR loans guide explains how that financing works.
Pre-application checklist
1. Calculate project cost and compare it to your realistic ARV.
2. Identify which limit binds: your tier on cost, or the 75% ARV cap.
3. Add closing costs, condo fees, draw float, carry, and reserves.
4. Confirm where each dollar comes from and seat it in an account.
5. Request the HOA questionnaire and master insurance details early.
6. Ask your broker about gift, partner, and borrowed-fund policy before you rely on them.
Frequently Asked Questions
Can I put zero down on a condo flip?
No. No hard money program funds 100% of a purchase. The rehab budget can be funded up to 100% through draws against completed work, but you still bring cash for the purchase side, plus closing costs and reserves. Leverage depends on the lender, the property, and your experience.
Can I borrow the down payment?
Sometimes, and it is lender-specific. Some lenders accept certain borrowed funds or collateral on another property, while others want your own liquid cash. Stacked borrowing also adds a payment that eats flip margin. Ask your broker how a given lender treats it before you build the deal on it.
Does a condo need more cash than a house?
Often, yes. The building review can lower leverage, and condos add fees such as questionnaires, certificates, dues, and possible assessments. A weak HOA can also lengthen your resale, which raises carry.
Does the rehab budget count toward my down payment?
No. The rehab budget is funded in draws against completed work, so it sits outside your down payment. It does affect project cost, which is the base for the loan sizing. You also need draw float to start the work before the first release.
How much should I keep in reserve?
Enough to cover interest and the early rehab spend until the first draw, with room for a slow sale. Lenders want to see money left after closing. The exact amount varies by lender, so ask early.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker that arranges financing through select lenders in its wholesale network, across 41 markets, including Washington, D.C. Lendmire does not lend or approve loans. Lenders review each file individually, and programs can change. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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.
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References
1. Fannie Mae Selling Guide: Personal Gifts
2. Experian: Down Payment Gift Rules
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 Much Down Payment a Hard Money Lender Requires on a Flip · How to Replace Seller Financing With a Hard Money Loan on a First Flip · How a Hard Money Lender Counts Days to Close a Fix and Flip Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.