How Much Hard Money Lends on a Flip Versus a 1099-Only Mortgage

The Quick Read: Hard money sizes a flip loan on the project, not on your personal income, so the amount depends on purchase price, rehab budget, and after-repair value. A 1099-only mortgage works the other way: it sizes on documented income, credit, and the property. They are built for different jobs, and many self-employed flippers use one for the flip and the other for what comes after.

• Across the wholesale network, flip leverage runs 85% of project cost with fewer than 2 completed projects, 90% at 2+, and 93% at 5+. Every tier is capped at 75% of after-repair value.
• Up to 100% of the rehab budget funds in draws against completed work. That is a rehab figure, not a purchase LTV.
• Hard money terms run 6-18 months, interest-only. A 1099-only mortgage is a long-term product.
• Hard money is business-purpose and asset-based. A 1099-only file leans on documented income.
• All figures vary by lender, property, and experience, and none is a commitment to lend.

The honest answer on who each is for: hard money is for an investor buying, rehabbing, and exiting a non-owner-occupied property on a short runway. A 1099-only mortgage is for a self-employed borrower whose income is paid on 1099 forms and who wants long-term financing instead of a short-term bridge. If you want to read the full picture of how investor loans fit together, Lendmire’s complete DSCR loans guide covers the long-term side.

Side-by-Side

Published industry norms describe the 1099-only column below. The hard money column reflects the network’s program guidelines.

How Hard Money Decides the Amount

Hard money lenders run two tests and lend the lesser. The first is loan-to-cost: the loan as a share of purchase price plus rehab. The second is a cap on after-repair value (ARV). On the network’s flip program, loan-to-cost tops out at 93% of project cost for investors with 5+ completed projects, 90% at 2+, and 85% below that. Whatever the tier, the loan cannot exceed 75% of ARV.

That second test is the one investors underestimate. Nav points out that the ARV cap applies even on structures marketed as 100% financing, and that thin-margin deals can run into it. A deal with a fat purchase discount clears the cap easily. A deal bought near market value with a big rehab can hit it before the cost-based tier does.

Run it as a thought exercise. An investor with two completed projects buys a property that needs heavy work. The cost-based test allows 90% of project cost. But total cost sits close to the ARV, so 75% of ARV is the smaller number. The ARV cap binds, and the investor covers the gap in cash. Experience sets the top tier; the project’s margin decides whether you reach it.

Two more mechanics matter:

• Rehab money arrives in draws. The borrower starts work, requests a draw as work is completed, and gets reimbursed in increments. The early phases come out of your pocket.
• There is no true 100% purchase program. Up to 100% of the rehab budget can fund through draws. The purchase side stays below that.

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. Collateral is non-owner-occupied residential, 1-4 units. Credit starts at a 620 score with added conditions below 660. Underwriting stays asset-based, meaning property, plan, and exit, though lenders still review credit, reserves, and experience. Business.com reports the same pattern: collateral value is the overriding factor, with credit still looked at.

How a 1099-Only Mortgage Sizes the Loan

A 1099-only mortgage is a non-QM product. It still tests whether the borrower can repay, but it reads 1099 forms in place of W-2s and traditional personal-income documentation. Lenders may use one or two years of income and may apply an expense factor. Those details differ by program. This is documented income, not skipped income. Credit, assets, reserves, and collateral are all reviewed.

Here the loan amount follows income, credit, and the property, not a project’s ARV. There is no rehab draw schedule, because the product is built to finance a finished property. It also is not a flip tool. The term runs long, not 6-18 months.

DSCR is a different product again. A DSCR loan qualifies primarily on property-level rental income covering the payment, subject to lender guidelines, so a self-employed investor buying a rental may not need 1099 income at all. Across the network, most DSCR purchases land at 75%-80% LTV, and select programs reach 85% with roughly a 700+ score. Those are rental-hold numbers, not flip numbers.

When Hard Money Is the Better Fit

Hard money fits when the deal is the point.

• The property needs work. A 1099 mortgage has no draw mechanism, so it cannot fund a rehab in stages.
• The exit is a sale or refinance within the term. Interest-only terms of 6-18 months suit a flip that finishes on schedule.
• Personal income is hard to document. Underwriting is asset-based, so self-employed borrowers with irregular income are not shut out by a 1099 paper trail.
• The investor wants leverage on cost. At 2+ completed projects the loan-to-cost tier reaches 90%, with draws covering rehab.

The costs of this fit are real. You front early rehab, you cover any gap above the ARV cap, and you need a sale or refinance plan. A flip is cash-intensive. The top tier is reserved for experienced investors, and first-time investors qualify only at the lower leverage tiers.

The ARV test deserves its own look. Lendmire’s piece Does After-Repair Value Cap How Much Hard Money Lends on a Flip? goes deeper on how that cap binds.

When a 1099-Only Mortgage Is the Better Fit

A 1099-only mortgage fits when the property is finished and the plan is to hold it.

• The home needs no major work. Nothing needs staged funding.
• The borrower wants a long runway. A multi-year amortizing structure removes the sale-or-refinance clock.
• Income is solid and documented on 1099s. The file can rest on that income instead of an asset-based project review.
• The property may be a primary residence or second home. That is a consumer-style transaction, and a flip loan is not built for it. Hard money here is business-purpose only, on non-owner-occupied property.

This is where the regulatory frame matters. Business-purpose loans are not covered by the ability-to-repay rules, and the CFPB’s final rule treats investment-purpose loans as business-purpose. The Federal Reserve’s Reg Z guide says the same of credit to acquire or improve non-owner-occupied rental property. A flip loan on an investment property sits on that side. A 1099-only loan on a home you live in does not, and the exemption turns on purpose and occupancy, so it is not automatic.

Where the Two Meet: After the Flip

Many investors use both. The flip runs on hard money. Once the property is rehabbed and rented instead of sold, they refinance out of the short-term loan into long-term financing. Lendmire brokers that move into DSCR financing, which qualifies primarily on rental income, subject to lender guidelines. Cash-out refinances top out around 75% LTV on standard rentals, with about 6 months of seasoning as the common expectation. Clearing a 1.00 coverage ratio is where select programs start, and it is not the same as positive cash flow, since repairs, vacancy, and management sit outside the calculation.

That makes the choice less either-or than it looks. Hard money is the tool for buying and fixing. A long-term loan, 1099-based or rental-based, is the tool for holding.

Key Terms Defined

• Loan-to-cost (LTC): The loan divided by purchase price plus rehab budget.
• After-repair value (ARV): The estimated value of the property once the work is done.
• Draw: A release of rehab funds after a portion of the work is complete.
• Non-QM: A mortgage that does not follow standard qualified-mortgage documentation and is underwritten on alternative documentation.
• 1099-only: A file that documents self-employed income with 1099 forms instead of traditional personal-income documentation.

A Balanced Verdict

Choose hard money if you are buying a property to fix and sell or refinance, you have the cash for the equity gap and early rehab, and your experience supports the tier you need. Choose a 1099-only mortgage if you want long-term financing on a finished property and your income documents cleanly on 1099s. If you are buying a rental to hold, a DSCR loan may fit better than either.

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 or request a quote.

This article is general information, not legal or tax advice. Tax treatment varies, so consult a qualified attorney or CPA about your own situation.

About Lendmire

As a non-QM mortgage broker (NMLS# 2371349), Lendmire facilitates DSCR investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income instead of personal income documentation, subject to lender guidelines, serving LLC-structured portfolios and self-employed borrowers who don’t fit conventional boxes. A two-time Scotsman Guide Top Mortgage Workplace (2025, 2026).

References

1. Nav: hard money 100% financing

2. Business.com: hard money loans explainer

3. Federal Register: CFPB Ability-to-Repay and Qualified Mortgage final rule

4. Federal Reserve Regulation Z guide