The Quick Read: A hard money lender sizes a loan on a property you already own as a percentage of its value, then subtracts what you still owe on it. On a refinance or cash-out of a non-owner-occupied 1-4 unit property, the ceiling typically sits near 65% of value. It varies by lender, property, and experience. What lands in your account is that amount minus the existing payoff and closing costs.
- The cap is a ceiling, not a promise. Condition, experience, and the exit plan can pull the number lower.
- A property you own has no purchase price, so the appraised as-is value and the existing liens do the work.
- Net proceeds equal the maximum loan, minus the payoff, minus costs.
- Cost-based leverage (the 85% to 93% figures) applies to purchase-and-rehab deals, not to equity on a property you already hold.
- Most investors treat the loan as a bridge and move to long-term rental financing afterward.
What “Lend Against” Means on an Owned Property
A hard money loan is secured by the real estate and underwritten mainly on the asset, the plan, and the exit. Sizing is tied to loan-to-value or, on rehab files, after-repair value. Your income matters far less than it would on 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.
When you buy a property, the lender can anchor to the price you paid. When you already own it, there is no price to anchor to. Two things decide the proceeds:
1. The appraised value of the property as it stands today.
2. The balance of every lien already recorded against it.
The lender takes its percentage cap, applies it to value, and then asks what is left after the old debt is paid off. Many investors skip that last step when they quote a number to themselves. They hear 65% and imagine 65% of value landing in the bank. On a mortgaged property, it does not.
These are business-purpose loans on investment property. The collateral is non-owner-occupied residential, 1-4 units, and the borrower is using the money for a business reason.
Key Terms Defined
Loan-to-value (LTV): the loan amount divided by the appraised value of the property. Corporate Finance Institute lays out the formula and explains why the quality of the collateral affects how high lenders will go.
Loan-to-cost (LTC): the loan amount divided by what the project costs, meaning purchase price plus rehab budget. It applies to purchase-and-rehab deals.
After-repair value (ARV): the projected value once renovation is finished. Some lenders cap the loan against it as a second test.
Payoff: the balance needed to clear existing liens at closing.
Net proceeds: the cash you receive after payoff and costs come out of the new loan.
Seasoning: the period you have held title before a lender will size a loan to a new appraisal rather than your purchase price.
Exit plan: how the lender gets repaid, usually a sale or a refinance into long-term financing.
The Leverage Numbers by Transaction Type
The cap changes with what you are doing. Here is how the programs the wholesale network works with typically break down for hard money. Every figure varies by lender, property, and experience, and none is a commitment to lend.
| Transaction | Typical ceiling | Measured against |
|---|---|---|
| Cash-out or no-cash-out refinance | Up to 65% | Value |
| Bridge purchase, no rehab | Up to 80% | Purchase price |
| Fix-and-flip, 5+ completed projects | Up to 93% | Project cost |
| Fix-and-flip, 2+ completed projects | Up to 90% | Project cost |
| Fix-and-flip, fewer than 2 projects | Up to 85% | Project cost |
| Rehab budget | Up to 100% | Funded in draws |
Every fix-and-flip tier is also capped at 75% of after-repair value. The lower of the two tests controls the loan.
Read that table carefully if you own the property. The only line that describes equity on an owned asset is the first one. The 93% and 90% figures look generous, but they measure against cost, and they belong to experienced investors on acquisition deals. The 100% rehab figure is a budget that funds in draws as completed work is inspected. It is not a purchase loan at 100% of anything. No hard money program in the network lends a true 100% against a property.
Loan amounts run up to $5,000,000, with larger files handled by exception. Terms run 6 to 18 months, interest-only, with no prepayment penalty. Credit starts around 620 for most files, with added conditions below 660. First-time investors typically qualify at the lower leverage tiers.
The network figures above are the ones that apply to files placed through Lendmire.
How the Underwriting Runs, Step by Step
The sequence is the same on most files, even though lenders differ on the percentages.
1. Pick the structure. A first-lien refinance pays off the existing mortgage and returns the difference. A second-position loan sits behind the existing mortgage and leaves it untouched. Second-position lenders carry more risk if a senior lender forecloses, so they tend to cap leverage lower, price higher, or decline. Whether a second-position structure is available depends on the lender.
2. Establish value. The lender orders an appraisal or a broker price opinion. The value that matters on a refinance is the as-is value, not what you hope to have after improvements.
3. Apply the cap. Maximum loan equals value times the cap. On a refinance, that cap is typically 65%.
4. Subtract the payoff. The payoff includes the principal balance, accrued interest, and any junior liens that must clear. Anything the lender requires you to pay off comes out of the new loan first.
5. Subtract costs. Closing costs and lender fees reduce what you take home.
6. Clear title and entity. The lender confirms liens, ownership, and insurance. If an LLC holds the property, expect entity documents, subject to lender program eligibility.
7. Check the exit. The lender wants a visible route to repayment before the term runs out.
Step four is where files shrink. Say the existing mortgage already equals most of the cap. The new loan can pay it off and hand back little or nothing, and then the refinance has no purpose unless the term or structure itself is the goal.
Three Owned-Property Scenarios in Percentages
These are modeled assumptions, expressed as a share of appraised value. They are not market data, and the point is the arithmetic.
Free and clear. You own the property outright and the lender applies a 65% cap. The maximum loan is 65% of value. With no payoff, net proceeds are that figure minus costs. This is the cleanest file because the lien position is simple.
Moderate mortgage. Existing debt equals 40% of value. The 65% cap leaves roughly 25% of value as gross cash-out before costs. That is a usable file, though costs take a visible bite out of a number this size.
Heavy mortgage. Existing debt equals 60% of value. Only about 5% of value is left under the cap. Costs can consume most or all of it. This is a payoff-and-extend file at best, not a cash-out file.
Existing debt above the cap. If you owe more than 65% of value, a first-lien refinance at that cap usually cannot even clear the old loan. The lender may still look at it, but it becomes a question of lender appetite, not arithmetic.
If your property is worth less than you assumed, every one of these gets worse. A value shortfall hits the proceeds dollar for dollar, because the debt does not shrink when the appraisal comes in low. Appraisal reconsideration is a routine request when the comps look thin, but a packet with recent nearby sales and documented condition has to carry the argument.
Where the General Rule Breaks
The 65% figure is a typical ceiling, not a universal one. These are the cases that move it.
Rehab on a property you own. If you plan to renovate, some lenders size to ARV and hold the rehab portion in reserve, releasing it in draws. Others size to your cost basis plus the rehab budget. These produce very different numbers. Ask which basis a lender uses before you compare quotes, because the percentages are not interchangeable. For the ARV mechanics, see Lendmire’s piece Can a Hard Money Lender Lend Against After Repair Value?.
Seasoning. If you bought the property recently, a lender may size to your purchase price plus documented improvements and not to a higher new appraisal. The rule varies by lender. A no-cash-out payoff often needs less seasoning than a cash-out.
No-cash-out versus cash-out. A straight payoff with no proceeds is the lower-risk file. Pulling equity above the payoff makes it a cash-out, and the lender underwrites it more conservatively.
Property type. Hard money collateral is non-owner-occupied residential, 1-4 units, with ground-up construction going to 10 units. Owner-occupied homes, commercial, industrial, land, and hospitality properties are not on the program sheet. A genuine second home with personal use does not become an investment property by calling it one.
Refinancing out of an existing hard money loan. Taking one hard money loan to pay off another is hard to place, and lenders generally prefer a clear exit into long-term financing. An extension from the current lender is often the simpler conversation.
Borrower experience. The top cost-based tiers are reserved for investors with documented completed projects. A first-time investor on the same property gets a lower leverage tier.
The Two-Test Problem
The investor decision comes down to two tests. The first is equity: does the property carry enough value above its debt to satisfy the cap? The second is the exit: will the property support the long-term loan that repays the bridge?
On the exit side, a DSCR loan compares monthly rent to the full monthly housing obligation, meaning principal, interest, taxes, insurance, and any HOA dues. Across the wholesale network, most standard-rental cash-out refinances top out around 75% of value, with roughly six months of seasoning common. Most programs want a score near 660, and 700 or higher opens the strongest leverage. A 1.00 coverage ratio is where select programs start. A separate select-lender path goes below 1.00, with leverage and terms adjusted.
Clearing 1.00 does not mean the property cash flows. Repairs, vacancy, management, utilities, and capital expenses all sit outside the calculation. A property can pass the lender’s test and still run thin in practice.
A bigger down payment or more equity lowers the monthly payment and can lift the ratio. It does not erase credit floors, reserve rules, or property eligibility. The strongest files clear both tests at once: enough equity and enough rental coverage.
Many investors use a hard money cash-out as a bridge and then refinance into long-term DSCR financing once the property is stabilized. Lendmire brokers that path through select lenders in its network, and the complete DSCR loans guide walks through how those files are sized.
What Moves the Number Up or Down
Across the lenders the network works with, a handful of factors decide where inside the range a file lands.
| Factor | Pushes leverage up | Pushes leverage down |
|---|---|---|
| Experience | Several completed projects | First project |
| Property condition | Stable, rentable | Heavy rehab needed |
| Lien position | First lien, clean title | Junior liens, title issues |
| Valuation | Strong, recent nearby sales | Thin comps, wide adjustments |
| Exit plan | Clear refinance or sale | Vague or dependent on one assumption |
Documentation gets overlooked here. A lender that sees a clear exit, tidy entity papers, and current insurance has fewer open questions to resolve. A lender that sees missing operating agreements or an unclear lien payoff reads it as risk, and risk shows up as lower leverage or a slower review of the whole file.
Risks Worth Sizing Before You Borrow
Hard money is short-term, interest-only capital with a maturity date. If the exit slips, you face an extension conversation or a forced sale. Borrowing against a property you own also puts that property at stake. The same principle applies to investment property: more debt secured by the asset means more exposure if income or value falls.
Cross-collateralizing, where additional properties are pledged to support one loan, adds a second layer. Trouble on one property can reach the others.
Frequently Asked Questions
How much will a hard money lender lend against a property I own?
On a refinance or cash-out of a non-owner-occupied 1-4 unit property, the typical ceiling is up to 65% of value, varying by lender, property, and experience. That is the gross loan. Your net proceeds are that amount minus the existing payoff and costs.
Can I borrow against a property I own free and clear?
Yes, and it is the cleanest file because there is no payoff to subtract. The lender still sizes to as-is value, and the property must be non-owner-occupied residential. Entity documents and title review apply if an LLC holds it, subject to lender program eligibility.
Does an existing mortgage reduce what I can borrow?
It reduces what you take home, not the size of the cap. The cap applies to total value, and the old mortgage is paid from the new loan first. If you owe near or above the cap, the refinance returns little or no cash.
Is 100% financing real?
Not as a loan against the property. The 100% figure describes the rehab budget, which funds in draws against completed work. Purchase leverage runs on cost-based tiers up to 93% of project cost for experienced investors, with every flip tier also capped at 75% of after-repair value.
What happens if the appraisal comes in low?
The maximum loan drops with it, and so do your proceeds. You can request appraisal reconsideration with recent nearby sales and condition documentation. If the value still holds, the file may need a smaller loan, more equity, or a different structure.
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. The brokerage arranges these loans through select lenders in its wholesale network, across 41 markets, including Washington, D.C. Terms depend on lender guidelines and a full property review, and nothing here is a commitment to lend.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage brokerage specializing in DSCR investor loans, helping arrange financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. The model centers on property-level rental income reviewed by the lender rather than W-2 documentation, subject to lender guidelines, suiting entity-owned and multi-property investors. Lendmire holds Scotsman Guide Top Mortgage Workplace recognition for 2025 and 2026.
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References
1. Corporate Finance Institute
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 a Hard Money Lender Will Lend on a Fix-and-Flip · How a Hard Money Lender Counts Seasoning on a Flip · How a Hard Money Lender Sizes the Maximum Term for a Flip
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.