The Quick Read: A hard money lender counts LLC funds toward your down payment only when the money is verifiably yours, documented back to its source, and not already promised to another requirement such as reserves. The LLC is the borrower, but the underwriter still traces the cash to a person. Treatment varies by lender, property, and experience, and nothing here is a commitment to lend.
- The lender asks whose money it is and whether you can access it, so your ownership share inside the LLC matters.
- Large or recent deposits usually trigger a request for the source.
- Borrowed money is treated differently from money you own, and it is often excluded from reserves.
- Down payment, closing costs, and reserves are tested as separate buckets, so the same dollars rarely cover all three.
- Ask each lender up front which documents prove ownership and source, and whether any seasoning applies.
What the Lender Is Really Asking
Hard money is asset-based lending. The lender cares most about the property, the plan, and the exit. But it also wants to see that you have money in the deal.
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.
That money is your equity in the project. It tells the lender you lose something if the plan fails.
When your LLC is the borrower, the question gets one step more complicated. The entity may hold the cash. Yet the lender usually wants a guarantor, a real person, standing behind the loan. So underwriting asks two things:
1. Whose money is it? That means the guarantor’s ownership and access.
2. Is the trail clean? That means where the balance came from, especially any big recent deposit.
No federal rule sets these standards for business-purpose hard money. Each lender writes its own guidelines. That is why one investor says nobody checked and another says the file stalled over a bank statement. Both can be true.
How Much of the Down Payment Is Actually Yours?
First, know what the down payment even is. Hard money leverage is usually measured against project cost, not just purchase price. Programs in this space vary by lender, property, and experience, but the pattern looks like this:
- Fix-and-flip: up to 93% of project cost with 5+ completed projects, up to 90% of project cost with 2+, and 85% with fewer than 2. Every tier is capped at 75% of after-repair value.
- Bridge purchase without rehab: up to 80% of the purchase price.
- Cash-out and rate/term refinance: up to 65% of value.
The top tier is reserved for experienced investors. There is no true 100% purchase program. The rehab budget can fund in draws against completed work, but that is a budget item, not purchase leverage.
So the gap between the loan and the cost is your cash in the deal. A newer investor carries a bigger share. An experienced one carries less. Either way, the lender needs to accept that your cash is real, yours, and documented.
How Underwriting Treats LLC Money, Step by Step
Here is the typical sequence. Details shift from lender to lender.
Step 1: Sort the money into buckets. Down payment, closing costs, and reserves are tested separately. Draining a business account for the down payment can leave your reserves short. A file can stall for exactly that reason. Plan the three buckets before you move anything.
Step 2: Collect statements. Expect to provide recent bank or investment statements covering the account that will fund the deal. Lenders differ here. A few ask for little beyond a statement showing cash to close. Others want more history. Ask early, because the answer changes how you prepare.
Step 3: Prove ownership and access. The underwriter asks whether you own the account, or what share of the LLC you own. A business account may count only your share. Picture an LLC with two equal members and one guarantor. The lender may credit only the guarantor’s portion of the balance, not the whole thing. Operating agreements and formation documents often serve as proof of ownership. Some lenders also ask for a CPA letter, but the lender, not the CPA, decides what counts.
Step 4: Review large deposits. Underwriters look for jumps. An unexplained jump in a balance draws a request for the source. A paycheck-sized pattern is routine. A single lump that appears days before application is not.
Step 5: Check whether the money is borrowed. Borrowed funds are often accepted for the down payment and closing costs with documentation. They are commonly excluded from reserves. Some lenders restrict or refuse borrowed down payment money. So disclose it and ask rather than hoping it goes unnoticed.
Step 6: Move the funds as instructed. Whether the money is sent from the LLC or from your personal account depends on the lender’s instructions. Ask before you transfer personal funds you need for the down payment, closing, or reserves. Final transfer records may be requested.
Five Kinds of LLC Money and How They Usually Look
This table shows typical treatment. It is a pattern, not a rule, and each lender decides for itself.
| Source of cash | Usual view | What to document |
|---|---|---|
| Operating revenue in LLC account | Often counts, to your ownership share | Statements, operating agreement |
| Member capital contribution | Usually reads as owned equity | Transfer record, agreement |
| Member loan to the LLC | Depends on repayment terms | Loan note, source of the loan |
| Loan or credit line taken by LLC | Treated as borrowed money | Loan terms, disclosure to lender |
| Guarantor’s personal funds | Often the cleanest source | Personal statements |
The pattern is simple. Money you own and can trace is easiest to count. Money someone else can claim is hardest.
Contribution Versus Loan: How the Lender Reads Each
A capital contribution means you put your own money into the LLC as an owner. A member loan means you lend your own money to the LLC, with an expectation of repayment.
From an underwriter’s view, a contribution looks like equity. A member loan can look like debt sitting on the entity, even though the money began as yours. Lenders handle this differently, so the paper trail matters. A clean operating agreement, a dated transfer, and a short written explanation make either version easier to review.
Tax treatment can depend on how the funds are used and how the property is held. Investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
Timing matters as much as labeling. If you contribute cash to the LLC the week before you apply, the deposit stands out. If the money moved into the LLC well before you started shopping, there is less to explain. Move money early, not at the last minute.
Where the General Rule Breaks
The basic rule is that owned, traced, accessible money counts. These edge cases bend it.
Partial ownership. A tax form that allocates income to you as a partner does not automatically prove you control the same share of the bank balance. Lenders often want to see actual access, not just a percentage on paper.
Multi-member LLCs. When several members hold cash in one account, the lender may credit only the guarantor’s share. If other members also contribute, show who put in what, and keep the contribution record proportional to the operating agreement.
Borrowed LLC money. A profitable LLC may be able to borrow, and that money could be used toward the down payment. Whether the lender accepts it depends on the lender. Treat it as borrowed, disclose it, and do not count on it for reserves.
Cash-out proceeds moved between entities. Proceeds from a cash-out refinance in one entity can flow to another as a capital contribution. That is a documented transfer with a clear source, which is what the underwriter wants. It still has to be recorded properly.
No business account at all. A separate business account is generally not required to buy in an LLC, subject to lender program eligibility. Many investors use personal funds, provided the source is documented and the lender’s instructions are followed. Keeping business and personal money separate is still good practice for liability reasons.
Gift funds. Treatment varies widely and many lenders restrict them on investment property. Do not assume a gift counts.
Funds that were recently turned over. Some investors recycle cash by refinancing and pulling cash out repeatedly to fund the next project. That can work, but each cycle leaves a trail the next lender will read. Plan for the questions.
Seasoning Versus Source
These two ideas get mixed up, and they are different.
Seasoning is how long money has sat in an account. Source is where the money came from. A lender can care about one, both, or neither.
Conventional mortgage lending has a habit of wanting funds to sit for a period. Portfolio-style lenders, which lend their own money, may skip seasoning and ask only for the source. Hard money sits in that second camp more often, but not always. Some lenders want nothing beyond a statement showing cash to close. Others trace deposits.
The practical move is to ask two direct questions: does any seasoning apply, and what do you need to see to confirm the source? You can fix a paperwork gap before submission. You cannot fix it after the file is stuck.
Down Payment, Cash to Close, and Reserves
Cash to close is bigger than the down payment. It adds closing costs, and sometimes prepaid items and fees. Reserves, where required, sit on top of that.
This is where LLC accounts cause trouble. Say a balance looks large. You assign it to the down payment. Then the lender wants personal liquidity left over after closing, and there is none. The deal stalls even though the project is strong.
The fix is to count each dollar once. Add up the down payment, the closing costs, and any reserve requirement. Then compare that total with the verified balance in each account. Anything that cannot be traced or accessed drops out of the math. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
If the loan is a bridge purchase, you still need the cash share on top of the loan. If it is a cash-out or rate/term refinance, the lender is lending against value, so the “down payment” question becomes an equity question. Either way, the sequence of documents is the same.
Common Mistakes That Stall Files
- Moving money at the last minute. A large new deposit invites a source request.
- Assuming the whole LLC balance counts. Your share may be all the lender credits.
- Counting the same cash twice. Down payment and reserves are separate tests.
- Hiding borrowed money. Disclose it. Silence causes bigger problems than a restricted source.
- Assuming a CPA letter settles it. It supports the file, but the lender decides.
- Skipping the question about seasoning. Lenders differ, so ask each one.
Another common slip is assuming down-payment help exists for investors. It generally does not. Business-purpose investors fund their own equity.
A Clean Pre-Application Sequence
1. Decide which account, personal or LLC, will fund the down payment.
2. Gather the operating agreement and formation documents that show your ownership.
3. Pull recent statements for every account you plan to use.
4. Mark any large or unusual deposit and write a short explanation with backup.
5. Set aside reserves separately from the down payment.
6. Confirm with the lender how it wants funds moved, and whether seasoning applies.
7. Keep the final transfer records.
Do this before submitting the file. It turns an open-ended underwriting question into a short checklist.
Key Terms Defined
Down payment: the cash share you put into a purchase, which is the gap between the loan and the cost.
Loan-to-cost: the loan amount measured against total project cost, including purchase and rehab.
Capital contribution: money an LLC member puts into the entity as an owner.
Member loan: money a member lends to the LLC with an expectation of repayment.
Source of funds: the origin of the money, shown through statements and records.
Seasoning: how long funds have sat in an account before use.
Reserves: cash held after closing as a cushion, tested separately from the down payment.
Guarantor: the person who personally stands behind the LLC’s loan.
How Agency Rules Compare
Agency mortgage rules are not the standard for hard money, but they show the underlying logic. The Fannie Mae Selling Guide says unverified funds are not acceptable for the down payment, closing costs, or financial reserves. Business assets may be acceptable when the borrower is listed as an account owner. Those rules cover agency loans, not hard money. The shared idea is ownership plus verification.
Where the Loan Goes Next
Many investors refinance out of hard money into long-term rental financing once the property is stabilized, and Lendmire brokers that path. A refinance can raise its own seasoning and source questions, so keep your records tidy from the start. Lendmire’s complete DSCR loans guide explains how that long-term step works.
If your down payment cash sits in a company account rather than an LLC, Lendmire’s piece How a Hard Money Lender Counts Business Cash as Down Payment covers that case. If part of your cash comes from equity in another property, see Lendmire’s piece How a Hard Money Lender Counts Equity as a Flip Down Payment.
Not Legal or Tax Advice
This article is general information, not legal or tax advice. Entity structure, ownership, and the use of borrowed funds raise questions that depend on your facts. Consult a qualified attorney or CPA about your own situation.
Your 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. As a broker, Lendmire arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. Programs and eligibility vary by lender, property, and experience.
Frequently Asked Questions
Can the money in my LLC’s bank account count as my down payment?
Often yes, to the extent it is yours and you can document it. The lender looks at your ownership share and your access to the funds. If you own only part of the LLC, only your portion may be credited. Expect to provide statements and ownership documents.
Do I have to move personal money into the LLC first?
Not necessarily. Many lenders accept personal funds for the down payment, with a clear source, and a business account is generally not required. Ask the lender how it wants the money moved before you transfer anything. If you do contribute to the LLC, do it early and keep the transfer record.
Can the same cash cover both my down payment and reserves?
No, not usually. Reserves are tested separately, and cash used to fund the purchase cannot also count as post-closing cushion. A file can stall when an LLC balance was assigned to the down payment and nothing was left. Add up each requirement, then compare it with verified balances.
Can my LLC borrow the money for the down payment?
It depends on the lender. Borrowed funds are often accepted for a down payment with documentation, but they are commonly excluded from reserves, and some lenders restrict them. Disclose the loan and ask up front. Hiding it is the worst option.
Does seasoning apply to hard money down payments?
It varies. Some portfolio-style lenders ask only for the source and skip seasoning. Others want some history on the balance. Ask each lender two questions: does seasoning apply, and what documents prove source.
About Lendmire
Lendmire (NMLS# 2371349), a non-QM mortgage broker serving investors in 41 markets including Washington, D.C., helps structure DSCR scenarios commonly evaluated around a property’s rental income rather than personal income paperwork, subject to lender guidelines. A Scotsman Guide Top Mortgage Workplace in 2025 and 2026, Lendmire places loans through wholesale investor lenders and is not a direct lender.
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References
1. Fannie Mae Selling Guide, B3-4.2-02 Depository Accounts
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 a Hard Money Lender Sets the Down Payment on a Condo Bridge Loan · How a Bank Statement Lender Counts a Portfolio Hard Money Payoff · How a Hard Money Lender Counts Equity as a Flip Down Payment
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.