The Quick Read: The down payment is not a flat percentage of price. The lender runs two limits, one based on project cost and one based on after-repair value, takes the lower, and the investor funds whatever that loan leaves uncovered, plus fees and reserves.
- Two caps run at once: loan-to-cost and a cap on after-repair value (ARV). The lower one controls.
- On the Lendmire network’s fix-and-flip tiers, leverage is 85%, 90% or 93% of project cost depending on completed projects, always capped at 75% of ARV.
- Up to 100% of the rehab budget funds in draws after completed work, so the investor carries early rehab costs.
- Cash to close also covers fees, title charges and reserves, not just the gap.
- Condos add HOA exposure, such as special assessments, rental caps and investor concentration, that can move ARV and the cash required.
Hard money flip leverage is set by private lenders, and the numbers below are program ranges that vary by lender, property, and experience. Nothing here is a commitment to lend.
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 Does the Lender Want Your Cash at All?
Because the lender’s recovery depends on the property’s resale value. If the loan covered every dollar of cost and the flip stalled, the lender would hold a unit worth less than what it advanced. The investor’s cash is the cushion.
That is the whole logic. Underwriting is asset-based: property, plan, and exit. The down payment is where the lender measures how much risk the borrower shares.
Key Terms Defined
Loan-to-cost (LTC): The loan divided by purchase price plus rehab budget. Nav’s explainer on hard money and 100% financing defines it this way.
After-repair value (ARV): What the unit should be worth once renovated, based on comparable sales of finished units.
Loan-to-ARV: The loan divided by ARV. This is the value-based cap.
Draw: A rehab payment released after inspection of completed work.
Cash to close: The down payment plus fees, title and closing charges, and any required reserves.
The Two-Cap Method, Step by Step
The down payment is a residual. The lender sizes the loan first. Your cash is what is left.
1. Establish project cost. Add the purchase price and the rehab budget.
2. Establish ARV. The lender relies on a broker price opinion or an independent appraisal built on renovated, sold comps. For a condo, those comps should be the same product type in similar buildings.
3. Apply the cost cap. On the Lendmire network’s fix-and-flip program, that is 93% of project cost at five or more completed projects, 90% at two or more, and 85% with fewer than two. Rehab is a part of project cost.
4. Apply the value cap. Every tier is capped at 75% of ARV.
5. Take the lower number. That is the maximum loan.
6. Subtract. Project cost minus the loan is the investor’s equity in the deal.
7. Add the other cash. Origination and lender fees, title and closing costs, and reserves sit on top. They vary by lender.
One point trips up first-timers. A headline of 90% of cost may never be reached. If the ARV cap bites first, the gap is bigger than expected. Nav’s guidance makes the same distinction: 100% financing means 100% of cost, not 100% of value, and the ARV cap still applies. On the Lendmire network there is no true 100% purchase program. The structure that comes closest is rehab funding, where up to 100% of the rehab budget releases in draws against completed work. That is a rehab-budget figure, never a purchase LTV.
A Condo Example
Use modeled inputs, not market data. Say a condo costs 200 units of purchase price, the rehab budget is 40, and ARV is 300 (units are abstract so nothing here reads as a quote). Project cost is 240.
At the 90% cost tier, the cost-based limit is 216. The 75% ARV cap gives 225. The lower number is 216, so the cost cap controls. The investor’s equity is 24, or 10% of project cost, before fees and reserves.
Now thin the margin. Same cost of 240, but ARV only 270. The ARV cap now gives about 202.5, which is lower than 216. The value cap takes over. Equity jumps to about 37.5, roughly 15.6% of project cost, with no change to purchase price or rehab.
| Scenario | Project cost | ARV | Controlling cap | Investor equity |
|---|---|---|---|---|
| Fat margin | 240 | 300 | Cost (90%) | About 10% of cost |
| Thin margin | 240 | 270 | ARV (75%) | About 15.6% of cost |
Both rows are illustrative. The pattern holds: the thinner the spread between cost and ARV, the more likely the value cap sets your cash.
What Changes for a Condo
A condo flip uses the same two caps. The difference is what can push ARV down or the cash up.
Valuation. Condos usually have plenty of similar sold units in the same building or complex, which can make ARV easier to support than a one-off house. That helps the appraisal. It does not change the caps.
HOA documents. Expect to produce the HOA budget, reserve information, bylaws and rental restrictions, and any special-assessment disclosure. Real Estate Skills’ condo-flipping guide names the resale certificate, rental caps and special assessments as the items to audit before buying.
Special assessments. A large assessment lands in your cost basis or on the buyer, and either way it can erase margin. The same guide gives one illustrative case of a $20,000 assessment on a $150,000 unit. That is an anecdote, not a statistic.
Building health. Low reserves, litigation, high delinquency and heavy investor ownership are the usual red flags. They matter at exit as well. Homebuyer.com explains that these factors can trigger a non-warrantable label, which narrows the pool of buyers who can finance the unit. A thinner buyer pool puts pressure on ARV, and ARV is the number that sets your cap.
Rehab limits. Condo work is mostly walls-in. HOA rules can limit exterior doors, windows or plumbing stacks. Budgets run smaller, which shifts more of project cost into the purchase price and can lift the equity you bring.
One distinction matters here. A hard money lender is usually not applying agency warrantability rules to your flip loan. Its concern is whether the unit resells at the ARV.
Everything Else You Pay Besides the Down Payment
Equity in the deal is not the same as cash to close. Plan for each bucket.
| Cash bucket | What it covers |
|---|---|
| Equity gap | Project cost minus the loan |
| Lender fees | Origination and related charges, vary by lender |
| Title and closing | Title, escrow, recording |
| Reserves | Required liquidity, varies by lender and file |
| Early rehab | First contractor phase before draw reimbursement |
| Condo items | HOA transfer or certificate fees, dues carry |
Draws deserve attention. Funds release in stages after inspection, so you pay the first phase of work and get reimbursed after. Working capital beyond the nominal down payment is part of the real number. HOA dues keep running regardless of the season, which adds carry while the unit sits.
How Experience Sets the Number
Experience changes leverage, not just eligibility. On the Lendmire network’s tiers, the top 93% of project cost is reserved for investors with five or more documented completed projects. Two or more earns 90%. Fewer than two sits at 85%. The 75% ARV cap applies to all of them.
A 620 credit score is the minimum, with extra conditions below 660. First-time investors qualify at the lower leverage tiers, subject to lender guidelines. Underwriting stays asset-based, so the property, plan and exit carry most of the weight.
Lenders usually want a track record in documents: settlement statements and a project list. Have them ready.
What If the Value Comes In Low?
A low ARV is a routine event, not a dead deal. Because the value cap controls on thin margins, a lower appraisal raises your cash directly. The options:
- Renegotiate the purchase price with the seller.
- Trim the rehab scope to protect margin.
- Bring more cash to cover the larger gap.
- Walk if the spread no longer supports the flip.
Support the original value with sold, renovated comps in the same building before you accept a markdown. An inflated ARV in your pro forma does not raise the cap once the appraisal lands.
Can You Reduce the Cash You Need?
You can shrink the gap, not erase it. Buying deeper under value helps because it widens the spread between cost and ARV and keeps the cost cap in control. A cash partner can supply equity, which is a separate structure. Expect to document where the cash comes from. This is not a zero-money product.
Pre-Offer Checklist for a Condo Flip
1. Ask the lender whether its percentage is of cost or of value.
2. Request the HOA budget, reserve study, bylaws, rental rules and any special-assessment notice.
3. Pull sold, renovated comps from the same building.
4. Run both caps and see which controls.
5. Add fees, title, reserves and early-rehab cash.
6. Confirm your exit, whether a sale or a refinance.
Many investors refinance out of hard money into long-term DSCR financing once the unit is stabilized, and Lendmire brokers that path. Condo dues, assessments and rental caps all affect that review. The complete DSCR loans guide explains how that refinance is reviewed.
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.
Frequently Asked Questions
Do hard money lenders require a down payment on a condo?
Yes, in practice. On the Lendmire network, fix-and-flip loans cover 85% to 93% of project cost depending on completed projects, capped at 75% of ARV. The rest is your equity, plus fees and reserves. Terms vary by lender, property, and experience.
Is the down payment based on purchase price or total project cost?
Total project cost, which is purchase price plus rehab. The loan is sized against that figure and against ARV, and your cash is the shortfall. Rehab money funds in draws, so you front early work.
Does a non-warrantable condo change the cash I need?
It can, indirectly. The label narrows the exit buyer pool, which can pressure ARV and the value cap. A lower cap means more of your cash goes in.
What if the appraisal comes in low?
The 75% ARV cap then controls and your cash rises. You can renegotiate, cut scope, add cash or pass on the deal.
Are closing costs part of the down payment?
No. Fees, title and closing charges and reserves sit on top of the equity gap.
About Lendmire
Lendmire, NMLS# 2371349, is a non-QM mortgage broker serving real estate investors in 41 markets, including Washington, D.C., through DSCR investor loan programs. Qualification is generally reviewed around the subject property’s rental income, not the borrower’s W-2 history — a practical fit for LLC-titled portfolios and self-employed investors. All scenarios remain subject to lender review and program guidelines. Two consecutive Scotsman Guide Top Mortgage Workplace recognitions (2025, 2026).
Short-term financing tends to work best when the long-term plan is decided early – see refinancing out of a hard money loan with a DSCR loan.
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. Nav: Hard Money Loans and 100% Financing
2. Real Estate Skills: Condo Flipping
3. Homebuyer.com: Non-Warrantable Condominium
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 Sizes an Interest-Only Fix and Flip Loan · National vs Local Hard Money Lender for a Fix-and-Flip Investor · How a Hard Money Lender Sizes a Flip Without Income Documents
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
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.