The Quick Read: A lender sizes the loan first and the down payment second, taking the lower of a cost limit and a value limit and leaving the borrower to fund the gap; a first-time borrower typically starts in the lowest tier, near 85% of project cost and never above 75% of after-repair value. Exact figures vary by lender, property, and experience, and nothing here is a commitment to lend.
- The down payment is whatever the cost or value limit leaves uncovered. It is not a flat percentage chosen up front.
- Experience sets the tier. A first-timer is sized more conservatively, not shut out.
- No true 100% purchase program exists. Rehab money that funds up to 100% arrives in draws against completed work.
- Cash to close runs higher than the down payment alone.
- A bridge purchase with no rehab, and a refinance bridge, each follow their own sizing path.
What a Bridge Loan Is, and Who Sets the Down Payment
A hard money bridge loan is short-term financing secured by the property, and the lender sets the sizing, not a government rule. Corporate Finance Institute describes hard money as property-collateralized, short-term lending from non-bank or private lenders. Terms in the wholesale network typically run 6 to 18 months, interest-only, subject to lender guidelines.
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.
The two labels overlap. Hard money names the kind of lender. A bridge loan names the job, which is bridging two financings until a sale or a takeout loan. When an investor asks for a bridge from a private lender, the file is sized like any other hard money loan.
This article covers business-purpose investor loans on non-owner-occupied 1-4 unit residential property. A bridge against an owner-occupied home draws on that home’s equity. It is a different product.
Key Terms Defined
As-is value: What the property is worth today, before any work, from an appraisal or broker price opinion.
After-repair value (ARV): The estimated value after renovation, built from the as-is value, the planned work, and comparable sales. Wall Street Prep covers the formula.
Loan-to-value (LTV): The loan divided by the property’s value. The borrower’s equity fills the gap between the loan and the price.
Loan-to-cost (LTC): The loan divided by purchase price plus rehab budget.
Draw: A release of rehab funds after the lender confirms completed work.
How Underwriting Sizes the Loan, Step by Step
Underwriting runs in a fixed order, and the down payment falls out at the end.
1. Establish value. The lender orders an appraisal or broker price opinion. On a rehab deal it also gets an ARV, which comes from comparable sales.
2. Test the budget. The lender reviews the scope of work and the rehab budget. An unrealistic budget can stop the file here.
3. Run the cost test. The lender applies the borrower’s tier to total project cost. Across the wholesale network, a first-time investor typically lands at 85% of project cost.
4. Run the value test. Every tier is capped at 75% of ARV. This is a separate limit from the cost test.
5. Take the lower number. The smaller of the two results is the loan. Cost minus loan is the borrower’s equity.
6. Layer on cash that is not financed. Fees, interest carry, reserves, and contractor deposits come on top. Most files also need two consecutive months of bank statements showing the liquid funds.
The quoted percentage is rarely the whole story. A high cost percentage means little when the ARV cap binds first.
Why the First-Time Label Changes the Number
Lenders in the network treat experience as a leverage setting. It rarely decides eligibility. The reasoning is execution risk. A borrower with documented completed projects has shown the ability to finish a rehab and exit the loan, so the lender extends more of the cost.
| Completed projects | Loan-to-cost | Value cap |
|---|---|---|
| Fewer than 2 | 85% of project cost | 75% of ARV |
| 2 or more | 90% of project cost | 75% of ARV |
| 5 or more | 93% of project cost | 75% of ARV |
These tiers reflect Lendmire’s wholesale network guidelines and vary by lender, property, and experience. The top tier is reserved for experienced investors, so a first-timer should plan around the first row.
Credit adds a second filter. A 620 score is the minimum, and scores below 660 carry additional conditions. Underwriting stays asset-based, meaning it looks at the property, the plan, and the exit.
A Worked Example (Illustrative Units, Not Dollars)
Take a first-time borrower and assume a purchase price of 60 units, a rehab budget of 20 units, and an ARV of 100 units. These are modeled assumptions, not market data.
- Project cost is 80 units.
- The 85% cost test gives a loan of 68 units.
- The value cap is 75% of 100, or 75 units.
- The lower number controls, so the loan is 68 units.
- The borrower funds the remaining 12 units.
Because rehab funds in draws, that gap typically shows up on the purchase side at closing.
Now stress the deal. Say the appraisal returns an ARV of 85 units. The value cap falls to 63.75 units, which is below the 68 from the cost test. The loan drops to 63.75, and the borrower’s equity rises to 16.25 units. The lender’s quoted percentage did not change. The appraisal did.
This is why an investor who buys well below finished value needs less cash than one who pays near full price.
Bridge Purchase, Rehab Deal, or Refinance
The sizing path depends on the loan’s purpose.
| Loan type | Sizing basis | Typical ceiling |
|---|---|---|
| Rehab (fix-and-flip) | Project cost, capped by ARV | 85% of cost, 75% of ARV (first-timer) |
| Bridge purchase, no rehab | Purchase price | Up to 80% of price |
| Cash-out or rate/term refinance | Value only | Up to 65% of value |
On a bridge purchase with no rehab, the down payment is the gap to 80% of price. That is a 20% minimum before closing costs. No ARV is involved.
A refinance bridge has no purchase price, so sizing is a percentage of value alone. Refinance sizing is more conservative than purchase sizing. An investor who plans to bridge out of a prior loan should not assume purchase-level leverage.
Where the General Rule Breaks
Five edge cases show up repeatedly in files.
The value cap binds before the cost limit. If the purchase price is not well below ARV, the 75% cap cuts the loan and the down payment rises above what the cost tier suggested.
Rehab at 100% is not 100% financing. Up to 100% of the rehab budget can fund, but only in draws against completed work. It is a budget figure released over time. It says nothing about purchase leverage. This is the main source of confusion about zero-down claims.
Rare 100% structures carry other costs. Some private lenders fund purchase and rehab in full for a borrower who pays only closing costs. These structures tend to charge interest from settlement, hold back little or no rehab money, and price higher. They are the exception, not the norm. Hard money lending is based on LTV, and a true 100% LTV does not exist in this lending, because lenders keep an equity buffer.
Lender type shifts flexibility. Individual private capital sometimes bends on cash down. Institutional capital generally wants the cash in.
Credit below 660 adds conditions. A lower score may mean a larger down payment or added collateral, within the 620 minimum.
Cash Needed Beyond the Down Payment
A first-time borrower should budget for the full ledger, not the equity gap alone.
| Item | Financed? |
|---|---|
| Down payment (cost or value gap) | No |
| Lender and title fees | Typically paid at closing |
| Builder’s-risk insurance | Typically paid by borrower |
| Interest carry during the term | Paid by borrower |
| Contractor’s first deposit | Fronted before the first draw |
| Post-closing reserves | Held in liquid funds |
Reserves vary by lender, leverage, and loan size. The contractor deposit is the item most first-timers miss. Draws reimburse completed work, so the borrower fronts early costs.
What the Investor Decision Looks Like
The deal’s spread controls the number as much as the lender’s quoted percentage does. A tight budget, a well-supported ARV, and a purchase price well below finished value reduce the equity the lender asks for. A fully priced deal can push cash above the typical range.
Three honest levers help a first-timer.
- Tighten the scope. A realistic, documented budget sizes cleaner than an ambitious one.
- Buy a wider spread. The ARV cap then binds less often.
- Bring experience to the file. A partner or sponsor with completed projects can move the tier, subject to lender guidelines.
The exit is underwritten along with the entry. A bridge runs 6 to 18 months, so the lender wants to see a sale or a refinance. Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. The post-rehab property then has to rent at levels that meet the rental-loan floors. Lendmire’s complete DSCR loans guide covers those floors.
Tax treatment varies; consult a qualified professional.
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. Programs change and every file is underwritten individually.
Frequently Asked Questions
Can a first-time investor get a bridge loan with no money down?
Not on a standard program. No true 100% purchase structure exists in the network. Up to 100% of the rehab budget can fund, but only in draws after work is completed. A first-timer typically brings the gap left by the 85% cost tier and the 75% ARV cap.
Is the down payment a percentage of price or of total cost?
It depends on the loan type. On a rehab deal, the loan is sized on total project cost, which is purchase plus rehab, and then capped by ARV. On a bridge purchase with no rehab, it is a percentage of purchase price, up to 80%. On a refinance, it is a percentage of value.
What happens if the appraisal comes in low?
The value cap shrinks, and the loan can fall below what the cost test allowed. The borrower then funds a larger gap. Build a cushion into your cash plan for that case.
Does credit affect the down payment?
Yes, at the margin. The minimum score is 620, and scores below 660 carry additional conditions, which can mean more cash down. Property, plan, and exit still drive the core sizing.
Do closing costs get financed?
Generally not on these loans. Fees, insurance, interest carry, and contractor deposits come from the borrower’s liquid funds, on top of the equity gap.
About Lendmire
Lendmire (NMLS# 2371349) is a DSCR-focused mortgage broker that helps arrange investor financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR eligibility is generally reviewed by the lender around the property’s rental income rather than personal income documentation, subject to lender guidelines — which works for self-employed investors, LLC operators, and portfolios above four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Short-term financing tends to work best when the long-term plan is decided early – see the hard money loan overview.
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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. Corporate Finance Institute: Hard Money Loan
2. Wall Street Prep: After Repair Value (ARV)
3. The Motley Fool: ARV Formula
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Hard Money Bridge vs Private Money Down Payment for an LLC Buyer · Hard Money vs Private Money for a 2-4 Unit Flip: Down Payment · Hard Money After Repair Value Loan Requirements for a Flip
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.