The Quick Read: A flip loan is sized by two tests at once, loan-to-cost and a cap on after-repair value (ARV), and the lower result sets your loan. Across the programs we place files with, you raise the cost test with documented completed projects, and you stay under the ARV cap with a lower price, a tighter scope, and comps that hold up. Cash, a bigger net worth, or a pleasant personality will not lift the cap.
- Loan-to-cost tiers typically run 93% of project cost at 5+ completed projects, 90% at 2+, and 85% with fewer than 2.
- Every tier is capped at 75% of ARV, so the ARV cap is often the real ceiling.
- Rehab money is released in draws against completed work, not handed over at closing.
- Cash to close is the gap between cost and loan, plus fees, interest carry, and reserves.
- All figures vary by lender, property, and experience, and nothing here is a commitment to lend.
Key Terms Defined
After-repair value (ARV): what the house should be worth once the renovation is finished, usually supported by comparable sales and an appraisal.
Loan-to-cost (LTC): the loan as a share of purchase price plus rehab budget. Hard money lenders size flips on this number.
Hard money loan: a short-term, asset-based loan from a private or non-bank lender, secured by the property.
Draw: a release of rehab funds after the lender confirms a phase of work is done.
Seasoning of experience: a plain way to say the number of completed projects you can document. More projects move you into a higher leverage tier.
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.
How Does a Lender Decide How Much You Can Borrow?
The lender runs two tests and uses the lower result. The first test is loan-to-cost: a percentage of your purchase price plus rehab budget. The second is a ceiling tied to ARV. Whichever number is smaller becomes your maximum loan.
Hard money is asset-based. The lender is lending against a house and a plan, so the sizing follows the project. That matches what we see. There is no true 100% purchase program, and any pitch that sounds like one is describing something narrower.
Here is the tier structure we see across the wholesale network for a single-family flip:
| Experience | Loan-to-cost | Value cap |
|---|---|---|
| 5+ completed projects | Up to 93% of project cost | 75% of ARV |
| 2+ completed projects | Up to 90% of project cost | 75% of ARV |
| Fewer than 2 projects | Up to 85% of project cost | 75% of ARV |
Terms are typically 6 to 18 months, interest-only, with no prepayment penalty. Loan amounts run up to $5,000,000 on most files, and smaller balances vary by lender. Collateral is non-owner-occupied residential property of 1 to 4 units, so a single-family flip fits cleanly.
Which Test Is Binding on Your Deal?
The ARV cap binds whenever your total project cost is high compared with ARV. At the top tier, the cap takes over once cost passes roughly 81% of ARV. At the middle tier, that point is about 83%. At the lowest tier, it is about 88%.
Run the arithmetic yourself with percentages of ARV. These are modeled scenarios, not market data.
- Thin margin. Project cost equals 85% of ARV. At the 90% cost tier, the cost test says 76.5% of ARV. That is above the 75% cap, so the cap wins. The loan is 75% of ARV, and you fund the remaining 10% of ARV plus fees and reserves.
- Better purchase. Project cost equals 75% of ARV. At the 90% cost tier, the loan is 67.5% of ARV. Now the cost test governs, and you fund 7.5% of ARV out of pocket.
- Experienced and well bought. Project cost equals 70% of ARV. At the 93% tier, the loan is about 65% of ARV. Your out-of-pocket share of the project falls to roughly 5% of ARV.
Look at what the first scenario teaches. An experienced investor in the middle tier with a thin margin still hits the 75% cap. Experience raises the cost percentage. It does not remove the ceiling. For that reason, the most useful question before you make an offer is not “which tier am I in?” It is “where does my cost land against ARV?”
What Actually Moves the Number?
Five levers move your loan size, and they are not equal. Documented completed projects raise the cost tier. A defensible ARV, a tighter scope, and a better purchase price keep you under the cap. Liquidity does not raise the loan, but it covers what the loan leaves out.
| Lever | What it moves | Beats the ARV cap? |
|---|---|---|
| Completed projects | Cost tier (85%, 90%, 93%) | No |
| Lower purchase price | Cost relative to ARV | Yes, indirectly |
| Tighter, line-item scope | Cost relative to ARV | Yes, indirectly |
| Strong comps and appraisal | Supported ARV | Raises the cap itself |
| Cash and reserves | Your ability to close and finish | No |
The only levers that actually move the ceiling are the ones that change the ratio of cost to ARV or the ARV itself. That is the point most investors miss when they chase a higher tier. A bigger percentage of a cost that already sits above the cap changes nothing.
How Do You Build ARV Evidence a Lender Will Accept?
Lenders validate ARV with an appraisal, and a low appraisal shrinks the loan directly. Your job is to hand them a number that survives that review. Pick comparable sales of renovated homes, match your finish level to them, and tie your scope to what those buyers paid for.
A working checklist:
- Use recent sales of fully renovated, similar single-family homes close to the subject.
- Match bedrooms, bathrooms, square footage, and finish level, not just the neighborhood.
- Show that your scope reaches the same finish as the comps, with no gaps.
- Be conservative. A rosy ARV that comes in low at appraisal leaves you scrambling for cash.
- Keep the contract, scope of work, contractor bids, and timeline organized with the comps.
A renovation may support a higher appraised value, depending on comps and underwriter review. It never adds a fixed percentage on its own. Treat your ARV as a claim you must prove, not a figure you get to choose.
The old 70% rule is a purchase screen, not a lending limit. A market source’s explainer gives the formula as ARV times 0.70, minus estimated repairs. Many flippers use it to decide what to offer. Lenders do not use it to decide what to lend, and it is only a rule of thumb. Local markets and house types push the right percentage up or down.
What Do Completed Projects Actually Do?
Completed projects lift your loan-to-cost tier, and that is all they do. You move from 85% of project cost to 90% at two documented projects, and to 93% at five. The jump matters most when your deal sits well under the ARV cap. It does nothing when the cap already binds.
Document each project cleanly: purchase, rehab, sale or refinance, and dates. A clean track record also helps you ask for better terms on the next deal. Some lenders in the network will let an experienced co-borrower or guarantor support the experience tier. That is lender-specific. Confirm it before you build a plan around it.
First-time flippers are not shut out. Credit minimums start around 620 across the network, with additional conditions below 660, and first-timers qualify at the lowest leverage tier. Hard money is still underwritten on the property, the plan, and the exit, but your credit is checked too. Lenders look at bankruptcies, foreclosures, and collections, not just the house.
The Real Cash-to-Close Stack
Your cash need is the difference between total project cost and the loan, plus everything the loan does not fund. Borrowing the maximum on paper does not always mean writing a small check. Several items sit outside the loan amount.
- The cost gap. The share of purchase and rehab the loan does not cover.
- Fees and closing costs. These vary by lender and file.
- Interest carry. The loan is interest-only, and you pay during the hold.
- Reserves. Lenders want proof you can finish if something goes sideways.
- Contingency. Renovations run over, and your own cushion belongs in the plan.
- The draw gap. This one surprises people.
Rehab funds release in draws against completed work, and up to 100% of the documented rehab budget can fund that way. A draw is a reimbursement for work done. On many deals you pay early costs yourself, then get reimbursed after inspection. Plan for that float. A flip can be fully funded on paper and still strain your bank account in month two.
A “no money down” claim almost never means zero cash out of pocket. It usually means purchase and rehab are funded up to the cap, and you cover the overage, fees, and reserves. Tax treatment varies; consult a qualified professional.
Where the Rule Breaks: Edge Cases
Four situations bend the general rule.
Experienced but thin margin. Covered above. The top tier does not override the 75% cap.
Bridge purchase with no rehab. Without a renovation budget, the structure is different. Bridge purchases typically run up to 80% of purchase price. Cash-out or rate-and-term refinances run up to 65% of value. Those percentages are a different product from a flip, so do not mix them with the cost tiers.
Pledging other property. Flip loans are business-purpose loans on non-owner-occupied investment property. Using your home to borrow more is not part of how these programs work. Because the loan is business-purpose, it is treated differently from a standard owner-occupied mortgage, as the FDIC’s compliance manual describes when it explains how a loan’s primary purpose is judged.
Partners and gap capital. Some investors bring in an equity partner or second-position money. Those are alternatives to the first loan, not ways to raise it. They cost you a share of profit or added expense. Weigh that before you treat them as free leverage.
When More Leverage Is Not the Answer
Sometimes the right move is to fix the deal, not the loan. If the cap binds, you have three real options. Negotiate the price down. Trim or re-phase the scope. Or pass.
Run the miss case before you commit. When total cost sits near 85% of ARV, a 10% miss on sale price can erase your profit. Selling costs and holding costs come out of the buffer between cost and ARV. They are not profit you get to keep. If the only way a deal works is a perfect ARV and the maximum loan, the deal is telling you something.
Think about the exit too. For many investors, a flip loan is the front end of a longer hold. Many refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. A DSCR cash-out on a standard rental tops out around 75% of appraised value. The takeout is sized on appraised value. If you borrowed to the limit on the bridge and the appraisal comes in under your ARV, the exit can strand you. The complete DSCR loans guide explains how that takeout is underwritten, including the coverage test that compares rent to the full monthly payment.
A Short Order of Operations
1. Price the deal against ARV first, using the 70% screen only as a starting point.
2. Build a line-item scope and get contractor bids.
3. Pull renovated-sale comps and match your finish level to them.
4. Check which test binds: your cost tier or the 75% ARV cap.
5. Add fees, interest carry, reserves, and contingency to your cash plan.
6. Map the exit, whether a sale or a DSCR refinance, before you borrow the maximum.
Frequently Asked Questions
Can I finance 100% of a flip?
No true 100% purchase program exists. The loan funds a share of project cost, up to 93% at the top experience tier, and never more than 75% of ARV. Up to 100% of the documented rehab budget can be released in draws, but that is a rehab figure, not a purchase loan-to-value. You still bring cash for the gap, fees, and reserves.
Does my experience or net worth raise the loan past the ARV cap?
No. Completed projects raise your loan-to-cost tier. Net worth and liquidity help you qualify and cover costs. The 75% ARV cap applies at every tier, so only a lower cost or a higher supported ARV changes it. Programs vary by lender, property, and experience.
Can a first-time flipper borrow more?
A first-timer typically lands in the 85% of project cost tier. A 620 credit score is the floor across parts of the network, with additional conditions below 660. Partnering with an experienced guarantor may help on some files. That is lender-specific, so confirm it before you rely on it.
What happens if the appraisal comes in low?
The loan shrinks, because the ARV cap is applied to the appraised figure. You then fund the larger gap yourself or renegotiate the deal. Conservative comps and a realistic scope protect you from this outcome.
How do draws work?
The lender holds the rehab portion and releases it in phases after verified work. You often front early costs and get reimbursed. Plan your cash for that timing gap.
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.
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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References
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Is a Hard Money Fix-and-Flip Loan Worth It on a Single-Family Home? · Is There a Limit on a Hard Money Fix-and-Flip Loan? · Does a Hard Money Fix-and-Flip Loan Need Full Documentation?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.