The Quick Read: Lenders run two tests on the deal, loan-to-cost and a cap on after-repair value, then lend the lower result, so the loan follows the property and the plan rather than your income, while your count of documented completed projects decides which cost tier you start in. First-timers sit in the lowest tier. The gap between the loan and your total project cost is cash you bring, and that is before fees, interest carry, and reserves.
- Loan-to-cost means the loan as a percentage of purchase price plus rehab budget. Pricing and available terms vary by lender, borrower profile, property type, and full underwriting review.
- After-repair value (ARV) is what the finished property should sell for. Every cost tier is capped at 75% of ARV, and the lower of the two results is the loan.
- A bridge purchase with no rehab typically runs up to 80% of purchase price.
- Rehab money usually arrives in draws as work is completed, so you front contractor costs before you are reimbursed.
What Is a Bridge Loan, and Is It the Same as Hard Money?
They overlap, but they describe different things. A bridge loan is a function: short-term money that carries you from one point to another, such as from purchase to sale or to a longer-term refinance. Corporate Finance Institute describes it as short-term, collateral-backed financing repaid by permanent financing. Hard money is a source: a private lender that lends against the property rather than your paycheck, per Corporate Finance Institute’s hard money overview.
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.
So an investor bridge loan from a hard money lender is one product with two names. Be careful with the homeowner version. A move-up bridge helps someone carry a current house while buying the next one. This article covers the investor kind only: non-owner-occupied, 1-4 unit property, business purpose.
On the programs we place, terms run 6 to 18 months, interest-only, with no prepayment penalty. Loan sizes run up to $5,000,000, larger by exception. Everything here varies by lender, property, and experience, and none of it is a commitment to lend.
Key Terms Defined
Loan-to-cost (LTC): the loan divided by total project cost, meaning purchase price plus rehab budget.
After-repair value (ARV): the estimated market value once the planned work is finished, usually supported by recent comparable sales.
Draw: a release of rehab money after a stage of work is completed and checked.
Interest-only: you pay interest during the term and owe the full balance at maturity.
Exit strategy: how you repay the loan, usually by selling the property or refinancing into long-term financing.
Documented completed projects: finished deals you can prove, typically with closing statements. This count sets your cost tier.
The Three Numbers a Lender Looks At First
A lender needs three figures before it can size anything: what you pay, what you will spend on repairs, and what the finished property is worth. Each one feeds a different test, and the tests do different jobs.
| Metric | What it measures | When it governs |
|---|---|---|
| Purchase price | Cash paid for the property | Bridge with no rehab |
| Project cost | Purchase plus rehab budget | Strong-margin deals |
| ARV | Value after the work | Thin-margin deals |
| Current value | As-is value today | Refinances |
ARV is the number most likely to be argued over. It comes from recent comparable sales, and some lenders confirm it with an appraisal or a broker price opinion. A first-timer with no track record gets less benefit of the doubt on it. Bring comps that support both your purchase price and your exit price.
The Sizing Sequence, Step by Step
Here is how a lender works through a file, in order.
1. Submit the deal. You provide the address, price, ARV estimate, rehab budget, and your background.
2. Establish ARV. The lender checks your comps and may order a valuation of its own.
3. Run loan-to-cost. Add purchase price and rehab budget to get project cost. Apply your tier: typically 85% with fewer than two documented completed projects, 90% with two or more, and 93% with five or more.
4. Run the ARV cap. Take 75% of ARV. This cap applies at every tier.
5. Take the lower number. That is the loan, subject to lender guidelines.
6. Split the funds. The purchase portion funds at closing. The rehab portion sits in escrow and is released in draws.
7. Test the exit. The lender underwrites your sale or refinance plan as seriously as the deal itself.
Notice what is missing. Nothing in this sequence asks for your debt-to-income ratio. Underwriting stays asset-based, meaning it looks at the property, the plan, and the exit.
One Deal, Run Both Ways
Dollar figures would only distract here, so this example uses index numbers. Every figure is a percentage of ARV, with ARV set to 100. These are modeled assumptions for a first-time investor in the 85% tier, not market data.
| % of ARV | Strong margin | Thin margin |
|---|---|---|
| Purchase price | 55 | 75 |
| Rehab budget | 15 | 15 |
| Project cost | 70 | 90 |
| 85% of project cost | 59.5 | 76.5 |
| 75% ARV cap | 75 | 75 |
| Loan (lower result) | 59.5 | 75 |
| Test that limits the loan | Cost | ARV cap |
| Your equity gap | 10.5 | 15 |
On the strong-margin deal, the cost test limits the loan. The investor borrows about 59.5% of ARV, well under the cap, and brings the remaining 10.5% of ARV in cash. On the thin-margin deal, the cost test would allow 76.5, but the ARV cap cuts it to 75. The investor brings 15.
Here is the lesson. A good purchase discount raises your loan. Overpaying makes the cap bind, and your cash requirement climbs with it.
From Loan Amount to Cash at Closing
The equity gap is the floor of your cash need, not the total. A first-timer’s real cash requirement is usually well above the gap alone. Several costs sit on top of it:
- Closing costs and lender fees. Whether financed costs count as project cost, or sit on top of the tier, is a lender-by-lender call.
- Interest carry. The loan is interest-only, so you pay or reserve interest every month the project runs.
- Reserves. Lenders want to see liquidity left over after closing.
- Contractor float. Draws reimburse completed work. You usually fund the first stage yourself.
Even a small deal needs meaningful capital to carry it to the finish line. Plan your budget around total cash, not the headline gap.
A related point trips up first-timers. Up to 100% of the documented rehab budget can fund in draws. That is a rehab-budget figure, not a purchase LTV. There is no true 100% purchase program across our network. Some lenders advertise full financing, but those programs are individual to the lender and are still bounded by an ARV cap.
What If the Appraisal Comes In Low?
A low ARV is the most common way a deal’s math changes after you have started. Re-run the strong-margin deal above with ARV 25% lower than you planned. Cost stays at 70, but the new ARV is 75.
| % of original ARV | As planned | ARV 25% lower |
|---|---|---|
| Project cost | 70 | 70 |
| 85% of project cost | 59.5 | 59.5 |
| 75% of the new ARV | 75 | 56.25 |
| Loan (lower result) | 59.5 | 56.25 |
| Your equity gap | 10.5 | 13.75 |
The cap now binds. The loan falls by 3.25 points of the original ARV, and your cash gap grows by the same amount. A deal with a wide margin absorbs a modest ARV miss. A thin-margin deal has no cushion, so build your comps conservatively.
How Experience Changes the Tier
Experience changes the tier, not the method. A veteran runs the same two tests as you. The difference is the percentage in step three. First-timers qualify at the lower leverage tiers, while the top tier is reserved for experienced investors.
Credit also matters. The program has a 620 minimum score, with added conditions below 660. Your score is not the deciding factor, since the asset drives the loan, but lenders commonly pull credit and ask for a personal guarantee. These are business-purpose loans on non-owner-occupied property, so they are reviewed differently from a standard owner-occupied mortgage. The CFPB’s Truth in Lending guide treats credit for investment property as business purpose.
You can strengthen a first-time file in several ways:
- Keep the rehab budget modest relative to the purchase price.
- Use a contractor with written, binding quotes and a clear timeline.
- Bring comps that support both purchase and exit values.
- Show your own cash in the deal.
- Present a credible exit before the lender asks.
Where the General Rule Breaks
A few situations bend the tidy sequence above.
Experience does not override the ARV cap. On a thin-margin deal, even a veteran runs into the 75% ceiling. A higher tier helps only when the cost test is the limiting one.
A big rehab on a first deal draws scrutiny. Lenders get warier when a first-timer’s rehab budget is large relative to purchase price. Expect hard questions about the contractor and the contingency. Longer, heavier projects call for more conservative leverage, and cosmetic flips are expected to run shorter than major rehabs.
A bridge with no rehab is sized differently. With nothing to fund in draws, the lender looks at purchase price. Bridge purchases typically run up to 80% of purchase price. Cash-out and rate-and-term refinances run up to 65% of value.
Closing costs vary. Some lenders count financed costs inside project cost. Others stack them on top of the tier. Ask before you compare two quotes.
Some projects are not available. The program covers non-owner-occupied residential property of 1-4 units. Commercial, industrial, land, and owner-occupied properties are not offered.
How the Exit Gets Tested
Because the loan is short and interest-only, the balance comes due all at once. The lender wants to see how you will repay it. A sale exit depends on your ARV comps. A refinance exit depends on the property qualifying for longer-term financing.
Not every hard money loan is a flip. Many investors use a bridge to buy and stabilize a rental, then refinance out. That takeout uses a different test: rent against the full monthly payment (principal, interest, taxes, insurance, and any HOA dues). This is the debt service coverage ratio (DSCR). Lendmire brokers that path, and the complete DSCR loans guide walks through the rental side. On DSCR files, 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted.
Clearing 1.00 does not mean positive cash flow. Repairs, vacancy, management, utilities, and capital expenses all sit outside the calculation. Size your bridge exit with that in mind.
Before You Apply: A Checklist
Bring these items so a lender can size the file cleanly:
- The address, purchase price, and your ARV estimate with supporting comps
- A line-item rehab budget and binding contractor quotes
- A realistic timeline, with milestones for draws
- Proof of any completed projects
- A personal financial statement and your cash available
- A clear written exit plan
Two common mistakes show up again and again. The first is budgeting only the down payment. The second is trusting an ARV that no comparable sale supports.
Frequently Asked Questions
Can a first-time investor get a hard money bridge loan?
Yes, at the lower leverage tiers. Experience affects the percentage you can borrow, not whether you can apply. The program has a 620 minimum score with added conditions below 660, and approval stays subject to lender guidelines, the property, and the plan.
Does hard money cover 100% of the purchase?
No. Up to 100% of the documented rehab budget can fund in draws, but the purchase portion is limited by your cost tier and the ARV cap. Programs that advertise more are lender-specific and still carry an ARV ceiling.
Which test will limit my loan?
It depends on your margin. On a strong-margin deal, the cost test usually limits the loan. On a thin-margin deal, the 75% ARV cap does. Run both tests before you make an offer.
Do credit and income matter?
Credit matters, and income matters less. Underwriting is asset-based, so the property, plan, and exit drive the decision. Lenders commonly pull credit and ask for a personal guarantee, and a lower score can mean added conditions.
What happens when the term ends?
The balance is due. Terms run 6 to 18 months, interest-only, with no prepayment penalty. Investors repay by selling or by refinancing, and many refinance a stabilized rental into long-term financing.
Next Step
If you are buying, rehabbing or refinancing an investment property 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.
The deals that size well for first-timers share one trait: a purchase price low enough that the cost test, not the ARV cap, sets the loan.
About Lendmire
A non-QM mortgage broker (NMLS# 2371349), Lendmire arranges DSCR financing for real estate investors in 41 markets — 40 states plus Washington, D.C. Because deals are underwritten primarily on property cash flow rather than personal income documentation, the structure suits self-employed buyers and entity-owned portfolios. Lendmire places loans through wholesale investor lenders; it is not a direct lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
The exit plan matters as much as the purchase price on short-term financing – 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: Bridge Loan
2. Corporate Finance Institute: Hard Money Loan
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 First-Time Flipper Can Qualify for a Lower Hard Money Down Payment · Hard Money Fix-and-Flip Loan Limits for a First-Time Investor · Can an Investor Hold Two Hard Money Bridge Loans at Once?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.