The Quick Read: A hard money lender does not pick a down payment percentage. It runs the loan through two tests, one against your cost and one against the finished value, and your cash is whatever the lower test leaves uncovered. Figures vary by lender, property, and experience.
- On a purchase with no rehab, the network’s bridge loans run up to 80% of the purchase price.
- On a flip, advances run 85%, 90%, or 93% of project cost by experience tier, and every tier is capped at 75% of after-repair value.
- Rehab money funds in draws, so it is not cash at closing.
- Points, fees, and carrying costs come on top of the down payment.
Why Do Lenders Make You Bring Cash at All?
Hard money is asset-based lending. The lender is betting mostly on the property, not on your paycheck.
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.
Your cash is the lender’s cushion. If the deal goes bad, the lender sells the property and absorbs selling costs and price drops. A borrower with real money in the deal also has a reason to finish the project.
So the down payment is not a fee or a rule of thumb. It is the gap between what the property supports and what the deal costs.
Key Terms Defined
- Loan-to-cost (LTC): the share of total project cost the lender funds. Project cost is the purchase price plus the rehab budget.
- As-is value: what the property is worth today, before any work.
- Holdback and draws: the rehab money the lender holds back and releases in stages as inspected work is finished.
- Bridge loan: a short-term loan on a purchase where little or no rehab is planned. It is sized on price or as-is value.
The Sizing Sequence, Step by Step
Underwriting follows the same order on almost every file. Once you know the order, you can predict your own number.
1. Pick the cost base. On a pure purchase, it is the contract price or as-is value. On a flip, it is the purchase price plus the rehab budget.
2. Apply the advance percentage. The lender multiplies that base by a percentage tied to your experience. Across the network, flips run 85% of project cost with fewer than two completed projects, 90% at two or more, and 93% at five or more. Bridge purchases without rehab run up to 80% of purchase price.
3. Apply the value cap. On a flip, the total loan also cannot exceed 75% of ARV. This test is independent of the first one.
4. Take the lower number. Whichever test produces the smaller loan wins.
5. Subtract. Cost minus the loan is the gap you fund. That gap is your down payment.
6. Add the extras. Points, closing costs, insurance, and legal fees come on top. They are part of cash to close, but they are not part of the down payment.
Some lenders also size off the lower of the contract price or the appraised value, not price alone. Overpay against the appraisal, and your cash goes up.
Worked Example: A Purchase With No Rehab
Treat these numbers as an index, not dollars. Say the purchase price is 100.
A bridge loan on a purchase with no rehab runs up to 80% of purchase price. The loan is 80, and your down payment is 20, or 20% of the price. Closing costs and fees come on top.
Now say the appraisal comes in at 90. A lender that sizes off the lower of price or value applies 80% to 90 and gets a loan of 72. Your down payment jumps to 28, or 28% of the price. You paid 100 for an asset the lender values at 90, and the lender will not fund the difference.
That is the quiet reason appraisal risk matters on purchase-only deals. The percentage on the term sheet stayed the same, but the base moved.
Worked Example: A Purchase Plus Rehab
Again, these are index numbers. Purchase price is 100 and the rehab budget is 30, so project cost is 130. Assume the borrower has two or more completed projects, so the cost tier is 90% of project cost.
Deal A, strong margin. ARV is 160.
- Cost test: 90% of 130 is 117.
- Value test: 75% of 160 is 120.
- Lower number: 117. The cost test binds.
- Gap: 130 minus 117 is 13, or 10% of project cost.
Deal B, thinner margin. ARV is 150.
- Cost test: 117, as before.
- Value test: 75% of 150 is 112.5.
- Lower number: 112.5. The value cap binds.
- Gap: 130 minus 112.5 is 17.5.
Deal C, thin margin. ARV is 140.
- Cost test: 117.
- Value test: 75% of 140 is 105.
- Lower number: 105. The value cap binds hard.
- Gap: 130 minus 105 is 25.
The lender, the experience tier, and the budget did not change across these three deals. Only ARV changed, and the cash required nearly doubled. This is why two investors with the same term sheet can bring very different amounts to the table.
Four Deals Side by Side
| Scenario | Which test binds | Effect on your cash |
|---|---|---|
| Strong ARV, normal budget | Cost test | Lowest gap for your tier |
| Thin ARV, same budget | Value cap (75% of ARV) | Gap grows |
| Low appraisal on a purchase | Lower of price or value | Gap grows by the shortfall |
| Buy well below value | Cost test | Full tier percentage applies |
The cleanest way to reach the full tier percentage is to buy well. A deal with real margin between cost and ARV lets the cost test bind, and that is the more generous of the two tests.
What Moves the Number?
Experience moves it most. The top 93% tier is reserved for experienced investors with at least five completed projects, and that is a documented count. First-time investors qualify at the lower tiers, so they put in more.
Credit plays a smaller role. The network’s floor is a 620 score, with added conditions below 660. Because the loan is asset-based, credit rarely changes the percentage the way experience does. It can still decide whether a file gets reviewed at all.
Rehab scope matters when the budget is large next to the price. A heavy rehab on a cheap property pushes total cost toward the ARV cap, and the value test starts to bind. Property type and condition matter too. Programs here cover non-owner-occupied residential property, one to four units.
Every figure in this section varies by lender, property, and experience, and none is a commitment to lend.
What Does Cash to Close Actually Include?
Think of it as a stack:
- The down payment, which is the gap from the sizing sequence.
- Points, lender fees, and closing costs.
- Insurance and legal costs.
- Interest carry, since these loans are interest-only and you pay as you go.
- Rehab costs you front before a draw reimburses you.
The rehab piece trips up newer borrowers. Rehab can fund up to 100% of the documented budget, but it funds in draws against completed work. That 100% is a rehab-budget figure, not a purchase LTV. A contractor who wants a deposit on day one is paid from your cash until the first inspection clears.
Cost overruns are also yours. The holdback covers the budget you documented at closing. If the work runs over, you cover the difference.
Where the General Rule Breaks
Lopsided rehab. When the rehab budget exceeds the purchase price, the value cap usually takes over. Expect more cash.
Bridge versus flip. A bridge loan is sized on price or as-is value and usually funds no rehab. A flip is sized on cost and capped by ARV. If you tell a lender the wrong story, the structure will not fit the deal.
The 100% financing pitch. There is no true 100% purchase program in the network. When you hear that phrase, it usually means 100% of the rehab budget in draws, or full cost financing on a deal where the ARV cap sits above cost. Ask which base the percentage applies to. A quoted 90% on cost and 90% on value are very different loans.
Seller credits and earnest money. Whether a credit counts toward your contribution varies by lender. Ask before you rely on one, because a lender that treats a credit as a price reduction will shrink the loan with it.
Refinances. Cash-out and rate-term refinances run differently, up to 65% of value in the network.
Exit risk. Many hard money loans are paid off by a refinance. If the exit appraisal lands low, the takeout loan shrinks and you bring cash to close it. Size your cash with that in mind.
What the Decision Looks Like in Practice
Start with the deal, not the percentage. Before you ask any lender what you can borrow, work out four things:
1. The contract price and a realistic as-is value.
2. A line-item rehab budget a lender can verify.
3. A conservative ARV from comparable sales.
4. Your completed-project count, since that picks your tier.
Then run both tests yourself. Take 75% of ARV, take your tier percentage of project cost, and use the lower number. Subtract it from cost and add fees and carry. That total is the cash you should have in the bank, plus a cushion for overruns.
Loan amounts run up to $5,000,000 in the network, with larger loans by exception. Terms run 6 to 18 months, interest-only, with no prepayment penalty. There are no multi-year options on the current program. Investors who need a longer runway typically refinance into long-term rental financing. Lendmire brokers that path, moving stabilized properties into DSCR loans, and the complete DSCR loans guide explains how that second loan is sized.
Tax treatment varies; consult a qualified professional.
For deeper background on the mechanics discussed here, see CFPB: Regulations.
Frequently Asked Questions
Is a down payment always required on a hard money purchase?
In practice, yes. The network has no true 100% purchase program. A deal can look fully financed when the rehab is funded in draws and the cost test binds, but the purchase side still carries borrower cash. Closing costs and fees are paid by you either way.
Is the down payment based on the purchase price or the ARV?
Both matter, and the lower result wins. The cost test uses your price and rehab budget. The ARV test caps the total loan at 75% of after-repair value on a flip. A bridge purchase without rehab is sized on purchase price, up to 80%.
Can the down payment change after I sign a contract?
Yes. A low appraisal, a larger rehab budget, or a lower ARV estimate can shift the base or trigger the value cap. The percentage on your term sheet stays the same, but your cash changes with it. Lock down the appraisal and scope early.
How does experience change what I put down?
It changes the tier. Fewer than two completed projects sits at 85% of project cost, two or more at 90%, and five or more at 93%. Each tier stays under the 75% ARV cap.
Is the down payment all the cash I need?
No. Points, fees, insurance, interest carry, and rehab costs you front before draws all add up. Build the full stack before you commit to a deal.
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. Lendmire arranges these loans as a broker across 41 markets, including Washington, D.C., and every file is reviewed by the lender individually.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage focused on DSCR investor financing, helping arrange programs through wholesale and investor-lending channels in 41 markets, including Washington, D.C. DSCR loans are evaluated by the lender on property cash flow rather than personal income, subject to lender guidelines, supporting LLC closings and accommodating investors with four or more financed properties. Scotsman Guide Top Mortgage Workplace in both 2025 and 2026.
Many investors treat hard money as the acquisition tool and plan the exit up front – 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: How to Budget Down Payment and Rehab Cash on a Hard Money Flip · How a Hard Money Lender Counts a Seller-Financed Down Payment · How a Hard Money Lender Sizes the Maximum Term for a Flip
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.