The Quick Read: The loan amount comes from the deal, not your paycheck. The lender compares a percentage of total project cost against a cap on after-repair value, lends the lower of the two, and uses your credit, experience, reserves, and exit plan to set your cost tier and decide whether the deal works forward. Qualification runs on the project’s numbers, subject to lender guidelines, and none of this is a commitment to lend.
- Two tests, lowest wins. Across the wholesale network Lendmire places files with, flip leverage typically runs 85% of project cost with fewer than 2 completed projects, 90% at 2 or more, and 93% at 5 or more. Every tier is capped at 75% of after-repair value. This varies by lender, property, and experience.
- Rehab money arrives in draws. Up to 100% of the rehab budget funds in stages against completed work. That is a rehab-budget figure, not a purchase loan-to-value.
- Credit still counts. A 620 minimum score is typical, with additional conditions below 660.
- You still bring cash. The gap between the loan and total cost, plus fees and holding costs, is yours to fund.
- The loan is short and interest-only. Terms run 6 to 18 months with no prepayment penalty, and the exit is a sale or a refinance.
What Replaces Income Documents?
Five things replace the income file: liquidity, experience, credit, entity structure, and the exit plan. The lender is asking whether the money gets repaid from the property and the plan, not from your salary or traditional personal-income documentation. That is why the loan can work for self-employed investors and for investors whose write-offs leave taxable income low.
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.
Trade press describes the split clearly. Scotsman Guide frames an asset-based lender’s core question as whether the loan gets repaid regardless of what happens to the borrower. A conventional lender asks whether the borrower repays regardless of what happens to the property.
“No income documents” does not mean “no underwriting.” The file still gets reviewed, just on different inputs. Here is how each one touches your number.
| Factor | What the lender checks | Effect on your number |
|---|---|---|
| Experience | Completed projects, documented | Sets your cost tier |
| Credit | Score against the program minimum | Gate; extra conditions below 660 |
| Liquidity | Cash for the gap, fees, and carry | Can shrink or stall the file |
| Entity | LLC or other business-purpose structure | Affects how the loan is papered |
| Exit | Sale or refinance plan | Must support the loan term |
Scotsman Guide’s survey of the hard money space reports that lenders weigh investor experience and deal potential heavily, though a minimum credit score is usually still required. That matches what shows up across the network. The 620 minimum is a gate, and experience does most of the work after it.
Key Terms Defined
- After-repair value (ARV): the estimated value of the property once the planned work is finished, based on comparable sales.
- As-is value: what the property is worth today, before any repairs.
- Loan-to-cost (LTC): the loan as a percentage of project cost, meaning the purchase price plus the rehab budget.
- Loan-to-ARV (LTARV): the loan as a percentage of the after-repair value.
- Holdback: the part of the loan reserved for rehab and not wired at closing.
- Draw: a release of holdback money after a stage of work is finished and inspected.
- Scope of work (SOW): the itemized list of repairs and their budget.
- Liquidity: cash or near-cash you can show for the gap, fees, and holding costs.
The Sizing Sequence, Step by Step
The lender builds the number in a fixed order, and each step can only lower the result. Terms differ by lender, but the shape is consistent.
1. You submit the deal. That means the address, the purchase contract, the scope of work and budget, and entity documents. Lenders commonly also ask for photos, contractor bids, proof of insurance, and a preliminary title report, per the Scotsman Guide survey.
2. The lender orders a valuation. Value comes first. The Scotsman Guide tutorial on hard money loans notes lenders stay conservative on leverage against as-is value and put a conservative ceiling on ARV.
3. The cost test runs. The lender applies your tier percentage to purchase price plus rehab budget.
4. The value test runs. The loan cannot exceed 75% of after-repair value, whatever the cost test says.
5. The lender takes the lower result. Even where the rehab is fully funded, the ARV cap limits the total.
6. The rehab portion becomes a holdback. It funds in draws as work is completed.
7. You fund the gap. Cash to close is total cost minus the loan, plus fees and reserves.
Run both tests before you bid. Most investors only run one.
Worked Examples: Which Test Binds?
Two modeled deals show why the cap that binds changes from deal to deal. Every figure below is a modeled assumption expressed as a percentage of the after-repair value, not market data. Treat the ARV as a fixed reference value, with every other item shown relative to it.
| Item | Deal A | Deal B |
|---|---|---|
| Purchase (points of ARV) | 55 | 65 |
| Rehab (points of ARV) | 15 | 20 |
| Total project cost | 70 | 85 |
| Cost test at 90% (2+ projects) | 63 | 76.5 |
| ARV cap at 75% | 75 | 75 |
| Loan (lower of the two) | 63 | 75 |
| Gap before fees | 7 | 10 |
| Binding test | Cost | ARV cap |
In Deal A, the cost test binds. The ARV cap has room to spare.
Now change the borrower. A first-time flipper at the 85% tier on Deal A sees a loan of 59.5 points, so the gap grows to 10.5 points. On Deal B, 85% of cost is 72.25 points, so the cost test binds and the gap is 12.75 points.
A five-project investor at the 93% tier gets 65.1 points on Deal A. On Deal B, the ARV cap holds the loan to 75 points, so the top tier buys nothing extra there. The top tier is reserved for experienced investors, and the cap decides whether it matters.
This is the practical lesson: experience moves the number only until the ARV cap takes over.
What Happens If the ARV Comes In Low?
A low ARV shrinks the loan and raises your cash requirement, because the 75% cap is applied to the lender’s value, not yours. Take Deal B again, with a lender ARV 10% below the investor’s estimate. The lender’s ARV is now 90% of the original figure.
The cap drops to 67.5 points. The cost test still allows 76.5, so the cap binds. The loan falls from 75 points to 67.5, and the gap against an unchanged cost of 85 points grows from 10 points to 17.5.
The same logic applies to the as-is value. If the as-is valuation comes in low, the purchase-side leverage shrinks. If comparable sales are thin, the ARV shrinks. Both raise your required cash.
Valuation methods vary by lender. Some order a full appraisal, and others use a different third-party evaluation. Ask which one applies before you commit to a contract price.
A weak scope of work or an aggressive ARV is the usual way a file shrinks or stalls. Pull comparable sales yourself, and assume the lender will pick the conservative ones.
How Rehab Holdback and Draws Work
Rehab money is not wired at closing. It is held back and released in stages as work is completed and inspected. Up to 100% of the rehab budget can fund this way, depending on the lender, the property, and your experience.
That 100% applies to the rehab budget only. It does not mean the purchase is 100% financed. There is no true 100% purchase program.
Draws reimburse finished work. You need cash on hand to pay a contractor before the draw arrives. The Scotsman Guide survey notes lenders commonly apply a draw schedule to any loan that includes rehab money. Build the schedule around your contractor’s payment milestones so the gaps stay small.
Carry, Fees, and Your True Cash to Close
Your true cash requirement is bigger than the gap in the sizing table. The gap is the equity the lender requires. On top of it sit closing costs, lender fees, and the cash to cover interest-only carry while the work is done.
Terms run 6 to 18 months, interest-only, with no prepayment penalty on the program. A longer project needs more carry cash. A slow permit or a late draw adds months, and every month adds interest.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
The pitch of 100% financing is where this gets misunderstood. The ARV cap limits the loan, and fees and reserves still need cash. The calculator on this site can give an illustrative estimate of the gap, but it is not a quote.
Documents You Still Submit
You skip the personal income file, but you still submit a real package. Not required: pay stubs, W-2s, and traditional personal-income documentation to prove income. Still required: the purchase contract, scope of work and budget, entity documents, proof of insurance, ID, and evidence of liquidity.
Lenders also tend to ask for contractor bids and photos so they can test your budget. Experience is documented as completed projects. First-time investors can still qualify at the lower leverage tiers.
Where the General Rule Breaks
The sizing sequence above holds on most flip files, but several cases bend it.
True hard money versus a flip loan. Trade press describes a true hard money loan as sized almost exclusively on the asset, with few guidelines and often a cap of 65% loan-to-value or less. A flip loan is more heavily underwritten and sized on both borrower and asset. That distinction comes from Scotsman Guide. In the network, a bridge purchase without rehab goes up to 80% of purchase price, and a cash-out or rate/term refinance goes up to 65% of value.
Ground-up construction. Leverage reaches up to 90% of cost and 75% of completed value at 3 or more completed projects. It carries its own rules.
Loan size. Loans go up to $5,000,000, with larger by exception. Smaller balances vary by lender, so a very small flip may not fit every program.
Property type. Collateral is non-owner-occupied residential of 1 to 4 units, with ground-up construction to 10 units. Owner-occupied, commercial, industrial, land, and hospitality properties are not offered.
Business purpose. Hard money flip loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. Federal rules exempt credit extended primarily for a business purpose from the consumer ability-to-repay requirements. That is the legal reason no income file is needed. It still depends on the actual purpose of the loan, not just the label.
Valuation gaps and experience tiers. Both were covered above. Both move your required cash without changing the formula.
The terminology is also shifting. Lenders increasingly say private money, bridge lending, or residential transition lending. The underwriting logic is the same.
Why This Is Not DSCR Sizing (and Where the Exit Leads)
A flip loan is sized on value and cost. A DSCR loan is sized on rental income. The debt service coverage ratio compares monthly rent to the full monthly housing payment, covering principal, interest, taxes, insurance, and any association dues.
That difference matters because a flip repays from a sale or a refinance, not from monthly property cash flow. The lender never runs a coverage ratio on the flip itself.
Coverage does matter at the exit if you plan to keep the property. Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. The coverage test then applies to the rental. A 1.00 ratio is where many select programs start, while a separate select-lender path goes below 1.00 with leverage and terms adjusted. Clearing 1.00 does not mean positive cash flow, because repairs, vacancy, and management sit outside the calculation. Lendmire’s complete DSCR loans guide walks through how that test works.
The same logic carries through: the refinance qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
Frequently Asked Questions
Can a first-time flipper get a hard money loan without income documents?
Usually yes, at the lower leverage tier. Fewer than 2 completed projects typically sits at 85% of project cost, still capped at 75% of after-repair value. You still need a 620 minimum score, with additional conditions below 660. Expect to bring more cash than an experienced investor. Terms vary by lender, property, and experience.
Does 100% financing mean I put nothing down?
No. Up to 100% applies to the rehab budget, released in draws against finished work. The purchase side is capped by the cost tier, and the whole loan is capped at 75% of after-repair value. Closing costs, fees, and carry reserves still need your cash.
What if the lender’s value comes in below mine?
The loan shrinks and your cash requirement grows. The cap is applied to the lender’s ARV, so a 10% lower value can cost you several more points of equity, as the earlier example shows. Reviewing comparable sales before you bid is the best protection.
Does a flip loan need an appraisal?
A valuation comes first, and most lenders use an as-is appraisal or another third-party evaluation, per Scotsman Guide. The method varies by lender. Ask which one applies before you finalize a contract price.
Do I need to document cash reserves?
Expect to show liquidity for the equity gap, fees, and holding costs. The required amount varies by lender, deal size, and experience. Thin liquidity is a common reason a file stalls, because draws reimburse work after it is completed.
Pre-Application Self-Check
- Run the cost test at your likely tier.
- Run the 75% ARV cap on a conservative ARV, and take the lower result.
- Confirm your cash covers the gap, fees, and carry through the longest realistic timeline.
- Confirm your credit score clears the minimum.
- Write down your exit, a sale or a refinance into long-term financing.
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 is a broker that arranges financing through select lenders in its wholesale network, across 41 markets including Washington, D.C. Program terms vary by lender, property, and experience, and nothing here is a commitment to lend.
The investor who runs the cost test and the ARV cap before bidding rarely gets surprised by the lender’s number.
About Lendmire
As a DSCR and non-QM mortgage broker, Lendmire — NMLS# 2371349 — connects investors with wholesale lending channels across 41 markets, including Washington, D.C. The property’s rental income, not the borrower’s tax returns, is central to lender review, which works for self-employed operators and portfolios beyond four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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. Scotsman Guide: Mine the Hard Money Landscape
2. Scotsman Guide: The Hard Money Space Has Adapted
3. Scotsman Guide: Take a Tutorial on Hard Money Loans
4. Scotsman Guide: Stop the Confusion for Investor Clients
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 vs Private Money for a 2-4 Unit Flip: Down Payment · Is There a Limit on a Hard Money Fix-and-Flip Loan? · Can a Hard Money Lender Secure One Loan Across Multiple Properties?
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
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.