The Quick Read: Your loan amount is the lower of two numbers: a percentage of total project cost that rises with your track record, and a fixed cap on the finished property’s projected after-repair value, so whichever test is tighter on your specific deal sets the real figure. Leverage varies by lender, property, and experience, and nothing here is a commitment to lend.
- On non-owner-occupied 1-4 unit flips, the cost test typically runs 85% of project cost with fewer than 2 completed projects, 90% at 2 or more, and 93% at 5 or more.
- Every one of those tiers is capped at 75% of after-repair value.
- Up to 100% of the rehab budget can be funded, but it is released in draws against completed work, not paid at closing.
- There is no true 100% purchase program, so plan to bring cash for the gap.
- Loan sizes run up to $5,000,000, with larger amounts by exception.
Key Terms Defined
Loan-to-cost (LTC): the loan divided by the purchase price plus the rehab budget.
After-repair value (ARV): what the property should be worth once the renovation is finished, based on comparable sales of renovated homes.
Loan-to-ARV: the total loan as a share of that projected finished value.
As-is value: what the property is worth today, before any work.
Holdback: the rehab money the lender sets aside at closing and releases later.
Draw: a release of holdback funds after the lender confirms that work is complete.
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.
What a Hard Money Fix-and-Flip Loan Actually Funds
A fix-and-flip loan is short-term, interest-only financing to buy a property, renovate it, and then sell or refinance it. The lender reviews the property’s rental income, the plan, and the exit more than your paycheck. Terms typically run 6 to 18 months, and there is no prepayment penalty on the current program.
Collateral is non-owner-occupied residential property, 1-4 units. Commercial buildings, land, and owner-occupied homes are not on the sheet. Credit still matters. A 620 score is the typical minimum, with additional conditions below 660, and first-time investors qualify at the lower leverage tiers.
These are business-purpose investor loans on non-owner-occupied property, so they are reviewed differently from a standard owner-occupied mortgage. The related DSCR products are covered in Lendmire’s complete DSCR loans guide. Flip loans work differently from those, and the rest of this piece stays on the flip side.
The Two Tests That Set Your Loan Amount
The lender runs a cost test and a value test, then lends the lower result. The cost test multiplies your total project cost, which is purchase price plus rehab budget, by a percentage tied to your experience. The value test multiplies the projected ARV by the fixed cap.
Across the select lenders in Lendmire’s wholesale network, the experience tiers look like this on a fix-and-flip purchase of non-owner-occupied property:
| Completed projects | Cost test | 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 |
The top tier is reserved for experienced investors, and the exact tier varies by lender, property, and experience. Brokers see this often: a newer investor assumes the headline percentage applies to them, when their tier sits lower.
One Flip, Start to Finish
Run the numbers on a modeled deal. These are assumptions, not market data. Set the projected ARV at 100 and say the purchase price is 60% of ARV and the rehab budget is 15% of ARV. Total project cost is then 75% of ARV.
| Tier | Loan (% of ARV) | Cash in (% of ARV) |
|---|---|---|
| 85% of cost | 63.75% | 11.25% |
| 90% of cost | 67.5% | 7.5% |
| 93% of cost | 69.75% | 5.25% |
The 75% value cap never binds here, because every tier lands below it. The cost test decides the answer, so experience changes your cash in. Fees and carry costs come on top of the cash-in figures above.
Now tighten the deal. Say the purchase is 70% of ARV and the rehab is 20%, so cost is 90% of ARV. The cost test would produce 76.5%, 81%, and 83.7% of ARV across the three tiers. Every tier gets cut back to the 75% cap, and you bring 15% of ARV in cash no matter how experienced you are. That is the moment many investors learn that a better track record only helps while the cost test is the one that binds.
What Happens When the Appraisal Comes In Low
A low appraisal shrinks the value cap, and the loan follows it down. Go back to the first modeled deal, where projected ARV was 100 and total cost was 75. Suppose the appraisal comes in at 90.
The cap becomes 75% of 90, which is 67.5% of your original projection. The 85% tier, at 63.75%, is untouched. The 90% tier, at 67.5%, lands exactly on the cap. The 93% tier, at 69.75%, is cut back to 67.5%, so that investor brings roughly 2.25% of projected ARV in extra cash.
In the tight deal, the cap drops to 67.5% against a 90% cost. The cash gap grows from 15% to 22.5% of projected ARV. The lesson is to stress-test your ARV before you offer, not after the appraisal lands.
How Rehab Money Gets Released
Rehab money does not arrive at closing. Up to 100% of the rehab budget can be funded, but it sits in a holdback and is released in draws. You typically start the work with your own funds, and each draw reimburses completed work.
A typical sequence looks like this:
1. You complete a milestone in the approved scope of work.
2. You request a draw.
3. The lender inspects the work.
4. Funds are released for what was actually finished.
Partial completion, work done under an unapproved change order, and missing lien waivers are common reasons a draw is trimmed. The concept is familiar from rehab lending elsewhere. The HUD 203(k) program also holds renovation money in escrow and releases it as work is completed. A related FHA program also sizes its loan on the lesser of two value tests, a logic that parallels the cost-versus-ARV approach in flip lending.
Ask each lender whether every draw needs an inspection and whether draw or fund-control fees apply. Also ask whether interest accrues on the full approved balance or only on what has been disbursed. Those answers change your carry cost and your cash position before the first reimbursement arrives.
Other Structures That Size Differently
Not every short-term loan follows the flip formula. On non-owner-occupied property, the network’s hard money structures size like this, varying by lender, property, and experience:
| Structure | Typical maximum | Based on |
|---|---|---|
| Fix-and-flip | 85%-93% of project cost, 75% of ARV cap | Cost and ARV |
| Bridge purchase, no rehab | Up to 80% of purchase price | Purchase price |
| Cash-out or rate/term refinance | Up to 65% of value | Current value |
| Ground-up construction (3+ projects) | Up to 90% of cost, 75% of completed value | Cost and completed value |
Ground-up construction extends to 10 units, while flips stay at 1-4 units. Each type of loan uses a different base, so comparing two quotes only works when you confirm each one sizes the same way.
Where the General Rule Breaks
A cheap purchase with a big rehab. A loan sized off ARV can exceed the acquisition price, because the rehab portion comes through draws. Draws keep the lender’s risk down, which is why the structure works at all.
Different sizing bases. Some lenders size on purchase price or as-is value, while others size on ARV. The same deal can produce sharply different loan amounts depending on which base the lender uses.
The 100% financing claim. There is no true 100% purchase program. Full coverage of the rehab budget through draws is not full coverage of the deal. Where a lender covers every cost, it usually works only because the property was bought far below value, so the total stays within the ARV cap.
The 70% rule. Many investors screen deals by taking 70% of ARV and subtracting repairs to get a maximum purchase price. That is an investor screen, not a lending rule. It is hard to meet on high-priced homes, and it can leave too little profit on low-priced ones.
Budget credibility. Lenders may revise a scope they think is too optimistic or too light, which can change the holdback. A line-item budget backed by contractor estimates holds up better than a round number.
Property eligibility. Manufactured homes, owner-occupied properties, and commercial buildings are not offered on these loans. Eligible property type is part of the sizing question, not a separate one.
Borrow the Maximum, or Less?
Borrowing less than the maximum often makes sense. A lower loan means a smaller carry cost, a bigger cushion if the appraisal slips, and more room for a budget overrun. Overruns land on you, because the lender does not increase the loan to cover them.
Build in contingency on the rehab side, and run both tests with a lower ARV. A back-solve helps: if all-in cost is 72% of projected ARV, the appraisal has to land at 96% of your projection before the 75% cap stops covering the full loan. Thin margins stop working fast when the value moves.
Exit planning belongs in the same conversation. Many investors refinance out of hard money into long-term DSCR investor loans once the property is stabilized, and Lendmire brokers that path. A DSCR refinance is its own test. Coverage compares rent to the full monthly obligation of principal, interest, taxes, insurance, and any HOA dues, and 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. A cash-out refinance on a standard rental typically tops out around 75% LTV, with about 6 months of seasoning common.
Clearing 1.00 does not mean positive cash flow, because repairs, vacancy, management, and utilities sit outside the calculation. Sale is the other exit, and 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.
What to Prepare So the Number Holds
Lenders adjust the number based on what you can document. A strong package usually includes:
- The purchase contract and property address.
- A line-item scope of work with contractor estimates.
- Comparable sales of renovated homes that support your ARV, not active listings.
- Proof of your completed projects, since that sets your tier.
- Entity documents if you buy through an LLC, subject to lender program eligibility.
- Proof of funds for the cash gap and the start of the work.
If you are still choosing a lender, how an investor finds a hard money lender for a flip covers that step.
Frequently Asked Questions
Can a hard money lender finance 100% of a flip?
Not on the purchase. The network’s top tier is 93% of project cost at 5 or more completed projects, always capped at 75% of ARV. Up to 100% of the rehab budget can be funded through draws, but that is a rehab figure, not a purchase loan-to-value.
How much cash does a first-time flipper need?
More than an experienced investor. With fewer than 2 completed projects, the cost test is typically 85% of project cost, so you cover the remaining 15% plus fees and the start of the work. If the ARV cap binds, you cover more.
Is a lender’s indicated amount a binding commitment?
No. An early indication reflects what you submitted. The final amount depends on the valuation, the scope review, your credit, and underwriting, and it can move.
Can I borrow based on ARV alone?
No. ARV only sets the ceiling. The cost test sets the other limit, and the lender lends the lower result.
What credit score do I need?
A 620 minimum is typical, with additional conditions below 660. Credit affects terms, but underwriting stays centered on the property, the plan, and the exit.
Run Your Own Number Before You Offer
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. Call 828-256-2183 or request a quote.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker that arranges hard money and DSCR financing through select lenders in its wholesale network, across 41 markets, including Washington, D.C. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. HUD: Single Family Mortgage Programs 203k
2. IRS: Topic No. 409, Capital Gains and Losses
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 Fix-and-Flip Loan Limits for a First-Time Investor · How to Get a Hard Money Loan for a First Flip With No Track Record · Hard Money Fix and Flip Minimum Loan Amount Requirements
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.