The Quick Read: A private, asset-based lender (hard money is short-term business-purpose lending secured by real estate) will lend against real estate you already own, sizing the loan from the property’s current value, the debt already on it, and your plan to repay, rather than from your income alone. Across the wholesale network Lendmire places files with, a cash-out or rate-and-term refinance on a non-owner-occupied rental typically runs up to 65% of value. Terms are interest-only and run 6 to 18 months. The loan comes due at the end of that window, so your exit plan matters as much as your equity.
- Equity is your starting capital, but existing liens count against it.
- Lenders look at the property, the plan, and the exit first. Credit still matters, with a 620 minimum score and added conditions below 660.
- Collateral is non-owner-occupied residential property of 1-4 units. Your own home is not offered.
- Every figure here varies by lender, property, and experience. Nothing here is a commitment to lend.
Key Terms Defined
Six terms come up again and again. Here they are in plain words.
- Loan-to-value (LTV): the loan amount divided by the property’s value, shown as a percentage.
- CLTV (combined loan-to-value): all loans secured by the property, old and new together, divided by its value.
- Lien position: your lender’s place in line to be repaid from the property. First lien gets paid first. Second lien waits behind it.
- As-is value: what the property is worth today, in its current condition.
- After-repair value (ARV): the projected worth once planned renovations are finished.
- Cross-collateralization: pledging one property to secure a loan that funds something else, or pledging several properties for a single loan.
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 Does It Mean to Borrow Against a Property You Own?
It means your existing real estate becomes the collateral. The lender records a lien on it. You receive cash, or you pay off an old loan, or both.
Most owned-property deals take one of three shapes:
- Cash-out refinance. The new loan pays off the existing mortgage, if any, and sends you the difference.
- Rate-and-term refinance. The new loan replaces the old one without paying you cash. Investors use it when they need a different structure or a new maturity date.
- Equity used for the next deal. You pull cash from the owned rental and use it to fund a purchase or a rehab somewhere else.
A free-and-clear property (no mortgage at all) is the easiest case, because the new lender is the only claim on the title. A property with a mortgage is still workable. It just turns into a math problem, which we’ll get to below.
Think of hard money as a tool with a short shelf life. It is built for a project with a clear end date. It is a poor fit for an open-ended hold.
How Does Underwriting Treat an Owned Property?
Underwriting looks at the asset first and the borrower second. Here is the sequence a lender typically works through.
Step 1: Is the property eligible?
The collateral has to be non-owner-occupied residential property of 1-4 units. Ground-up construction can run to 10 units. Commercial, industrial, land or lots, hospitality, and owner-occupied properties are not offered.
Step 2: What is it worth?
The lender orders an appraisal or a broker price opinion. Which value counts is a real fork. On a property you already own, lenders generally size against as-is value. Some use ARV when a renovation is part of the plan. Different lenders use different bases, so ask which one applies before you pay for anything.
Step 3: How much debt is already on it?
The lender adds your existing liens to the new loan. That total is the CLTV. A refinance that pays off the old loan replaces it. A second-lien loan stacks on top of it.
Step 4: Where does the lien sit?
First lien is the cleanest. Plenty of private lenders want first position and decline to sit behind a bank mortgage. Second-lien hard money exists, but fewer lenders will do it. If you want to keep a low-cost first mortgage in place, expect a narrower menu of options.
Step 5: How does the borrower look?
The file is asset-based, but credit and experience still count. Most programs want at least a 620 score, with added conditions below 660. First-time investors qualify at the lower leverage tiers. The top tiers are reserved for experienced investors with documented completed projects.
Step 6: Does the exit hold up?
This is the step that separates a workable deal from a trap. A lender wants to see how the loan gets repaid at maturity. That means a sale, a refinance into long-term financing, or a payoff from other funds.
The loan size can reach $5,000,000, larger by exception. Smaller balances vary by lender.
What Can You Actually Pull Out? A Worked Example
Run the math in percentages of value. The table is illustrative only. It uses the cash-out and rate-and-term ceiling of up to 65% of value on a non-owner-occupied rental, which varies by lender, property, and experience.
| Scenario | Existing mortgage | Lender ceiling | Room for cash |
|---|---|---|---|
| Free and clear | 0% of value | 65% of value | Up to 65% of value |
| Moderate mortgage | 40% of value | 65% of value | Up to 25% of value |
| Heavy mortgage | 70% of value | 65% of value | None; debt exceeds the ceiling |
Those are ceilings, not payouts. Closing costs and fees come out of the proceeds. The appraisal may land below your own estimate of value, which shrinks everything.
Scenario three is the one that surprises people. Owning a lot of equity on paper doesn’t help when the existing debt already exceeds what a refinance lender will fund. In that case, the realistic options are to wait while the balance pays down, or to fund a purchase another way.
(That is also why an appraisal comes before any real planning. Everything else rests on that one number.)
Structures and Variations
The same equity can be used in different ways. These are the common ones.
Payoff refinance. One new first-lien loan replaces whatever sits on the property. This is the simplest structure and the one with the most lenders behind it.
Cash-out to fund the next purchase. You pull proceeds from an owned rental and use them as the down payment on another property. The proceeds can then fund a bridge purchase, which typically runs up to 80% of purchase price on a property without a rehab component. The cash-out on the property you already own stays within the up-to-65%-of-value ceiling.
Rehab on an owned property. Where a project includes renovation, programs can fund up to 100% of the rehab budget, released in draws against completed work. That is a rehab-budget figure. It is not a purchase LTV, and it does not mean a 100% loan on the property.
Second-lien loan. The new loan sits behind your existing mortgage. This is the least common structure, because the new lender is paid after the first-lien holder in a default. Many lenders won’t do it.
Cross-collateralization. You pledge a second owned property as extra security, so the loan doesn’t depend on the equity in one building alone. It can stretch your borrowing power, and it can strip out the down payment on a purchase. It also ties properties together. A default on one payment can put the whole pledged group at risk, and you can’t easily sell one property out of the bundle while the loan is open. A few lenders in the market offer it. Treat it as lender-specific, not as a standard feature.
Terms across all of these are 6-18 months, interest-only, with no prepayment penalty. There are no multi-year structures on the current program. If you need a longer runway, you refinance into long-term rental financing (more on that below).
Where the General Rule Breaks
Every rule here has edges. These are the ones that trip up real files.
Your own home is not offered. Collateral has to be non-owner-occupied. A house you live in, including a duplex where you occupy one unit, is outside the program. Some investors expect a 2-4 unit “house hack” to qualify. It doesn’t.
The loan’s purpose matters more than the property type. Business-purpose loans are reviewed differently from a standard owner-occupied mortgage. A Compliance Alliance explainer on investment properties makes the point that the purpose of the loan, not the property securing it, is generally what counts, and that a single-unit rental you don’t live in can still be exempt. The same piece warns that not every investment property is exempt. The CFPB’s official interpretations of Regulation Z add that the purpose gets decided file by file. Calling a loan business-purpose on the application does not make it one. If the money goes to personal use, expect the file to go sideways.
Entity title. Many investors hold rentals in an LLC. Lenders can often lend to the entity, subject to lender program eligibility, and may ask for personal guarantees. Tell the lender how title is held at the start, because it changes the paperwork.
An existing mortgage with a low balance. Keeping it may feel smart. But if the new lender needs first position, you’ll have to pay it off. Count that payoff as part of the cost of using the equity.
As-is versus ARV. A property that needs work may be worth much less today than after the work. If the lender sizes from as-is value, your proceeds shrink. Ask which base applies before you assume a number.
Combined properties. On cross-collateral files, some lenders review the properties together when one can’t support the loan alone. That helps weak properties and puts strong ones at risk. Know which side of that trade you’re on.
Property types that aren’t on the sheet. Commercial buildings, raw land, and hospitality properties are not offered. So don’t build a plan around them.
How Does Hard Money Compare to a DSCR Cash-Out Refinance?
Both pull equity from a rental. They solve different problems. A DSCR loan is long-term investor financing qualified primarily on property-level rental income covering the payment, subject to lender guidelines. DSCR (debt service coverage ratio) is the monthly rent divided by PITIA, which is the monthly principal, interest, taxes, insurance, and any association dues.
| Factor | Hard money (refinance) | DSCR cash-out refinance |
|---|---|---|
| Underwritten on | Property, plan, exit | Rent vs. PITIA, plus credit |
| Term | 6-18 months | 30-year fixed is the spine |
| Payment structure | Interest-only | Typically amortizing; IO and extended terms via select lenders |
| Typical leverage | Up to 65% of value | Up to ~75% LTV on standard rentals |
| Credit | 620 minimum; added conditions below 660 | 620 floor in parts of the network; most want ~660 |
| Best use | A short, defined project | A stabilized rental you hold |
All figures vary by lender, property, and experience.
On the DSCR side, a 1.00 ratio is where select programs start. It is not a universal standard. A separate select-lender path goes below 1.00, with leverage and terms adjusted. Stronger ratios open better leverage. Cash-out on a DSCR file commonly expects about six months of seasoning, which is the waiting period between buying a property and refinancing it. The network’s standard loan range reaches up to $3,000,000 on standard programs, with smaller balances available through select lenders.
One caution on the DSCR side: clearing 1.00 does not mean the property produces positive cash flow. The ratio compares rent to PITIA only. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation.
Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. The details are in the complete DSCR loans guide.
What Does the Decision Look Like in Practice?
Start with the exit, then work backward. Here is the sequence that tends to separate clean files from messy ones.
1. Name the purpose. Write down what the cash does. Buy the next rental? Fund a rehab? Pay off a loan with a bad structure? A vague purpose makes everything else harder.
2. Get a realistic value. Use as-is value for a property you already own. Discount your own estimate.
3. Add up all liens. Include the mortgage, any second loans, and unpaid assessments. Compare the total against the 65% ceiling.
4. Pick the exit before the loan. If the exit is a long-term refinance, check whether the property would meet that program’s coverage and seasoning expectations. If the exit is a sale, check that the market can absorb it inside your term.
5. Gather the file. Expect to provide entity documents if you hold title in an LLC, the current mortgage statement, insurance, and a scope of work if a rehab is involved.
6. Compare options. Look at hard money, a DSCR cash-out, and simply waiting.
When is hard money the wrong tool? When there’s no exit. When the property is a long hold with stable rent and a decent mortgage already in place. When the reason for borrowing is cash flow shortfall. Hard money is interest-only on a short clock. It pushes the problem forward and makes it bigger.
For more detail on the owned-property case, see Lendmire’s piece Can You Get a Hard Money Loan on a Property You Already Own?. If the property is a small multifamily, there’s also a separate piece Can You Use Hard Money on a Two to Four Unit Multifamily Property?.
Frequently Asked Questions
Can I borrow hard money against a paid-off rental?
Yes, as long as the property is a non-owner-occupied residential property of 1-4 units. A free-and-clear rental is the simplest case, because the new loan takes first position with nothing ahead of it. The ceiling on a cash-out or rate-and-term refinance is typically up to 65% of value, varying by lender, property, and experience.
Does an existing mortgage stop me from borrowing?
Not automatically. The lender adds the old balance to the new loan and checks the combined total against its ceiling. If the existing debt is low, there’s room. If it’s already near or above 65% of value on a rental, there’s little or none. Many lenders also want first-lien position, which can mean paying the old loan off.
Does my credit score matter if the loan is asset-based?
Yes. Underwriting leans on the property, the plan, and the exit, but credit still counts. A 620 score is the minimum, with additional conditions below 660. First-time investors qualify at the lower leverage tiers, while the highest tiers go to experienced investors with completed projects.
What happens if I can’t repay at maturity?
Terms run 6-18 months, and the full balance comes due at the end. If the exit slips, you’re left to negotiate an extension, refinance, or sell, and extension terms vary by lender. That’s why the exit plan is the first thing to build, not the last. A common path is refinancing into long-term rental financing once the property is stabilized.
Can I use this on my own home, a commercial building, or land?
No. Owner-occupied property, commercial, industrial, land or lots, and hospitality are not offered. The collateral is non-owner-occupied residential property of 1-4 units, with ground-up construction up to 10 units.
Next Step
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. As a broker, Lendmire arranges financing through select lenders in its wholesale network, covering 41 markets, including Washington, D.C.
The deals that go smoothly tend to share one trait: the owner knew how the loan would end before it ever began.
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.
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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. Compliance Alliance — Regulation Z and Investment Properties
2. CFPB — Regulation Z, Section 1026.3, Exempt Transactions
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 · Hard Money vs Investment Property HELOC on a Property You Own · Hard Money for a Six-Unit Rehab vs. a 2-4 Unit Bridge Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.