The Quick Read: A hard money lender reads a fix and flip or bridge file in a set order: the property first, then the borrower and entity, then the rehab plan, then the exit. Each document answers one question about whether the collateral can repay the loan if the plan goes sideways. Your traditional personal-income documentation is not the center of the file. The property and the plan are.
- The lender builds the decision around the property, the scope of work, the after-repair value (ARV) and the exit. Your personal income is secondary.
- Leverage is tested several ways at once, and the lowest result controls the loan.
- The scope of work reaches the appraiser before the appraisal, or the ARV can come back too low.
- Rehab money is released in draws against finished work, not at closing.
- Documents that disagree with each other cause more follow-up requests than documents that are thin.
Key Terms Defined
Scope of work: a line-item list of every repair, with the trade, the materials and the cost of each.
After-repair value (ARV): the appraised value of the property once the planned work is finished.
Loan-to-cost: the loan as a percentage of the total project cost, meaning the purchase price plus the rehab budget.
Holdback: the part of the loan reserved for repairs and held back at closing.
Draw: a release of holdback money after the lender verifies that a stage of work is complete.
Proof of funds: statements showing you hold the cash for your down payment, closing costs and a cushion.
Bridge loan: a short-term loan that carries a property between a purchase and its long-term plan, such as a sale or a refinance.
Exit strategy: your written plan for repaying the loan, either a sale or a refinance.
Conditions: the list of items the lender needs cleared before it will fund.
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 Is the File Built Around?
The file is built around the collateral and the plan. A hard money lender is asset-focused. Scotsman Guide describes hard money decisions as resting on the subject property, which usually keeps lenders conservative on leverage. The loan is repaid from the sale or the refinance. It is not repaid from your paycheck.
That changes how the paperwork gets read. A bank asks whether you earn enough. A hard money underwriter asks whether the property, once improved, is worth enough to cover the loan. Then the underwriter asks whether you can actually finish the work.
The paperwork is lighter than a bank’s, but it is not absent. Practice varies by lender. Many lenders still take an application, a credit check, an entity package and some bank statements. Some ask for more personal financial paperwork, and some ask for less.
The reason traces to how the loan is classified. Hard money loans for investors are business-purpose loans on non-owner-occupied property. Because of that, they are reviewed differently from a standard owner-occupied mortgage. The file leans on the deal rather than on household income.
On licensing: it varies by state, and there is no single national hard money license. Rules for business-purpose lending on non-owner-occupied property differ from state to state. Counsel should check state law before you structure anything.
In What Order Does a Lender Read the Documents?
Lenders read the file in a rough sequence, from the thing that cannot change to the things you can still fix. A typical order looks like this:
1. The executed purchase contract. It confirms the price, the parties and the property address.
2. Entity documents. The operating agreement, the EIN and a good standing certificate show who is borrowing.
3. The scope of work and budget. These show what you plan to build and what it costs.
4. Sold comparables. They support the ARV.
5. Proof of funds. It shows you can cover the cash portion of the deal.
6. Track record. It shows what you have finished before.
7. The exit plan. It shows how the loan gets repaid.
8. The draw plan. It shows how the rehab money will be spent and verified.
A market source, a document-collection software vendor, publishes a hard money requirements checklist that covers much of the same ground. It includes the application, credit authorization, purchase agreement, comparable sales, rehab budget, contractor bids, proof of funds and bank statements. The vendor presents it as a template. It is not a universal rule, and your lender’s list may differ.
The Document-by-Document Read
Each document answers one question. This table shows the question, what a clean version looks like and what raises a flag.
| Document | Lender’s question | Clean version | Red flag |
|---|---|---|---|
| Purchase contract | Is the deal real? | Signed, buyer matches entity | Buyer name differs from LLC |
| Entity papers | Who is on the hook? | Active LLC, named signers | Lapsed status, unclear owners |
| Scope of work | Is the plan specific? | Line items by trade | One lump-sum number |
| Budget | Does cost match scope? | Every scope line priced | Scope items with no cost |
| Sold comps | Does the ARV hold? | Recent, similar, nearby sales | Listings or distant comps |
| Proof of funds | Can you cover the gap? | Seasoned, in your name | Fresh deposits, no source |
| Track record | Have you done this? | Addresses, dates, outcomes | Vague claims, no detail |
| Exit plan | How is it repaid? | One clear path, one backup | No plan, or sale price too high |
The scope is the document with the most downstream effect. It feeds the budget, the ARV and the draw schedule all at once. A vague scope weakens three other parts of the file.
How a scope differs from a bid
A contractor bid is a price for a job. A scope of work is a description of the job itself. A lender may accept bids as support, but the scope is what the draws and the appraisal are built on. One bid with a single total tells the underwriter very little.
Why the Scope Reaches the Appraiser First
The appraiser should see your plan before the visit. Scotsman Guide advises meeting your contractor and building a full budget and project plan before the appraisal is ordered. It adds that the scope can be attached to the appraisal report for later reference during the rehab.
Its illustration shows the stakes. Without the scope, an appraiser might return an as-is value of $200,000 and an ARV of $210,000. With the plan in hand, the ARV might come in at $300,000. That is an illustrative example, not a market statistic. The point holds anyway. An appraiser cannot value work they have not been told about.
Say you are buying a tired duplex and planning a full gut. If the appraiser sees only a dated property, the ARV may reflect light updates. If the appraiser sees a priced, itemized plan, the after-repair number can reflect the real work. That one document can move the maximum loan.
How the Leverage Tests Work
Lenders run more than one leverage test, and the lowest result wins. They look at the purchase price against the as-is value, total project cost against the loan, and the loan against the ARV. A lender may advertise a high loan-to-cost, but the ARV cap controls if the loan would otherwise exceed it.
Here is how this looks on the network Lendmire places files with. Everything below varies by lender, property and experience, and none of it is a commitment to lend.
- Fix and flip: leverage is tiered by completed projects. It typically runs 85% of project cost with fewer than two completed projects, 90% of project cost at two or more, and 93% of project cost at five or more. Every tier is capped at 75% of ARV.
- Bridge purchase without rehab: up to 80% of the purchase price.
- Cash-out and rate-and-term refinance: up to 65% of value.
- Rehab funds: up to 100% of the rehab budget is released in draws against completed work. That is a rehab-budget figure, not a purchase LTV.
- Loan size: up to $5,000,000, with larger loans by exception.
- Term: 6 to 18 months, interest-only, with no prepayment penalty.
- Credit: a 620 minimum score, with additional conditions below 660.
- Collateral: non-owner-occupied residential property of one to four units.
The top tier is reserved for experienced investors. First-time investors qualify at the lower tiers, so expect less leverage than a seasoned flipper receives. No program funds the full purchase price. Even at the highest tier, you bring cash to the deal.
Bridge File Versus Fix and Flip File
A bridge purchase with no rehab drops several documents. There is no scope to approve and no draw schedule. An inspection is usually not part of the process either. The file rests on the contract, the entity, the value and your plan to sell or refinance.
| Item | Fix and flip | Bridge, no rehab |
|---|---|---|
| Scope of work | Required | Not applicable |
| Rehab budget | Required | Not applicable |
| ARV analysis | Central | Usually as-is value |
| Draw plan | Required | Not applicable |
| Exit plan | Required | Required |
| Entity and funds | Required | Required |
On a bridge file, the exit plan carries more weight, because it is nearly the whole story. If the plan is a refinance into rental financing, the lender wants to know the property can support it.
How Documents Get Cross-Checked
Underwriters compare documents against each other. A thin document draws a question. A document that contradicts another draws a bigger one. These are the checks that matter most:
- Scope against budget. Every scope line should have a cost, and every cost should trace to a scope line.
- Contract against entity. The buyer on the contract should be the borrowing entity, with its name spelled the same way.
- Funds against cash to close. Proof of funds should cover the down payment, closing costs and a cushion, and the account should be in the borrower’s or entity’s name.
- Comps against the plan. The sold comparables should resemble what the finished property will be, not what it is today.
- Exit against the numbers. A sale price at the top of the neighborhood range makes the exit look fragile.
- Track record against the leverage tier. Claimed completed projects should be documented, since leverage depends on them.
A Worked Example With One Flag
Picture an investor buying a three-unit property through an LLC. She has two completed projects, so she sits in the 90%-of-project-cost tier, which varies by lender and is never guaranteed. Every tier is still capped at 75% of ARV.
The underwriter reads the file in order. The contract names her personally, but the borrower is her LLC. That is the first flag. The fix is a contract assignment or an amendment naming the entity.
Next, the scope lists a new roof, but the budget has no roofing line. The second flag. The investor adds a priced roofing line, and total project cost moves up.
Then the appraisal comes back with an ARV lower than her budget assumed. The 75% ARV cap now binds before the cost-based tier does. The maximum loan falls, and the cash she needs at closing rises. This is the common way a file changes late: the cost-based number looked fine, and the ARV number controlled instead.
She could have avoided most of this. A scope sent to the appraiser early would have supported the ARV. A contract in the entity’s name would have removed the first flag.
From Term Sheet to Clear to Close
A term sheet is not an approval. It lays out the proposed structure, and the lender then works through its conditions. The items split by owner:
| Item | Owner | What clears it |
|---|---|---|
| Entity and ID documents | Borrower | Uploaded, matching names |
| Scope, budget, bids | Borrower | Itemized and consistent |
| Proof of funds | Borrower | Statements in the right name |
| Appraisal | Lender orders | Scope delivered to appraiser |
| Title and survey | Title company | Clean title report |
| Insurance | Borrower and agent | Policy naming the lender |
Most delays trace to the borrower-owned rows. A missing page, a name mismatch or a scope with no matching budget triggers another request, and each request adds a loop.
Closing Documents and Draw Paperwork
At closing, the initial advance funds the purchase and goes to title. The construction holdback is not released then. The lender disburses it in stages as work is completed and verified by inspections or draw requests.
You will sign the loan agreement and note, a deed of trust or mortgage, and a guaranty if you are borrowing through an entity. Read the draw provisions closely. They govern how and when your rehab money moves.
After closing, a draw request usually has a few parts. Many lenders want photos of the finished work and invoices from the contractor. Many also ask for lien waivers, which show subcontractors were paid. An inspection confirms the stage is complete before funds go out. Change orders need lender sign-off, so a mid-project change should be cleared before the work is done, not after.
What Stalls Files
These are the usual causes, roughly in order of how often a broker sees them:
1. A scope that is vague or does not match the budget.
2. Entity names that differ across the contract, the operating agreement and the bank account.
3. Proof of funds that does not cover the cash needed, or has unexplained deposits.
4. Comparables that do not support the ARV.
5. A track record with no addresses or dates.
6. An exit plan that is missing or unrealistic.
Across a wholesale network of lenders, the fix is rarely complicated. Assemble the full file before submission, and read it the way an underwriter would. Does every document agree with the others?
What Happens After the Flip or the Bridge?
The loan is a bridge, so the exit matters from day one. Your exit is either a sale or a refinance. Many investors who hold the property refinance out of hard money into long-term DSCR financing once it is stabilized, and Lendmire brokers that path. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Lendmire’s complete DSCR loans guide explains how it works.
A few details about that take-out. On a standard rental, cash-out refinance tops out around 75% LTV across most of the network, and about six months of seasoning is the common expectation. Coverage of 1.00 is where 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, because repairs, vacancy and management sit outside the calculation. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Your rehab records help here. The scope, budget and comps from the flip also support the appraisal later, including the rent schedule form (1007) or the small residential income property form (1025) used for rentals. Clean records now make the refinance file easier to assemble.
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.
Lendmire also covers how an investor finds a hard money lender for a fix and flip.
Frequently Asked Questions
Do I need traditional personal-income documentation and pay stubs for a hard money loan?
It depends on the lender. Many hard money lenders focus on the property, the plan and your experience, and ask for little personal income paperwork. Others still request traditional personal-income documentation, bank statements and a schedule of owned real estate. Underwriting stays asset-based either way, and requirements vary by lender, property and experience.
Should I assemble documents before contacting a lender?
Yes, at least the core set. Have the contract, entity papers, scope, budget, comps and proof of funds ready. A complete first submission means fewer follow-up requests. It also lets you spot your own mismatches before an underwriter does.
Who orders the valuation, and what do I send?
The lender orders the appraisal. You control what the appraiser sees. Send the itemized scope and budget before the visit so the ARV reflects the planned work.
Can a first-time flipper qualify?
Often yes, at lower leverage. On the network Lendmire works with, first-time investors typically qualify at the 85%-of-project-cost tier, still capped at 75% of ARV. The top tiers are reserved for investors with documented completed projects. Credit has a 620 minimum, with additional conditions below 660, and everything varies by lender.
What does conditional approval actually mean?
It means the lender has reviewed enough of the file to propose terms, but conditions remain open. Items like title, insurance, the appraisal and any missing documents still need to clear. It is not a commitment to lend until those conditions are satisfied.
Ready to Line Up Your File?
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 arranging financing through select lenders in its wholesale network, across 41 markets, including Washington, D.C. Programs change, and every file is underwritten individually.
For current guidelines and terms, see Lendmire’s DSCR loan programs page.
About Lendmire
Lendmire — NMLS# 2371349 — is a DSCR and non-QM mortgage brokerage with investor loan programs in 41 markets, including Washington, D.C. DSCR eligibility is commonly reviewed by the lender around property-level rent rather than personal income documentation, subject to lender guidelines, and the brokerage helps arrange financing for LLC-owned portfolios beyond conventional financed-property limits. Recognized by Scotsman Guide as a Top Mortgage Workplace in 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, “Take a Tutorial on Hard Money Loans”
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 Minimum Loan Amount Requirements · Hard Money Fix-and-Flip Loan Limits for a First-Time Investor · Hard Money After Repair Value Loan Requirements for a Flip
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
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.