The Quick Read: You pledge a non-owner-occupied rental you already own, show the lender enough value above existing liens, and present a believable exit, usually a sale or a refinance into long-term rental financing, with leverage, terms, and eligibility varying by lender, property, and experience.
- Underwriting leans on property value, your equity cushion, your experience, and the exit plan. Credit comes second, with a 620 minimum score on typical files and added conditions below 660.
- A bridge purchase with no rehab typically funds up to 80% of the purchase price. A cash-out or rate/term refinance of a non-owner-occupied rental typically tops out around 65% of value.
- Terms run 6 to 18 months, interest-only, with no prepayment penalty. Loan amounts go up to $5,000,000, and larger by exception.
- The exit has to pass two separate tests: the new lender’s value test and its rent test.
- There is no true 100% purchase program. Up to 100% of a rehab budget can fund, but only in draws against finished work.
Key Terms Defined
Read these first. The rest of the article uses them freely.
- LTV (loan-to-value): the loan balance divided by the property’s value, shown as a percentage.
- Loan-to-cost: the loan divided by the total project cost, used on rehab and construction deals.
- ARV (after-repair value): the estimated value of the property once the renovation is finished.
- Seasoning: the waiting period a lender wants between buying or refinancing a property and the next refinance.
- Cross-collateralization: pledging a second property, along with the subject property, to secure one loan.
- Draw: a release of rehab funds after a portion of the work is completed.
- DSCR loan: a long-term investor loan that qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. DSCR means debt service coverage ratio.
- PITIA: the full monthly housing obligation: principal, interest, taxes, insurance, and any association dues.
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 a Hard Money Bridge Loan, Really?
It is a short-term, interest-only loan secured by investment real estate. “Hard money” describes the lender type, usually private capital instead of a depository bank. “Bridge” describes the purpose: it covers the gap until longer-term financing or a sale arrives. The two labels overlap heavily.
The loan is asset-based. Across the wholesale network Lendmire works with, the property’s value and your equity cushion carry the file. The lender also looks at your track record, your cash reserves, and whether the exit plan holds up. A weaker credit score can be a manageable issue on a strong asset. It is never ignored.
Lendmire is a broker. It arranges these loans through select lenders in its network across 41 markets, including Washington, D.C. The lender reviews the file, and nothing here is a commitment to lend.
What Counts as Substantial Equity?
Substantial equity means your value, minus every lien already on the property, leaves real room under the lender’s leverage cap. The cap is the number that matters. Your equity percentage only matters relative to it.
Take a rental held free of fancy assumptions. The figures below are modeled for illustration, not market data.
| Item | Share of value |
|---|---|
| Appraised as-is value | 100% |
| Existing mortgage (assumed) | 40% |
| Typical refinance cap on a non-owner-occupied rental | up to 65% |
| Room above the old payoff | about 25 points |
That 25-point gap is before closing costs, fees, and any interest reserve. It is the most you could take out, not what you will receive. On most files the lender also wants a cushion left behind.
Flip the picture. If the existing liens already sit near 60% of value, a refinance at a 65% cap leaves almost nothing. That owner has equity on paper but little usable equity for this product.
How Underwriting Treats It, Step by Step
The process follows a fixed order. Each step answers one question the lender needs settled.
1. Define the use of proceeds. The choices are a purchase, a refinance or cash-out against a property you own, a rehab, or a stabilization bridge. Each is sized differently.
2. Order the valuation. The lender uses a broker price opinion or an appraisal to set as-is value. Rehab deals also get an ARV estimate from renovated comparable sales nearby.
3. Test leverage. The lender checks loan-to-value on value and loan-to-cost on project cost. Then it looks at your experience and reserves.
4. Confirm collateral. The property must be non-owner-occupied residential, 1 to 4 units. Ground-up construction can go to 10 units.
5. Review credit. A 620 minimum score applies on typical files, with added conditions below 660. First-time investors generally land in the lower leverage tiers.
6. Test the exit. The lender wants to see how the loan gets repaid, and a vague plan is the most common weak spot.
7. Fund and manage draws. Purchase and payoff funds move at closing. Rehab money releases in draws as work is completed.
Everything above varies by lender, property, and experience.
Structures and Variations
Most files fall into one of a few shapes. Knowing yours tells you which leverage figure applies.
Bridge purchase without rehab. The loan typically funds up to 80% of the purchase price. You bring the rest in cash.
Refinance or cash-out on a property you own. This is the equity play in the title. The loan typically tops out around 65% of value on a non-owner-occupied rental, which is lower than the purchase bridge.
Fix-and-flip. Leverage here is measured against project cost and tiered by completed projects. At 5 or more completed projects, funding runs up to 93% of project cost. At 2 or more, up to 90% of project cost. With fewer than 2, up to 85% of project cost. Every tier is capped at 75% of ARV, and the top tier is reserved for experienced investors.
Ground-up construction. At 3 or more completed projects, funding can reach up to 90% of cost and 75% of completed value.
Cross-collateralized files. Some lenders in the network will take a second property alongside the subject property. This can stretch a thin file, because the extra equity supports the combined loan. It usually means first-position liens on the pledged properties and fresh valuations on each. Lenders typically count only the equity that sits above a cushion. Fresh valuations are an added cost and an added task.
Where the General Rule Breaks
Equity does not settle every file. These are the common places it stops working.
Lots of equity, no track record. Lenders lean harder on value when there is no experience. That tends to mean lower leverage, more reserves, or more cash to close.
Equity without rent coverage. A property can carry heavy equity and still fail the long-term loan’s rent test. The reverse also happens. The bridge may approve the file, but the exit lender looks at different things.
Bridge funded near its cap. Suppose a purchase bridge is sized close to the top of its leverage range, and the exit is a cash-out refinance on a standard rental, which allows less leverage than the bridge did. The gap has to come from your pocket. A bridge sized well below its cap, such as around 60% of ARV, has far more room for error than one sized at the cap. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Seasoning not finished. A long-term refinance on an investment property usually expects about 6 months of seasoning, measured from title recording. If you are short, your choices are a payoff-only refinance, extending the bridge, or waiting. Policy varies by lender.
Cross-collateral downside. A default can put every pledged property at risk. Ask about partial releases before you sign, since selling one property later may require lender consent.
Property types not offered. On the hard money side, commercial, industrial, land or lots, hospitality, and owner-occupied properties are not offered. On the long-term DSCR side, manufactured homes, log homes, and barndominiums are not offered.
The business-purpose line. Hard money bridge 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. The CFPB’s Regulation Z section on business-purpose credit makes the point that the primary purpose is judged on each transaction. A label alone does not settle it. The official interpretations also warn that business credit later rewritten for consumer purposes can change character.
The Exit: Two Tests, Not One
Plan the exit before you borrow. Many investors refinance out of hard money into a DSCR loan once the property is stabilized, and Lendmire brokers that path.
The long-term lender runs two separate checks. First is value: the appraisal has to support a loan big enough to retire the bridge. Second is rent: the property’s income has to cover the new monthly obligation. Strong equity passes the first and says nothing about the second.
Coverage is rent divided by PITIA. A 1.00 ratio is where many select programs start, and stronger ratios tend to open better pricing and leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Clearing 1.00 is not the same as positive cash flow. Repairs, vacancy, management, utilities, and capital expenses all sit outside the calculation.
For a cash-out DSCR refinance on a standard rental, plan around 75% LTV. Credit tiers matter too: a 620 floor exists in parts of the network, most programs want around 660, and 700 or higher unlocks the strongest leverage. Loan sizes run up to $3,000,000 on standard programs (smaller balances available through select lenders), and above $2,500,000 the network generally holds to 30-year fixed structures. Reserves vary, commonly around 6 months of PITIA. The complete DSCR loans guide covers these tiers in detail.
Work backward. Take a conservative appraisal, apply the exit cap, and subtract closing costs and the carry cost of each extra month on the bridge. If the answer does not clear the bridge payoff, the plan needs another structure.
Bridge Costs and Carry
This is where hard money earns its reputation. The loan is built for a short window, so every extra month of interest-only carry is money spent. Ask each lender for a full written list of fees, plus any valuation, title, legal, and draw-inspection charges. Then multiply the monthly carry by the longest hold you can realistically imagine, not the shortest.
The no-prepayment-penalty feature helps here. If the exit arrives early, you are not charged for repaying early. Terms of 6 to 18 months are the current structure, and there are no multi-year options on the program. Investors who need a longer runway refinance into long-term rental financing.
Does a Bridge Fit Your Situation?
| Scenario | Bridge fit | Why |
|---|---|---|
| Buy a rental, renovate, then refinance | Often fits | The exit is a rent-backed refinance |
| Cash out equity for a time-sensitive purchase | Can fit | Only if the exit passes both tests |
| Equity is high but rent barely covers PITIA | Weak fit | The exit lender may not take the payoff |
| Exit depends on a sale at a hoped-for price | Risky | A soft market stalls the exit |
| Property is owner-occupied or commercial | Not offered | Outside the program |
For a deeper take on the decision itself, see Lendmire’s piece Should an Owner With Substantial Equity Use a Hard Money Bridge Loan?. If you are weighing a bridge against a long-term refinance, Lendmire also compares hard money with an investment property cash-out refinance for equity access.
How to Evaluate a Lender and Term Sheet
Ask what value the lender uses, and what happens if the appraisal comes in light. Ask whether leverage is measured against cost or value. Ask how draws are inspected and released. Ask what the extension options are and what they cost.
Red flags are easy to spot. Be wary of any promise of 100% purchase financing, since no true program exists. Be wary of terms that sound credit-blind or income-blind with no questions asked. Be wary of a lender who cannot explain its exit assumptions. Underwriting stays asset-based: the property, the plan, and the exit.
Frequently Asked Questions
Can I use equity in a property I already own to buy another one?
Yes, on many files. The lender either takes a lien on the property you own, or takes both properties together as collateral. A refinance of a non-owner-occupied rental typically tops out around 65% of value. Combined leverage and the exit plan decide how much is usable, and this varies by lender, property, and experience.
Does a weak credit score disqualify me if my equity is strong?
Not automatically. Underwriting is asset-based, but there is a floor: a 620 minimum score with additional conditions below 660. Strong equity can offset some credit weakness. It does not remove the floor, and first-time investors qualify at the lower leverage tiers.
Is there a 100% financing option?
No true 100% purchase program exists. Up to 100% of a rehab budget can fund in draws against completed work, but that is a rehab-budget figure, not a purchase LTV. Fix-and-flip leverage is measured against project cost and capped at 75% of ARV.
How long can I keep the loan?
Terms run 6 to 18 months, interest-only, with no prepayment penalty. Longer terms are not part of the program. If you need more runway, the usual move is a refinance into long-term rental financing.
What if my exit falls through?
Have a Plan B before you close. Options include an extension, a payoff-only refinance, or selling the property. Which are available depends on the lender, the property, and where you stand on seasoning.
Where to Start
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. Bridge debt only works when the equity, the exit, and the carry all line up on paper before closing day.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage focused on investor financing, arranging DSCR loans in 40 states plus Washington, D.C. — 41 markets total. Qualification is based on the property’s income rather than personal income documentation, subject to lender guidelines, making it a fit for LLC-held rentals and scaling portfolios. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 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. CFPB, Regulation Z §1026.3: Exempt Transactions
2. Supplement I to Part 1026, Official Interpretations
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Use a HELOC or Home Equity Loan for Home Improvements? · Should You Pick a Fixed Home Equity Loan Over a HELOC? · Home Equity Loan vs. 401k Loan Requirements for a Large Expense
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.