The Quick Read: The best program for your portfolio depends on your property, your experience, and your exit plan, because hard money is short-term, asset-based capital. It can fund a purchase, a rehab, or a cash-out on equity you already hold. Most investors then move the property into long-term financing so the capital can be reused.
- Hard money cash-out leverage on a non-owner-occupied 1-4 unit property tops out around 65% of value on most files, varying by lender, property, and experience.
- Hard money terms run 6 to 18 months, interest-only, with no prepayment penalty on the current program.
- The refinance is sized on the new appraisal, not on what you spent.
- A realistic exit plan matters more than the headline leverage number.
- A credit score of 620 is the minimum, with added conditions below 660, and first-time investors qualify at the lower leverage tiers.
Two Meanings of One Search Phrase
A hard money cash-out refinance is not a separate loan type. Investors use the phrase for two different moves, and the right program depends on which one you mean.
The first move is a cash-out refinance on hard money terms. You own a property, have equity, and want short-term capital against it to fund the next deal. The second move is exiting a hard money loan. You bought or rehabbed with bridge money, and a longer-term loan now pays it off, with any leftover proceeds going to you.
Both moves use the same underwriting logic. The lender looks at the property, the plan, and the way out. A BRRRR glossary from AdviceOnly makes a useful point here: the refinance step in a buy-rehab-rent-refinance strategy is an ordinary cash-out refinance, and no special regulation defines it. It is a financing technique, not a product with its own rulebook.
Lendmire is a mortgage broker, not a lender. It arranges these loans through select lenders in its wholesale network across 41 markets, including Washington, D.C. That is why this article describes how programs behave rather than naming a winner. Every program carries qualifiers: it varies by lender, property, and experience, and nothing here is a commitment to lend.
How Underwriting Treats a Hard Money Cash-Out, Step by Step
Hard money underwriting is asset-based. The file turns on the property, the business plan, and the exit, rather than on personal income documentation.
1. The lender sizes the property. An appraisal or valuation sets today’s value, or the after-repair value on a rehab. Everything else hangs from that number.
2. Leverage is applied to value or cost. On a cash-out or rate/term refinance, most files in the network cap at up to 65% of value. On a purchase with rehab, leverage is measured against project cost, not value.
3. Existing debt is paid off first. Any current mortgage or bridge lien is released from the proceeds. What remains, after closing costs, is your net cash.
4. Credit and experience are reviewed. A 620 minimum score is the starting point, with added conditions below 660. First-time investors can qualify at the lower leverage tiers.
5. The exit is tested. The lender wants to see how you will repay within 6 to 18 months, by sale or by refinancing into long-term financing.
The refinance sizing deserves a plain example. Suppose a property is worth 100 units of value, and the existing loan is 50% of that value. A cash-out at 65% of value would produce roughly 15% of value in gross proceeds, before closing costs. If the appraisal comes in low, the same math shrinks those proceeds. Cash back depends on the appraisal, not on what you spent, a point the AdviceOnly glossary also stresses. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
The Structures That Exist
Hard money is a family of structures, not one loan. The leverage tiers below come from the network’s current program and apply to non-owner-occupied residential property, 1-4 units. All of them vary by lender, property, and experience.
| Structure | Typical leverage | Best fit |
|---|---|---|
| Fix-and-flip purchase | 85% to 93% of project cost, capped at 75% of ARV | Buy, rehab, then sell or refinance |
| Bridge purchase, no rehab | Up to 80% of purchase price | Acquisitions needing a short runway |
| Cash-out or rate/term refinance | Up to 65% of value | Pulling equity from a held property |
| Ground-up construction | Up to 90% of cost, 75% of completed value | Experienced builders with 3+ projects |
Some details matter. The fix-and-flip tiers step up with documented completed projects: 85% of project cost with fewer than two, 90% with two or more, and 93% with five or more. The bridge purchase row is separate and does not use these tiers. Up to 100% of the rehab budget can fund in draws against completed work, which is a budget figure and never a purchase leverage figure. There is no true 100% purchase program, and the top tier is reserved for experienced investors.
Loan amounts run up to $5,000,000, with larger by exception. Ground-up construction extends to 10 units. Commercial, land, hospitality, and owner-occupied property are not on the program sheet.
Why Investors Use Hard Money to Grow
Growth comes from recycling capital. A short-term loan lets you buy before a conventional file could clear, and a refinance later returns your cash to deploy again. The Addicted2Success BRRRR guide advises confirming the refinance lender’s seasoning rules, maximum leverage, and after-repair-value policy before you buy. That advice is sound for any growth plan.
Hard money suits an investor who values speed of execution, a short runway, or a property that is not yet rentable. It is a poorer fit when the property is already stabilized and the investor intends to hold for years. In that case, carrying a 6 to 18 month interest-only loan adds cost and exit risk without adding much.
Here is the flip point. A 65% cash-out on a stabilized rental leaves far less cash than long-term financing would. If the property is leased and rent covers its payment, an investor can often move straight to long-term rental financing. That route, a DSCR loan, qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Lendmire’s complete DSCR loans guide explains how that works in full.
Where the General Rule Breaks
A few edge cases trip up even experienced investors.
A low appraisal. A modest valuation miss can turn a planned cash-out into a bring-cash-to-close payoff. The after-repair value drives every number, so a conservative estimate protects you more than an optimistic one.
Seasoning varies by lender. Seasoning is the time you must hold title before a refinance. Some programs use short clocks and others use tiers. Agency-style cash-outs generally run longer or stricter than most investor programs. Confirm the clock for your target program before you buy.
Cost-basis refinances. Some lenders treat a payoff up to your total cost basis as lower risk than a true cash-out. Classification varies by lender and should never be assumed.
A lien at purchase. Delayed-financing rules generally require an all-cash purchase, so a hard money lien on the property at purchase usually breaks that eligibility.
A loan can pass the exit test and still lose money each month. A larger balance raises the payment, so avoid pulling so much that the payment approaches the rent. Rent coverage compares rent to the principal, interest, taxes, insurance, and any HOA dues. It does not account for repairs, vacancy, or management, so clearing the benchmark is not the same as positive cash flow.
Exit pressure. A hard money term has a hard end. Extensions cost money and are at the lender’s discretion. Start your exit work well before maturity. Many investors then refinance into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path.
What Lenders Look For
Lenders in this space tend to ask the same questions.
- The property. Is it a non-owner-occupied, 1-4 unit residential property in an eligible market?
- The plan. What are the rehab scope, the budget, and the target value?
- The experience. How many projects have you completed, and can you document them?
- The credit. Does your score meet the 620 floor, with additional conditions below 660?
- The exit. Will you sell, or refinance into long-term financing, and does the math support it?
- The entity. If an LLC holds title, lenders review the entity documents, subject to lender program requirements.
Documents to gather include the existing note and payoff letter, rehab records and draw history, the lease or rent proof, entity documents, and the appraisal or valuation. Having these ready lets a broker match your file to the right lender in the network.
Decision Table: Which Path Fits Your Situation?
| Your situation | Likely better fit |
|---|---|
| Buying a property that needs work | Fix-and-flip tier, then refinance out |
| Holding free-and-clear equity, needing short-term capital | Cash-out up to 65% of value |
| Already leased and stabilized | Long-term DSCR financing |
| Hard money note nearing maturity | Refinance into long-term rental financing |
Growth Without Over-Leverage
Repeating this cycle is the growth part of the strategy, and it carries risk. Each refinance adds debt. Each short-term loan adds a deadline. Think through three questions before every cycle.
First, would the property still pass if the appraisal came in lower than planned? Second, can the rent cover the long-term payment with room to spare? Third, if the exit slips, can you carry the loan through an extension?
A short-term loan can also be the better tool when the plan is a flip with a short runway. Long-term financing suits holds, not flips. The strongest portfolio builders match the loan to the plan rather than forcing one product to do every job.
Tax treatment varies; consult a qualified professional, and see this Credit Karma explainer for how an investment-property cash-out differs from a primary-residence one.
Key Terms Defined
LTV (loan-to-value): The loan amount divided by the property’s appraised value.
Loan-to-cost: The loan amount divided by the total project cost, used on purchase and rehab loans.
ARV (after-repair value): The property’s expected value once the rehab is complete.
Seasoning: The time you must hold title before a lender allows a cash-out refinance.
Interest-only: A payment structure in which you pay interest during the term and owe the principal at maturity.
DSCR: Debt service coverage ratio, which compares a property’s rent to its monthly payment of principal, interest, taxes, insurance, and any HOA dues.
Frequently Asked Questions
Can you do a cash-out refinance with hard money?
Yes. Select lenders in the network offer cash-out and rate/term refinances up to about 65% of value on non-owner-occupied 1-4 unit property. Terms run 6 to 18 months, interest-only, with no prepayment penalty on the current program. Leverage varies by lender, property, and experience.
Is hard money or long-term financing better for growing a portfolio?
It depends on whether the property is stabilized. Hard money fits a purchase, a rehab, or a short runway. Long-term financing fits a leased property you plan to hold. Many investors use both in sequence, with the short-term loan feeding the long-term refinance.
How much cash will I actually receive?
That depends on the new appraisal, the leverage cap, and what you owe. Value times the cap, minus the existing payoff and closing costs, equals your cash. A low appraisal can shrink that figure to zero, so size your plan on a conservative value.
Do first-time investors qualify?
Often at the lower leverage tiers, with a 620 minimum score and added conditions below 660. The highest tiers are reserved for experienced investors with documented completed projects. Qualification stays subject to lender guidelines.
Can an LLC hold the property?
Often yes, subject to lender program eligibility. Expect to provide entity documents alongside the property and plan details.
Where to Go From Here
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. Reach the team at 828-256-2183, or request a quote. The strongest portfolios are built by investors who plan the exit before they take the first loan.
About Lendmire
Lendmire (NMLS# 2371349), a non-QM mortgage broker serving investors in 41 markets including Washington, D.C., helps structure DSCR scenarios commonly evaluated around a property’s rental income rather than personal income paperwork, subject to lender guidelines. A Scotsman Guide Top Mortgage Workplace in 2025 and 2026, Lendmire places loans through wholesale investor lenders and is not a direct lender.
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References
2. Addicted2Success BRRRR guide
3. Credit Karma investment property cash-out explainer
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Best DSCR Cash-Out Refinance Program With No Job or Steady Paycheck · New Appraisal vs Old Appraisal for a Rental Cash-Out Refinance · How to Get a Short-Term Rental Cash-Out on a First Rental With No Tax History
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.