The Quick Read: No single program wins for every investor, because hard money cash-out loans typically cap at 65% of value on a non-owner-occupied refinance, run 6 to 18 months interest-only, and usually need a long-term refinance behind them, so the right fit depends on your equity, your plan and your exit. Lendmire is a mortgage broker, not a lender. It shops select wholesale lenders and matches the file to the program that fits. Programs vary by lender, property and investor experience, and none of this is a commitment to lend.
- Hard money looks at the property, the plan and the exit. It does not look first at your personal income.
- A hard money refinance typically returns up to 65% of value, minus your payoff and closing costs.
- A bridge purchase without rehab can reach up to 80% of the purchase price. Rehab deals are sized on project cost.
- The bridge is short. The investors who do this well plan the long-term exit before they buy.
- Passing the value test never excuses failing the rent test, and the reverse also holds.
What a Hard Money Cash-Out Refinance Does (and Doesn’t Do)
A hard money cash-out refinance swaps your current loan on a property for a short-term, interest-only loan and hands you the leftover equity as cash. Investors then use that cash as the down payment on the next deal. The loan is business-purpose financing for non-owner-occupied 1-4 unit residential property. Ground-up construction is eligible up to 10 units.
The phrase covers two different paths, and the choice between them is the first real decision.
Path one: refinance first, buy second. You own a property with equity. A short-term loan pulls some of that equity out. The cash funds the down payment on the next property.
Path two: buy on a bridge, refinance later. A short-term loan buys the next property, and often funds the rehab. Once the property is finished and rented, a long-term rental loan pays off the bridge and returns the leftover equity as cash. Investors call this the BRRRR method (buy, rehab, rent, refinance, repeat), an acronym The Motley Fool’s glossary also covers.
Neither path is a free pass. Hard money does not replace the long-term loan. It only buys time until the long-term loan is in place.
Key Terms Defined
Cash-out refinance: A new loan that pays off the old one and returns the extra equity to the borrower as cash.
Seasoning: The minimum time you must own a property before a lender will size a refinance on its new appraised value.
Interest-only: A loan structure where the borrower pays interest during the term and repays principal at maturity or payoff.
Loan-to-cost: The loan as a share of what the project costs (purchase plus rehab), instead of a share of appraised value.
After-repair value: The value a property is expected to have once the work is finished. The lender’s appraisal, not your estimate, sets the number it uses.
DSCR: Monthly rent divided by the monthly principal, interest, taxes, insurance and any HOA dues. It measures whether the rent covers the payment.
How the Underwriting Works, Step by Step
Underwriting on this product follows the asset: what the property is worth, what you plan to do with it, and how you will leave the loan. These are the steps most files in Lendmire’s wholesale network go through.
1. Property and scope review. The lender confirms the property is an eligible 1-4 unit, non-owner-occupied residential asset. Commercial, industrial, land, lots, hospitality and owner-occupied properties are not offered.
2. Independent valuation. The lender orders its own appraisal. Your projected after-repair value does not set the loan.
3. Leverage cap. On a cash-out or rate-and-term refinance, the cap is typically up to 65% of value. Equity above the cap stays in the property.
4. Credit review. A 620 score is the typical minimum, with added conditions below 660. First-time investors can qualify at the lower leverage tiers. Underwriting stays asset-based, but credit still matters.
5. Payoff math. Cash back equals the new loan, minus the payoff of the old loan, minus closing costs. If the payoff exceeds the proceeds, you bring cash to close.
6. Exit review. The lender wants to see how you will repay the short-term loan. A credible exit is part of the file.
Loan sizes typically run up to $5,000,000, and larger by exception. Smaller balances vary by lender.
Two warnings apply. You pay closing costs on the bridge and again on the long-term refinance. And a short-term loan sized at the full cap leaves little room if the appraisal comes in light.
What Structures Exist?
Hard money is not one product. The leverage basis changes with the transaction, and the labels below matter.
| Structure | Leverage basis | Best use |
|---|---|---|
| Hard money cash-out or rate/term refinance | Up to 65% of value | Pull equity from an owned property |
| Bridge purchase, no rehab | Up to 80% of purchase price | Buy before long-term financing is ready |
| Fix-and-flip purchase plus rehab | 85%-93% of project cost, capped at 75% of ARV | Buy and renovate |
| DSCR cash-out refinance (long-term) | Around 75% LTV on a standard rental | Take out the bridge, return equity |
The fix-and-flip tiers depend on documented completed projects. Investors with 5 or more completed projects reach 93% of project cost. Investors with 2 or more reach 90%, and everyone else is at 85%. Every tier is capped at 75% of after-repair value. Up to 100% of the rehab budget can fund in draws against completed work. That is a rehab-budget figure, not a purchase loan-to-value.
There is no true 100% purchase program. When a lender advertises something that sounds like one, it is usually a high loan-to-cost tier plus rehab draws. It is reserved for experienced investors, and it still carries the value cap.
A Worked Example in Percentages
Run the numbers on a modeled pair of properties. These are assumptions for illustration, not market data.
Say Property A is appraised at 100 units of value. The existing loan balance is 30 units. A refinance at the 65% cap produces a new loan of 65 units. After the 30-unit payoff, about 35 units of value remain, before closing costs and any reserves the lender requires.
Now Property B is priced near Property A’s value, and a bridge purchase without rehab can reach up to 80% of the price. That means roughly 20% down plus closing costs. The 35 units from Property A cover the down payment and leave a cushion. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Then stress-test both sides:
- Property A carries a bigger loan. Interest-only on a larger balance puts more weight on the rent. If rent does not cover the new carrying cost, you fund the gap from reserves.
- Property B carries a bridge. The bridge matures in 6 to 18 months, so the exit loan has to be ready before the term runs out.
- Equity left behind is the safety margin. At the 65% cap, 35% of value stays in the property if values soften.
The next deal only works if both properties survive that stress test. A strong purchase attached to a stretched refinance is a bad trade.
Seasoning and Recently Purchased Properties
Seasoning is lender policy, not a law, and it varies by program. Lofty’s BRRRR guide defines it as the minimum ownership time before a cash-out refinance can use the new appraised value. Most lenders count from the date title is recorded.
On the long-term DSCR side, about 6 months of seasoning is the common expectation across the network. Inside that window, a lender may size the loan on your cost basis instead of the new appraised value. That can leave rehab-created equity trapped until the clock runs out.
If the refinance returns no cash, it is generally a payoff-only (rate-and-term) refinance. Those files often carry lighter seasoning and a different leverage ceiling than cash-out. Payoff-only suits a stabilized property that is short on seasoning.
One more edge belongs here. Delayed financing, a conventional exception for cash purchases, generally does not apply after a hard money purchase secured by the subject property. Do not plan around it.
Moving Off the Bridge: The Exit
Plan the exit before you buy. The bridge term has to outlast the rehab, lease-up, seasoning, appraisal and underwriting. A schedule that slips means extension costs or a rushed payoff. Work backward from what the long-term loan can pay off, then size the purchase, rehab and bridge to fit.
Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. The complete DSCR loans guide covers it end to end. The core mechanics look like this:
- Leverage. A cash-out refinance on a standard rental tops out around 75% LTV across most of the network.
- Coverage. 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Stronger ratios open better pricing and leverage.
- Credit. A 620 floor exists in parts of the network. Most programs want around 660, and 700 or more unlocks the strongest tiers.
- Reserves. They vary by lender, leverage, loan size and transaction type. Around 6 months of PITIA is common, and loans above $1,500,000 typically step up. Some lenders let cash-out proceeds count toward reserves.
- Terms. The 30-year fixed is the spine. Extended terms and interest-only periods are available through select lenders.
The loan is sized at the lower of the value limit and the rent limit. A property can pass one test and fail the other. Clearing 1.00 also does not mean the property cash-flows. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities and capital expenses sit outside the calculation.
Manufactured homes (single- and double-wide), log homes and barndominiums are not offered on the DSCR side. Entity-held property is generally workable, subject to program terms. Lendmire’s piece Best Hard Money Cash-Out Refinance Program When the Property Is Titled in an LLC covers the title questions.
Where the General Rule Breaks
The rules above work for most files. These cases bend them.
The appraisal lands below break-even. If the payoff exceeds the refinance proceeds, you bring cash or restructure. Sometimes the answer is a payoff-only refinance and a longer hold.
Rents are too low for the price. Higher debt service on thin rent can make a property’s economics worse. If coverage fails on the long-term exit, the bridge has no clean landing. Re-examine the purchase, not the loan type.
This approach does not fit if the cash is not going into a business use. Hard money loans are business-purpose only, and DSCR 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 business-purpose exemption turns on the purpose of the credit, which is why lenders ask what the cash will do. Proceeds spent on personal or household needs are the risk case.
The bridge ends before the exit is ready. Build slack into the term.
The property or location is outside the program. Hard money covers 41 markets, including Washington, D.C. A few states and cities fall outside that footprint, so confirm the location early.
You are a first-time investor. You can qualify, but at the lower leverage tiers. Plan for more cash in the deal.
Which Path Fits Your Situation?
The best program for your situation depends on the file. This table matches common investor profiles to the structure that usually fits, subject to lender guidelines.
| Your situation | Structure that usually fits |
|---|---|
| Stabilized rental, strong rent coverage | Long-term DSCR cash-out refinance |
| Equity in an owned property, deal ready to buy | Hard money refinance, then purchase |
| Buying before long-term financing is ready | Bridge purchase, planned exit |
| Experienced investor with a rehab project | Fix-and-flip tier by completed projects |
| Thin rent coverage on the current property | Fix coverage first, then refinance |
| First deal as an investor | Lower leverage tier, more cash in |
If you are choosing between hard money and DSCR on the same property, ask one question first. Does the property already have the rent and the seasoning for the long-term loan? If so, skipping the bridge saves a second set of closing costs. If not, the bridge buys the time the property needs.
What to Prepare Before You Apply
A broker can shop several wholesale lenders, but the file has to be ready for any of them. Gather these items:
- The purchase contract or the current payoff statement.
- A rehab scope and budget, if there is a renovation.
- A lease or a rent estimate for the stabilized property.
- Entity documents, if the property is held in an LLC.
- A record of completed projects, since leverage tiers depend on it.
- Proof of funds for reserves and closing costs.
Lenders in the network differ on what they weigh most. Some focus on the project’s cost basis, and others on after-repair value. A broker that sees many lenders’ guidelines can match your file to the lender whose approach fits it.
Frequently Asked Questions
Can I use a hard money cash-out refinance on a property I own to fund the next down payment?
Yes, if the property is an eligible non-owner-occupied 1-4 unit residence with enough equity. The refinance typically returns up to 65% of value, minus your payoff and closing costs. The cash can then go toward the next purchase. Plan the long-term exit for both properties before you start.
How much cash can I actually pull out?
It depends on the lender’s appraised value, your current payoff and the closing costs. At the typical cap of 65% of value on a refinance, the cash back is the gap between that cap and your existing balance. Your own estimate of value does not set the number.
Is there a hard money program that covers 100% of a purchase?
There is no true 100% purchase program. Fix-and-flip leverage runs 85% to 93% of project cost depending on completed projects, capped at 75% of after-repair value. The top tier is reserved for experienced investors.
What credit score do I need?
A 620 score is the typical minimum, with additional conditions below 660. First-time investors qualify at the lower leverage tiers. Underwriting stays asset-based, so the property, the plan and the exit still decide the file. The long-term DSCR exit usually wants around 660 or higher.
Does a 1.00 coverage ratio on the exit loan mean the property cash-flows?
No. A ratio of 1.00 means rent matches PITIA and nothing more. Repairs, vacancy, management and utilities sit outside the ratio, so a property can clear 1.00 and still be thin on real cash flow.
The 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. The strongest next purchases come from deals where the refinance, the bridge and the exit were planned together, so the equity you pull out is never the only thing holding the file up.
About Lendmire
A non-QM mortgage broker (NMLS# 2371349), Lendmire arranges DSCR financing for real estate investors in 41 markets — 40 states plus Washington, D.C. Because deals are underwritten primarily on property cash flow rather than personal income documentation, the structure suits self-employed buyers and entity-owned portfolios. Lendmire places loans through wholesale investor lenders; it is not a direct lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. The Motley Fool – BRRRR Method
3. CFPB – Regulation Z § 1026.3, Exemptions
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Top Hard Money Cash-Out Refinance Providers to Tap Equity From a Rental Property · How a Lender Counts Reserves on a BRRRR Cash-Out Refinance · DSCR vs. Conventional Cash-Out Refinance for a St. Charles MO Rental
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.