The Quick Read: The best hard money program for funding a rehab between purchase and sale is the one whose leverage, draw schedule, term, and exit plan match where your property stands today, whether you already own it free and clear, are buying it now, or have finished the work and need to pay off the bridge.
- Hard money is short-term, interest-only financing sized on the property, not on your paycheck.
- On a cash-out or rate-and-term refinance of an investment property, hard money typically tops out around 65% of value.
- On a fix-and-flip purchase, leverage runs up to 93% of project cost for experienced investors, always capped at 75% of after-repair value.
- Rehab money arrives in draws after completed work, so you usually front early costs.
- Terms run 6-18 months with no prepayment penalty, so the exit plan matters more than the loan.
All of this varies by lender, property, and experience, and none of it is a commitment to lend.
What Does This Program Actually Mean?
According to Corporate Finance Institute, hard money loans are defined by short terms, collateral-driven underwriting, and sizing off a loan-to-value limit.
The phrase gets used for two different moves, and mixing them up causes bad plans.
1. Cash-out against a property you already own. Maybe you bought it with cash. The loan puts equity in your hand to fund the rehab or the next deal.
2. A payoff after the rehab. This is the more common usage. A long-term loan replaces the bridge and returns your rehab cash.
This article covers both, plus the sale exit. It does not cover owner-occupied homes. Hard money here is a business-purpose tool for non-owner-occupied residential property, 1-4 units. Ground-up construction can go to 10 units.
Which Structure Fits Your Property Today?
Three structures exist, and the “best” program is really a fit question. Brokers who place these files across a wholesale network see the same pattern: the stage of the property picks the structure.
| Where the property stands | Structure that fits | Typical ceiling |
|---|---|---|
| Owned, rehab not started | Hard money cash-out refinance | Up to 65% of value |
| Buying now, needs work | Fix-and-flip purchase loan with draws | 85%-93% of project cost, capped at 75% of ARV |
| Rehab done, ready to hold | DSCR cash-out refinance | Around 75% LTV on standard rentals |
ARV means after-repair value, what the property should appraise for once the work is finished. Ceilings are typical, not promised. Experience tiers matter: 93% of project cost generally needs 5+ completed projects, 90% needs 2+, and 85% applies with fewer than 2.
Notice what is missing. There is no true 100% purchase program. You will see ads for 100% financing, but the real structure is up to 100% of the rehab budget, released in draws, on top of a purchase loan that still needs your down payment.
When Does a Cash-Out Refinance Fit Between Purchase and Sale?
Cash-out fits when you own the property, the rehab is on schedule and on budget, and you can show how the loan gets repaid. It fits poorly when you are stuck mid-construction with overruns, because lenders want a stable project they can value.
Picture three entry points.
Cash or auction buyer. You paid cash, the property needs work, and your capital is tied up. A cash-out on the owned property can refill your account. The lender sizes off value and the documented plan.
Maturing bridge loan. Your current loan comes due before the work is done. Refinancing into a new hard money loan can buy runway. Lenders will want the original settlement statement, a list of completed work, and an updated scope.
Post-rehab exit. The work is finished, and the property will either be sold or held. Here the bridge gets paid off by a sale or by long-term financing.
Be careful with the idea that a hard-money-financed purchase counts as an all-cash buy. It generally does not. Some programs treat cash purchases more generously on waiting periods, and a financed purchase usually does not get that treatment.
How the Money Moves, Step by Step
The funding sequence is more mechanical than most investors expect.
1. Application and scope. You submit the property details, the rehab scope and budget, comps, and your exit plan. Hard money skips personal income documentation, but not paperwork.
2. Valuation. The lender usually orders an appraisal at your expense. It wants the loan to line up with value.
3. Closing. Title wires funds. Most or all of the rehab budget gets held back, and the settlement statement shows that money sitting with the lender.
4. Draw requests. You finish a phase and request a draw. The lender inspects. If the work passes, it releases that portion.
5. Float. Because draws reimburse completed work, you usually pay for early materials and labor yourself. Plan working capital for the first phase.
6. Interest-only carry. Interest accrues on the amount drawn, so carry climbs as the project advances.
7. Exit. A sale or a new long-term loan pays off the balance. Title wires the payoff and the lien is released.
Two draw traps catch people. Scope changes after closing may not be credited unless the lender approves them in writing. And missing lien waivers or documentation stall releases.
How Does Sizing Work: Cost Basis, As-Is Value, or ARV?
Three numbers drive sizing, and each lender weights them differently.
- Cost basis is the purchase price plus documented, receipted improvements.
- As-is value is what the property appraises for today, before the work.
- ARV is the projected value after repairs. Which one drives the loan depends on the loan type.
On a purchase, the cost-based tiers apply, and ARV caps them at 75%. On a refinance, the program looks at value, up to 65%. A low appraisal changes the whole picture. It can turn a planned cash-out into one that needs your own money.
A Worked Example Through to the Sale
Treat the numbers below as modeled assumptions. They are not market data.
Say you bought a property for cash, and as-is value is indexed at 100 units. A hard money cash-out refinance, subject to the program, could return up to 65 units. The rest of the equity stays in the property. If the rehab budget is a modest slice of that, the cash-out may cover it and leave a cushion.
Now run the full-cost stack to the sale. Net profit is the sale price, minus the bridge payoff, minus interest carried, minus closing costs on the refinance, minus selling costs, minus rehab spend, minus your original purchase. The refinance means you pay closing costs twice if you later move into long-term financing. Because the program carries no prepayment penalty, paying off at the sale closing adds no exit charge from the loan itself.
Now the thin-margin variant. Say the appraisal comes in low and the sale slips. Carry keeps running on an interest-only loan. If the term is 6-18 months, an extra few months can swallow a thin profit. Pencil in a delay before you borrow, not after.
Cash-Out Refinance vs. the Alternatives
| Option | Collateral | Best use |
|---|---|---|
| Hard money cash-out refinance | The owned property | Fund a rehab on a property you hold |
| Fix-and-flip purchase loan | The property being bought | Buy and rehab in one loan |
| Cash on hand | None | Small jobs, no carry |
| Cash-out on another rental you own | A stabilized rental | Pull equity from a different asset |
| Sell as-is | The property | Skip the rehab risk |
Government renovation loans generally require owner occupancy, so they are not an investor option here. The right pick depends on how much equity sits in the property, whether the work can wait, and what the sale or hold exit looks like.
How to Choose the Best Hard Money Cash-Out Refinance Program for Your Deal
The best program for your situation is not a ranked list. A broker shops several wholesale lenders and matches your scenario to the program that fits. Lendmire works that way, arranging financing through select lenders in its network across 41 markets, including Washington, D.C. It is a broker, not a lender, and the lenders make the credit decisions.
Compare programs on these criteria:
| Criterion | What to ask |
|---|---|
| Sizing basis | Cost, as-is value, or ARV? |
| Rehab holdback | Draw count, inspection process, who pays inspection fees |
| Term and extensions | 6-18 months typical; is an extension possible? |
| Prepayment | Is there any penalty on payoff or sale? |
| Experience tier | Does your count of completed projects unlock a higher leverage tier? |
| Credit | Around 620 is the typical floor, with added conditions below 660 |
| Property type | 1-4 units; not owner-occupied, commercial, or land |
Loan amounts commonly go up to $5,000,000, with larger sizes by exception. Smaller balances vary by lender. First-time investors can qualify at the lower leverage tiers, while the top tier is reserved for experienced investors.
Where the General Rule Breaks
- Mid-rehab refinance. Lenders want an on-budget project they can value. A half-demolished property with unpaid contractors is harder to place.
- Seasoning. The wait before a long-term cash-out is typically around 6 months in the DSCR network. It may shorten when cash-out stays within documented cost basis, but that depends on the lender.
- Two-step exit. You can do a payoff-only DSCR refinance first, then a cash-out once seasoned. That means two closings and costs. If the later cash-out is small, one cash-out after seasoning may beat two loans.
- Sell instead. A sale repays the bridge and ends the hold. Nothing needs to be refinanced.
- Terminology. Hard money, private money, and bridge loans are related but not identical. Hard money is based on collateral value.
What Happens When You Exit Into a Rental?
Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized. It is the same logic behind the BRRRR method, which stands for buy, rehab, rent, refinance, repeat. As Chase explains it, the refinance recovers invested capital so you can recycle equity into the next deal.
Typical network figures: a cash-out refinance on a standard investment rental tops out around 75% LTV, with about 6 months of seasoning common. Coverage of 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, available with leverage and terms adjusted. Credit around 660 is typical, and 700+ opens the strongest tiers. Reserves vary by lender, leverage, and loan size, commonly around 6 months of PITIA, meaning principal, interest, taxes, insurance, and any association dues.
One warning. DSCR compares rent to PITIA only. Clearing 1.00 is not positive cash flow, because repairs, vacancy, management, and utilities sit outside the calculation. The complete DSCR loans guide covers the mechanics.
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.
What Can Go Wrong, and What to Do About It
- Low appraisal. Build cushion into the budget and ask what the lender does if value falls short. A reduced cash-out may mean bringing in cash or shrinking the scope.
- Rehab overruns. Overruns come from your pocket first. Hold a contingency before closing.
- Soft market mid-rehab. If comps move, ARV moves. Stress-test the sale price.
- Missed maturity. Start the exit conversation well before the note comes due. Ask about an extension up front.
- Draw delays. Keep receipts, lien waivers, and a change-order paper trail. Delays here lengthen carry.
Also confirm vesting, title, and insurance before closing. A vacant or under-construction property needs coverage that fits its condition.
Timeline View: Purchase to Sale
| Stage | What happens |
|---|---|
| Purchase | Cash, auction, or hard money purchase |
| Cash-out or closing | Funds wired, rehab budget held back |
| Rehab and draws | Work, inspection, reimbursement |
| Value check | Appraisal confirms the plan |
| Exit | Sale payoff or long-term refinance |
Total hold generally sits within the 6-18 month term. Plan the exit before the rehab starts.
Key Terms Defined
ARV (after-repair value): the projected appraised value once the renovation is complete.
Draw: a release of held-back rehab money after the lender inspects completed work.
Holdback: the portion of the rehab budget the lender keeps until work is done.
Seasoning: the waiting period between acquiring a property and a cash-out refinance.
Cost basis: the purchase price plus documented, receipted improvements.
PITIA: principal, interest, taxes, insurance, and association dues, the monthly obligation DSCR compares rent against.
Frequently Asked Questions
Can I get 100% financing for a rehab?
Not on the purchase. Up to 100% of the rehab budget can fund in draws against completed work, but the purchase leverage tiers top out at 93% of project cost for the most experienced investors, capped at 75% of ARV. You still front early costs because draws reimburse finished work.
How much cash can I pull out on a property I already own?
Typically up to 65% of value on a cash-out or rate-and-term refinance of an investment property with hard money. The exact figure varies by lender, property, and experience. A low appraisal can reduce it.
Is there a prepayment penalty if I sell before the term ends?
The program has no prepayment penalty. You pay off the balance at the sale closing, and the lien is released.
Can a first-time investor qualify?
Yes, at the lower leverage tiers, subject to lender guidelines. Credit around 620 is a typical floor, with added conditions below 660. The top leverage tier is reserved for experienced investors.
Should I refinance into a DSCR loan or just sell?
It depends on whether you want a hold. A sale ends the project and repays the bridge. A DSCR refinance fits once the property is leased, seasoned, and likely to appraise well, subject to coverage and lender review.
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 rehab plans get settled long before the first draw, because the exit shapes the whole loan.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR loans are evaluated by the lender on rental income rather than personal income, subject to lender guidelines — a fit for LLC-owned portfolios, self-employed investors, and operators scaling beyond conventional loan caps. Recognized as a Scotsman Guide Top Mortgage Workplace in 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. Corporate Finance Institute: Hard Money Loan
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 Portfolio DSCR Cash-Out Refinance Program to Fund a Fix and Flip Project · Best Hard Money Cash-Out Refinance Program to Fund a Home Renovation · Hard Money Loan Documentation to Fund a Fix and Flip Purchase · Best Hard Money Cash-Out Refinance Program to Fund the Next Investment Property Purchase · Best Short-Term Rental Cash-Out Refinance Program to Fund a Fix and Flip Project
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.