Two short-term investor loans often get treated as one product, and that confusion costs borrowers money. The labels overlap, but the requirements do not always match. This guide lays them out side by side, so you can pick the structure that fits your deal.
The Quick Read: A bridge loan covers a timing gap and is sized mainly on the value of the property and the strength of your exit. A fix and flip loan funds a purchase plus a renovation and is sized on project cost and after-repair value. Both are business-purpose, interest-only loans with short terms.
- Sizing differs. On a purchase with no rehab, a bridge loan runs up to 80% of purchase price. A flip loan runs 85%, 90% or 93% of project cost, depending on completed projects, and every tier is capped at 75% of after-repair value.
- Refinances are tighter. Bridge refinance and cash-out files run up to 65% of value.
- Rehab money arrives in draws. Up to 100% of the rehab budget funds against completed work, so you front early costs.
- Terms are short. Both run 6-18 months, interest-only, with no prepayment penalty.
- The exit decides the file. A sale or a refinance into long-term financing has to be believable on paper.
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.
All figures here are typical ranges from select lenders in Lendmire’s wholesale network. They vary by lender, property, and experience, and none is a commitment to lend.
How Do the Two Loans Differ at the Core?
A bridge loan is defined by its job: it spans the gap between two events. A fix and flip loan is defined by its project: buy, renovate, sell. Corporate Finance Institute describes a bridge loan as short-term financing that meets current obligations until permanent financing arrives, backed by collateral.
In practice, a flip loan is a bridge with a renovation attached. A plain bridge usually has little or no rehab. That single difference drives almost every other requirement.
Investor bridges also differ from the consumer version, where a homeowner buys before selling. The investor product is business-purpose and sized to the asset, not to your personal paycheck.
Requirements Side by Side
The table below shows the structural differences. Every figure varies by lender, property, and experience.
| Factor | Bridge Loan | Fix and Flip Loan |
|---|---|---|
| Main purpose | Cover a timing gap | Buy, renovate, resell |
| Sized on | Purchase price or value | Project cost, capped by ARV |
| Purchase leverage | Up to 80% of price (no rehab) | 85/90/93% of project cost |
| Value cap | 65% of value on refi/cash-out | 75% of after-repair value |
| Rehab funding | Usually none | Up to 100% of budget in draws |
| Term and payments | 6-18 months, interest-only | 6-18 months, interest-only |
| Typical exit | Sale or long-term refinance | Sale, or refinance if it stalls |
Both use the same collateral rules. The property is non-owner-occupied residential, 1-4 units. Loans run up to $5,000,000, with larger amounts by exception.
What Does Each Loan Need From the Borrower?
Credit is similar for both. A 620 minimum score applies, with additional conditions below 660. Lenders look at the property, the plan, and the exit more than at your income.
Experience matters far more on flips. Leverage is tiered by documented completed projects. Under two projects, you land at the 85% tier. Two or more reach 90%, and five or more reach 93%. The top tier is reserved for experienced investors. First-time investors qualify at the lower tiers.
Bridge loans lean less on project history and more on equity and timing. A lender wants to see value in the collateral and a clear path to repayment.
Liquidity matters for both. Reserves and available cash vary by lender, but you should expect to show you can carry the loan if something slips.
How Does Underwriting Treat a Flip?
Underwriting a flip follows a set order, and each step feeds the next.
1. The lender sets two values. One is the as-is value today. The other is the after-repair value, or ARV, the estimated worth once work is finished.
2. Leverage is measured against project cost. Project cost means purchase price plus the renovation budget. The loan is sized to the lower of the cost test and the value test.
3. The ARV cap applies. Every tier stops at 75% of ARV, so an aggressive resale estimate cannot stretch the loan.
4. The rehab budget is held back. It is not wired at closing. It is released in draws as work is completed and inspected.
5. You pay interest only. The balance is repaid when you sell or refinance.
A budget with line items, a realistic scope, and comparable sales supporting the ARV makes the file easier to review. Vague scopes do the opposite.
How Does Underwriting Treat a Bridge?
Underwriting a bridge starts with collateral. That may be the subject property, another property you own, or both. The lender then asks one question: how does this get repaid?
A defined exit is the center of the file. The exit is either a sale or a refinance into long-term financing. A date, a plan, and a reason the plan works all help. “I will figure it out” does not.
Bridge loans often fund with little or no renovation. Common uses include a stabilized rental waiting on a long-term refinance, an acquisition that needs flexibility, or a purchase made before another property sells.
On a purchase with no rehab, leverage runs up to 80% of purchase price. On refinance and cash-out files, it runs up to 65% of value. Plan for the lower number if you are pulling equity out.
Where the Labels Overlap and Where They Break
Many lenders sell a flip loan and call it a bridge. Others sell a bridge and call it flip financing. The word on the page tells you little, so compare the structure instead.
Check four things on any quote:
- Leverage basis. Is it measured on cost, on after-repair value, or on as-is value?
- Rehab holdback. Does the loan fund renovation, and how is it released?
- Term and extensions. Does the term fit your real timeline, and what does an extension cost?
- Prepayment terms. In this program there is no prepayment penalty, but other products differ.
A mismatch is expensive. A flip loan with a short term on a slow stabilization leaves you refinancing under pressure. A bridge with no rehab funding on a gut renovation leaves you funding the whole job yourself.
For a closer look at how these two get sized, see Lendmire’s piece How a Hard Money Lender Sizes a Bridge Loan vs a Fix and Flip Loan.
Does Business Purpose Change the Paperwork?
Investor bridge and flip loans are business-purpose loans. That means they are reviewed differently from a standard owner-occupied mortgage. The CFPB’s Truth in Lending exam procedures treat credit to acquire or improve a non-owner-occupied rental as business purpose.
Documentation still matters. The OCC’s Truth in Lending handbook notes that a checked business-purpose box alone may not be enough evidence of purpose. Owner-occupancy also changes the answer. Compliance Alliance explains that the loan’s purpose matters more than the property label, with different unit-count rules for owner-occupied rentals.
For you, the practical takeaway is simple. Be ready to document how the proceeds will be used.
What Does the Draw Process Mean for Your Cash?
Rehab funding is the part borrowers misread most. A loan that funds up to 100% of the rehab budget does not mean you start with no cash. Draws reimburse completed work, so you often pay early costs first.
The 100% figure applies to the rehab budget only. It is not a purchase loan-to-value. There is no true 100% purchase program, so you still bring equity on the acquisition side.
Scope changes are a second trap. If repairs surface after your scope of work was submitted, a later draw may not credit them. The practical fix is a contingency line in the original budget. Lendmire’s article on the draw process for a remote out-of-state investor walks through the mechanics.
That makes your liquidity, not the headline leverage, the real limit on a flip.
Which Loan Fits Which Deal?
Match the loan to the work and the exit.
- Purchase with no rehab, refinance planned. A bridge fits, up to 80% of purchase price.
- Light cosmetic rehab and a resale. A flip loan fits, since the renovation budget is funded through draws.
- Heavy rehab. A flip loan fits, but your liquidity and a tight budget matter most.
- Equity pulled from a property you already own. A bridge fits, at up to 65% of value.
- A first flip. The 85% tier applies, so expect to bring more of your own cash.
What Happens If the Exit Slips?
Time is the main risk on both loans. The loans are interest-only, so carrying costs keep running while a sale drags or a refinance waits. Delays hurt in two places: your budget and your term.
Terms run 6-18 months, and there are no multi-year options on this program. If a flip stalls, you can sell, extend with the lender’s approval, or refinance. Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized and leased. The complete DSCR loans guide explains how that long-term loan is sized on rental income.
Keep one rule in mind about that exit. DSCR compares rent to the monthly payment of principal, interest, taxes, insurance, and dues. It does not measure repairs, vacancy, or management, so clearing the ratio is not the same as positive cash flow. Seasoning and lease requirements depend on the long-term program.
Key Terms Defined
After-repair value (ARV): The estimated worth of a property once renovations are complete.
Loan-to-cost: The loan amount as a share of purchase price plus the renovation budget.
Draw: A release of rehab funds after a portion of the work is finished and verified.
Interest-only: A payment structure where you pay interest during the term and repay the principal at the end.
Exit strategy: Your documented plan for repaying the loan, usually a sale or a refinance.
Business-purpose loan: A loan made for investment or business use, not for a home you live in.
Application Checklist
Gather these before you apply, since each one answers a question the lender will ask.
- Purchase contract, or current ownership documents for a refinance.
- A renovation budget with line items and a contingency.
- Comparable sales that support your ARV.
- A record of completed projects, if you have any.
- Proof of cash to cover down payment, early rehab costs, and carry.
- Your written exit plan with a target date.
- Entity documents if you borrow through an LLC, subject to lender program eligibility.
Frequently Asked Questions
Is a bridge loan the same as a fix and flip loan?
Not exactly. They overlap, but a bridge is defined by the gap it covers, while a flip loan is defined by a renovation project. Compare leverage basis, rehab funding, and term instead of trusting the label.
How much can I borrow on a fix and flip loan?
Leverage is typically measured on project cost: 85% with fewer than two completed projects, 90% with two or more, and 93% with five or more. Every tier is capped at 75% of after-repair value. Loans run up to $5,000,000, and all figures vary by lender, property, and experience.
Does 100% rehab financing mean I need no cash?
No. Up to 100% of the rehab budget funds through draws, but draws reimburse completed work. You usually front early costs, and you still bring equity toward the purchase.
What credit score do I need?
A 620 minimum applies, with additional conditions below 660. Underwriting stays asset-based, so the property, plan, and exit matter alongside your score. First-time investors qualify at the lower leverage tiers.
Can I refinance out of either loan?
Yes, that is the usual plan. You either sell or refinance into long-term financing. A rented, stabilized property can move into a DSCR loan, subject to that program’s lender guidelines.
Next Steps
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.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage brokerage specializing in DSCR investor loans, helping arrange financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. The model centers on property-level rental income reviewed by the lender rather than W-2 documentation, subject to lender guidelines, suiting entity-owned and multi-property investors. Lendmire holds Scotsman Guide Top Mortgage Workplace recognition for 2025 and 2026.
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References
1. Corporate Finance Institute: What Is a Bridge Loan?
2. CFPB: Truth in Lending Act Examination Procedures
3. OCC Comptroller’s Handbook: Truth in Lending Act
4. Compliance Alliance: Regulation Z and Investment Properties
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: National vs Local Hard Money Lender for a Fix-and-Flip Investor · How a Lender Sizes a Fix and Flip Loan on a 2-4 Unit Property · Portfolio DSCR Loan Experience Requirements for One Rental a Year
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.