The Quick Read: The total liquid cash you need is the equity gap, plus lender and third-party fees, plus the money you front before the first draw is reimbursed, plus reserves you must still hold after closing, and the exact total varies by lender, property, and experience.
- Equity gap: On fix-and-flips, the network’s tiers fund 85%, 90%, or 93% of project cost depending on your completed projects. Every tier is capped at 75% of after-repair value.
- Fees are mostly extra: Lender charges, title, and insurance are generally paid at closing, not financed. Some lenders let you roll certain costs in.
- Float is real: Rehab money is released in draws against completed work, so you often front early costs.
- Reserves are a separate pot: They are cash you show and still hold after closing, not cash you hand over.
Most new investors ask one question: how much do I wire? The better question is how much do I need to have, all in, before the deal is safe.
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.
Key Terms Defined
Cash to close is the money you bring to the closing table. It covers the equity gap, fees, and prepaid items.
Reserves are liquid funds you still hold after closing. A lender wants to see them as proof you can carry the loan.
Loan-to-cost is the loan as a share of purchase price plus rehab budget. Your equity is what remains.
After-repair value (ARV) is the estimated value of the property once the work is finished.
Draw is a release of rehab funds after a completed stage of work is inspected.
Float is the money you front before a draw reimburses you.
Proof of funds is the bank or investment statements showing you have the cash.
What Cash to Close Actually Includes
Cash to close is bigger than the down payment line on a term sheet. It is the equity gap plus every cost the loan does not cover. Some costs are wired at closing, and some leave your account later.
| Item | Paid to | Usually financed? |
|---|---|---|
| Equity gap | Seller, via title | No |
| Lender origination charges | Lender or broker | Generally no |
| Title and settlement | Title company | Generally no |
| Insurance and escrows | Insurer, escrow | Generally no |
| Appraisal and inspections | Third parties | Generally no |
“Generally no” is the honest answer. A few lenders allow some closing costs to roll in or be paid at sale. Treat that as a perk to confirm in writing, never a planning assumption.
Small loans feel this most. Title, appraisal, and insurance costs don’t shrink when the loan does, so a modest balance carries a heavier fee load as a share of the deal.
How Lenders Size the Equity Gap
Lenders size a fix-and-flip loan on the lesser of two tests: a share of total project cost, and a share of ARV. Whichever test produces the smaller loan sets your equity. Across the wholesale network Lendmire works with, leverage rises with documented experience.
| Program | Maximum leverage | Basis |
|---|---|---|
| Flip, 5+ completed projects | 93% | Project cost, capped at 75% of ARV |
| Flip, 2+ completed projects | 90% | Project cost, capped at 75% of ARV |
| Flip, fewer than 2 projects | 85% | Project cost, capped at 75% of ARV |
| Bridge purchase, no rehab | Up to 80% | Purchase price |
| Cash-out or rate/term refinance | Up to 65% | Value |
| Rehab budget | Up to 100% | Funded in draws |
These are typical ranges that vary by lender, property, and experience. Nothing here is a commitment to lend.
Here is the part people miss. The 100% rehab figure is a draw feature, not a purchase loan. No program in the network funds 100% of the purchase price. The top tier is reserved for experienced investors.
Which cap binds? Two scenarios
Say a project costs 80% of ARV (purchase plus rehab). At the 85% tier, the loan is 68% of ARV. That sits under the 75% cap, so cost governs. Your equity is 15% of project cost.
Now say the project costs 90% of ARV. The same 85% tier would imply a loan of 76.5% of ARV. That breaks the cap, so the loan is held to 75% of ARV. Your equity is 15% of ARV, which is about 16.7% of project cost.
Same investor, same tier, different deal, different cash. A thin deal, where cost sits close to ARV, pushes the ARV cap into play. It also shrinks your margin, so it hits you twice. Experienced borrowers at the 93% tier hit the cap sooner, because 93% of cost passes 75% of ARV whenever project cost exceeds about 80% of ARV.
Credit matters too, though underwriting stays centered on the property, the plan, and the exit. A 620 score is the minimum in the network, with additional conditions below 660. First-time investors qualify at the lower leverage tiers. Loan amounts run up to $5,000,000, larger by exception, and smaller balances vary by lender.
Where Reserves Fit
Reserves are not part of cash to close. They are what is left in your account afterward. Lenders want proof you can carry interest payments and absorb surprises before the project sells or refinances.
Think of it this way: cash to close leaves your account, reserves stay in it. A lender will verify both, but only one gets spent.
Hard money terms are interest-only, so the monthly carry is interest alone, and the term runs six to eighteen months with no prepayment penalty. Lenders usually express the reserve requirement as several months of those payments. Lenders size it as a share of the rehab or a set cushion. Those methods give different answers on the same deal, so ask which one your lender uses before you plan around a number.
Two practical points:
- Funds should be seasoned. Money that has sat in your account looks cleaner than a large recent deposit. Lenders ask where fresh deposits came from.
- Reserves can drain. Early rehab spending, an inspection surprise, or a contractor deposit can pull your balance below what you showed at closing. Plan so it doesn’t.
Cash to Close a Hard Money Deal Including Reserves: The Full Formula
Use this fill-in-the-blanks structure to build your total liquidity number. It is deliberately in percentages and placeholders, since each lender’s term sheet supplies the actual dollars.
| Bucket | What goes in | When it leaves |
|---|---|---|
| 1. Equity gap | Project cost minus loan, per the cap that binds | At closing |
| 2. Fees and third-party costs | Origination, title, appraisal, insurance, escrows | At closing |
| 3. Contractor float | Starting deposit, early materials, permits | After closing |
| 4. Interest carry | Interest-only payments until exit | Monthly |
| 5. Reserves | Verified liquidity the lender requires | Held, not spent |
| 6. Contingency | Overruns the loan will not cover | As needed |
Total liquidity is the sum of all six. A realistic cash plan includes every line.
Here is the structure in a modeled example. Assume a first-time flipper at the 85% tier, a deal where cost governs, and a project cost of 80% of ARV. The equity gap is 15% of project cost. Add fees and escrows on top, since they are generally not financed. Add the float for the contractor’s starting deposit. Add the interest carry. Add the reserve the lender requires. Contingency goes last. The result is a figure well above the 15% most people hear.
Overruns are your cost, not the lender’s. The loan covers the rehab budget agreed at closing and nothing beyond it.
The budget was agreed, the budget was funded, and the extra framing repair came out of the investor’s pocket.
When the Money Leaves Your Account
Knowing the timing helps you hold cash in the right place.
1. At closing: You wire the equity gap and pay fees, insurance, and escrows. Title issues the settlement statement, and that document shows your real cash to close.
2. Right after closing: You fund the contractor’s starting deposit and early materials. A new investor often fronts these costs, then gets reimbursed after the work is inspected. Experienced borrowers may get advances.
3. Each month: Interest-only payments come due while the work proceeds. These are the payments your reserves are meant to cover if the project stalls.
4. Each draw cycle: The lender releases money for completed stages. Your float shrinks, then refills.
5. At exit: You sell, or you refinance. A refinance has its own cash needs, covered below.
Where the General Rule Breaks
Every rule above has an edge. These are the ones that change the number most.
Experience changes everything. The same property needs more equity from a first-timer than from an investor with five or more completed projects. This is why quoted “down payment” figures online disagree. They describe different borrowers.
Seller credits can shrink the gap. A seller may credit part of the closing costs or items like prorated property taxes. A credit lowers what you bring, though a lender may limit how much it will count.
Borrowed down payments cause trouble. Many lenders disallow secondary financing for the equity gap. Large deposits also trigger sourcing requests. If you plan to refinance into long-term rental financing later, borrowed cash can complicate that file too.
Entity borrowers and disclosures. DSCR and hard money loans are business-purpose investor loans, so they are reviewed differently from a standard owner-occupied mortgage. The CFPB’s Regulation Z rule exempts credit extended primarily for a business purpose, and the eCFR text also covers credit to someone other than a natural person. The practical result: there is no standardized consumer closing disclosure for you to compare. Your term sheet and the title company’s settlement statement are the documents that tell you the real cash to close. Borrowing through an LLC is common, subject to lender program eligibility, and entity papers become part of your document package.
Refinance and bridge loans are different animals. A bridge purchase without rehab runs up to 80% of purchase price. A refinance runs up to 65% of value. Cash to close on a refinance depends on payoff, fees, and the new loan size rather than a purchase gap.
Thin deals may not return your cash. If margins are narrow, the exit refinance may not pay you back what you put in. In some cases it may require additional cash at that exit. Model the exit before you buy.
Some property types are not offered. The hard money program covers non-owner-occupied residential property, one to four units, with ground-up construction up to ten units. Commercial, land, and owner-occupied property are not on the sheet.
Planning the Exit Before You Buy
Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized and rented, and Lendmire brokers that path. A DSCR loan qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Stronger coverage opens better terms. Coverage below 1.00 is available through select lenders in the network, with leverage and terms adjusted.
The exit has its own cash needs, and that is where flips go sideways. A cash-out refinance on a standard rental investment property tops out around 75% LTV, and about six months of seasoning is the common expectation. DSCR lenders also count reserves in months of PITIA (principal, interest, taxes, insurance, and any HOA dues) after closing. The number varies by lender, leverage, and loan size, and it generally steps up on larger loans.
Clearing 1.00 coverage is not the same as positive cash flow. DSCR compares rent to the payment only. Repairs, vacancy, management, and utilities sit outside the calculation.
For deeper detail, Lendmire’s piece How Reserves Are Counted on a BRRRR Cash-Out Refinance After Hard Money walks through the exit side. Another piece covers what a BRRRR cash-out refinance returns after the hard money payoff. The complete DSCR loans guide explains the long-term side from the start.
Pre-plan the exit reserves too. The investor who budgets only for closing often has nothing left for the refinance.
Mistakes That Wreck the Cash Plan
- Treating hard money as covering everything. The loan funds the budget agreed at closing. Overruns and anything unbudgeted are yours.
- Reading 85% as 15% cash. Fees, escrows, float, and reserves sit on top.
- Counting reserves as spendable. If you spend them on the rehab, you may fall below what the lender needs to see.
- Ignoring the ARV cap. A thin deal turns a 15% gap into a larger one.
- Moving money around before applying. Large unexplained deposits slow down the file.
- Skipping the settlement statement. The term sheet is a plan, and the settlement statement is the real number.
Proof-of-Funds Checklist
A typical package includes:
- A signed purchase contract
- A scope of work and a line-item rehab budget
- ARV comparables supporting your projected value
- Recent bank or investment statements
- Title work
- Entity documents, if you are borrowing through an LLC
Experience documentation matters here too. Completed-project records can move you into a higher leverage tier, which cuts the equity gap.
Frequently Asked Questions
Are reserves paid at closing?
No. Reserves are funds you must show and still hold after closing. Cash to close leaves your account at the table, while reserves stay put as proof you can carry the loan. The required amount varies by lender, property, and experience.
Can fees be rolled into the loan?
Sometimes, but plan as if they cannot. Lender charges, title, and insurance are generally paid at closing, and a few lenders allow certain costs to be rolled in or paid at sale. Get that in writing before you count on it.
Does my down payment count toward reserves?
No. The equity gap is spent at closing, so it cannot also sit in your account. Lenders look at what you hold after paying the table. If your statements show only enough to close, reserves are the missing piece.
Can I borrow the cash to close?
It is risky. Many lenders disallow secondary financing for the equity gap, and borrowed funds can complicate a later refinance into long-term financing. Large deposits also need a paper trail. Talk to your broker before you move money.
Is cash to close different for a bridge loan or a refinance?
Yes. A bridge purchase without rehab runs up to 80% of purchase price, and a refinance runs up to 65% of value. A refinance has no purchase gap, so cash to close depends on payoff amounts, fees, and the new loan. All terms vary by lender, property, and experience.
What to Do Next
Build the six-bucket total before you make an offer, and keep it next to the lender’s term sheet. 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. Call 828-256-2183 to talk through the file. Lendmire is a mortgage broker arranging financing through select lenders in its wholesale network across 41 markets, including Washington, D.C.
The investors who stay solvent through a rehab are rarely the ones with the best deal. They are the ones who counted the float, the carry, and the reserve before they wired a dollar.
About Lendmire
A DSCR-focused mortgage broker, Lendmire (NMLS# 2371349) places investor financing across 41 markets — 40 states plus Washington, D.C. — with DSCR eligibility generally reviewed by the lender on property cash flow instead of tax returns, subject to lender guidelines. Scotsman Guide named Lendmire a 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. CFPB, Regulation Z § 1026.3 (exempt transactions)
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Hard Money Loan Proof of Funds Requirements for a Cash Offer · Can a Flipper Borrow More Than the Hard Money LTV Limit? · Hard Money to DSCR Seasoning Rules After a Flip
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.