The Quick Read: On a hard money flip, your down payment is the gap between total project cost and the loan, so you cover it with your own cash, a disclosed partner, a pledge of other property, or a deal priced low enough to shrink the gap.
Across Lendmire’s wholesale network, flip leverage is sized on project cost and then capped against after-repair value (ARV). No true 100% purchase program exists. Everything below varies by lender, property, and experience, and none of it is a commitment to lend.
- The gap is purchase price plus rehab budget minus the loan, and the ARV cap can make it larger.
- Typical network tiers run 85%, 90%, or 93% of project cost, depending on completed projects, always capped at 75% of ARV.
- Rehab money comes in draws after work is done, so you often front rehab costs first.
- Your real cash need includes fees, interest carry, and reserves on top of the down payment.
- Any money you use must be traceable and disclosed to the lender.
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.
What Does “Down Payment” Mean on a Flip?
It means the part of the project the lender will not fund. A homebuyer’s down payment is a percentage of price. A flip down payment is a result: total cost minus what the lender advances.
Start with purchase price plus rehab budget. That is project cost, and lenders express leverage against it as loan-to-cost (LTC). Then the lender runs a second test against ARV, the value the property should reach once the work is finished. As a BiggerPockets discussion on LTC versus LTV explains, loan-to-value with hard or private lenders is almost always measured on ARV, and the lender uses whichever test gives the smaller loan.
That “lower of two” rule is why two flips with the same purchase price can need very different cash. A thin ARV can shrink the loan below the cost-based number, and the difference lands on you.
Hard money is collateral-driven. Experian notes that the property secures the loan and lenders weigh the merits of the investment over the borrower’s creditworthiness. Credit still matters in our network, where a 620 minimum score applies with added conditions below 660. But the deal, the plan, and the exit lead.
How Much Does the Network Typically Require?
Leverage on a fix-and-flip is tiered by experience. On most files we place, it runs 85% of project cost with fewer than two completed projects, 90% of project cost at two or more, and 93% of project cost at five or more. Every tier is capped at 75% of ARV.
| Borrower experience | Loan-to-cost (typical) | ARV cap |
|---|---|---|
| Fewer than 2 completed projects | Up to 85% of project cost | 75% of ARV |
| 2+ completed projects | Up to 90% of project cost | 75% of ARV |
| 5+ completed projects | Up to 93% of project cost | 75% of ARV |
Two details matter here. First, up to 100% of the rehab budget funds in draws against completed work. That is a rehab-budget figure, not a purchase loan-to-value. Second, a bridge purchase with no rehab runs up to 80% of purchase price.
So is there a zero-down flip? Not as a program. The top tier is reserved for experienced investors, and even there the lender keeps equity in the deal. What does exist is a deal bought far enough below ARV that the cost-based loan fits under the ARV cap, which still leaves you with a cost-side gap.
Market surveys report a wide spread of expectations across private lenders. Nav says most hard money lenders want the borrower to put in some of their own money, and that some apply loan-to-value to ARV rather than purchase price. Treat those as market context. The network figures above are the ones that govern files we place.
Walking Through the Math
Here is the step-by-step, using percentages so you can plug in your own deal.
1. Add purchase price and rehab budget. The total is your project cost, the base every loan-to-cost tier is measured against.
2. Apply the cost tier. An investor with two completed flips lands near 90% of project cost, so the cost-side gap is about 10% of project cost.
3. Run the ARV test. Take 75% of your ARV. If that figure is lower than the cost-based loan, the lower number governs.
4. Subtract the loan from project cost. What remains is your gap.
Say you are a first-time investor at the 85% tier. Your cost-side gap is 15% of project cost. Now suppose your ARV estimate is modest and 75% of it falls below 85% of cost. The ARV cap binds, and your gap grows by the difference. That is the number most beginners miss: the tier is a ceiling, not a promise.
An experienced investor runs the same steps and often finds the cost tier binds instead. That is the investor whose cash goes furthest, because the deal was bought with spread between cost and ARV.
Why You Often Front the Rehab Money
Rehab funds are controlled money. The lender releases them in draws as milestones are completed, which means you usually pay a contractor first and get reimbursed after an inspection. A BiggerPockets thread on hard money flip math describes the same pattern: a down payment first, then rehab financed as work progresses.
“100% rehab financing” therefore does not mean the rehab is free. It means the budget is eligible for reimbursement. The cash you need between draws is real, and it belongs in your plan alongside the down payment.
What Else Comes Out of Pocket?
The down payment understates your check. Plan for these buckets:
- The cost-side gap, from the math above.
- Lender and closing costs, which Nav says are usually paid at closing.
- Interest carry. Network terms are 6-18 months, interest-only, with no prepayment penalty, so you carry the interest until you sell or refinance.
- Rehab float between draws.
- Reserves. Lenders look for post-closing liquidity, and requirements vary by lender and experience.
Add these up before you commit to a purchase contract. A flip that works at the down payment line and fails at the full-cash line is the classic first-deal mistake.
Where the Cash Can Come From
Several structures work. Each has a different risk, and each has a different lender reaction.
| Source | What you risk | How lenders tend to view it |
|---|---|---|
| Your own cash | Your savings | Cleanest; needs statements |
| Equity partner or JV | Profit share | Fine if disclosed and documented |
| Cross-collateral | Equity in another property | Common; liens attach to both |
| Buying below ARV | Deal risk | Shrinks the gap, not the need |
| Seller carry or second lien | Added debt | Senior lender must permit it |
| Borrowed funds | Layered debt | Scrutinized; can conflict with rules |
Your own cash. This is the simplest path. Lenders ask for recent bank or brokerage statements to confirm the money exists and has a trail.
An equity partner. One partner supplies cash while you bring the deal, manage the rehab, and run the sale. A BiggerPockets answer on ARV-based lending describes this split of cash equity and sweat equity. It also says that lenders who advance beyond the usual loan-to-cost tiers, which step down for borrowers with fewer completed projects, typically charge more or want a share of profit. Partner funds wired in without warning draw questions, so disclose the arrangement and paper it before closing.
Cross-collateral. You pledge equity in a property you already own instead of putting in cash. It can reduce the cash you bring, but a stalled flip now puts two properties at risk.
Buying far enough below ARV. A BiggerPockets thread on 100% financing says full financing works only when the deal is so good that the total loan still lands inside the lender’s ARV cap, with experience and bank liquidity as the mitigating factors. The spread is the strategy. The discount buys you leverage.
Seller carry-back or a second lien. These can work, but your first-position lender has to allow them. Ask before you sign anything.
Borrowed down payment. Personal loans or other borrowed money layer a second obligation on top of the flip. That can conflict with the senior lender’s rules, and it can complicate your exit. Honestly, it is the option we would steer a newer investor away from.
Sequencing the Deal
Order matters more than most investors expect. A workable sequence looks like this.
1. Underwrite the deal on paper. Estimate ARV, rehab scope, and the full cash stack before you make an offer.
2. Pick your funding source for the gap. Decide on cash, partner, or cross-collateral, and line up statements or agreements.
3. Share the plan with your broker early. Disclose partners and any pledged property up front so the structure fits the lender’s rules.
4. Place the file. A broker compares programs across the network based on the project, your experience tier, and the exit.
5. Close and fund the gap. You bring the cash, and the lender funds the loan against the purchase.
6. Manage the draws. Keep reserve cash on hand to bridge the time between work completed and reimbursement.
7. Exit. Sell, or refinance if you are keeping the property.
This is a business-purpose loan on a non-owner-occupied 1-4 unit property, so lenders review it on the project and the plan rather than on a standard owner-occupied mortgage checklist.
What the Lender Wants to See
Expect to document the following, though the exact list varies by lender, property, and experience:
- The purchase contract and a clear rehab scope and budget.
- Your estimate of ARV, usually supported by comparable sales.
- Bank or brokerage statements showing the cash for the gap and reserves.
- A track record, if you have one. Experience is what moves you up the leverage tiers.
- An explanation and paper trail for any non-personal funds, such as partner capital.
On experience, the BiggerPockets thread on 100% financing frames it as the best signal that an investor will carry a project through to the ARV. That matches what we see. Lenders fund more as you prove you can finish.
Stress-Test Your Funding Before You Close
What happens if the sale takes longer than planned or the property appraises below your ARV? Run both cases before you commit.
A delay extends interest carry, and the loan term is finite at 6-18 months. A lower ARV can pull down the 75% cap, which matters at refinance or sale. An overrun eats the cash you set aside for float between draws.
If your gap money is your own savings, those scenarios cost you time and profit. If it is a partner’s capital, they cost you a conversation. If it is cross-collateral or borrowed money, they can put other assets at risk. A good rule of thumb: pick the source you can afford to have tied up for the full term plus a delay.
Which Source Fits Which Investor?
| If you are… | Start with |
|---|---|
| A first-timer with savings | Your own cash at the 85% tier |
| Short on cash, strong network | A disclosed JV partner |
| Holding equity in another property | Cross-collateral, with caution |
| An experienced flipper | Buying below ARV to use the 90% or 93% tier |
Mistakes That Sink the Cash Plan
- Budgeting only the down payment. Fees, carry, and rehab float add up.
- Assuming the top tier. The 93% tier is for investors with five or more completed projects.
- Ignoring the ARV cap. An optimistic ARV is the usual reason the loan comes in smaller than expected.
- Hiding partner money. Undisclosed funds raise red flags. Disclose early.
- Stacking debt you cannot service. A borrowed gap that outlives the flip is a problem on its own.
Many investors also plan the exit before they close. If you intend to keep the property as a rental, many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, a path Lendmire brokers. Our complete DSCR loans guide explains how that works.
Key Terms Defined
Down payment (on a flip): The part of total project cost the lender does not fund, which you pay from your own or disclosed funds.
Loan-to-cost (LTC): The loan as a percentage of purchase price plus rehab budget.
After-repair value (ARV): The estimated value of the property once the renovation is finished.
Draw: A release of rehab funds after a milestone of work is completed.
Cross-collateral: Pledging equity in another property to support the loan in place of cash.
Reserves: Liquid cash a lender wants you to hold after closing.
Frequently Asked Questions
Can I do a hard money flip with nothing down?
Not through a true 100% purchase program. The network’s top tier is 93% of project cost for experienced investors, capped at 75% of ARV. A deal bought well below ARV can shrink your gap, but fees, carry, and reserves still need cash.
Does the down payment cover the rehab too?
No. The down payment closes the gap between cost and loan. Rehab funds, up to 100% of the budget on most programs, are released in draws after completed work, so you often front costs and get reimbursed.
Can a partner provide my down payment?
Yes, if the arrangement is disclosed and documented. Partner capital is a common structure, but lenders want a traceable source and may ask for the agreement. Surprise wires from undisclosed parties create problems.
Does my credit score matter on hard money?
It matters less than the deal, but it is not ignored. The network generally wants a 620 minimum, with added conditions below 660. Experian notes the focus falls on the investment rather than the borrower’s creditworthiness.
What if I want to keep the house after the flip?
Hard money terms run 6-18 months, so you would refinance. Many investors move into long-term DSCR financing once the property is stabilized. Eligibility depends on lender guidelines, coverage, and the property.
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. Leverage, terms, and eligibility vary by lender, property, and experience.
About Lendmire
As a DSCR and non-QM mortgage broker, Lendmire — NMLS# 2371349 — connects investors with wholesale lending channels across 41 markets, including Washington, D.C. The property’s rental income, not the borrower’s traditional personal-income documentation, is central to lender review for DSCR loans, which works for self-employed operators and portfolios beyond four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Short-term financing tends to work best when the long-term plan is decided early – see refinancing out of a hard money loan with a DSCR loan.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your investment property. No commitment required.
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. BiggerPockets forum: LTC or LTV for down payment
2. Experian: How do hard money loans work?
3. Nav: How do hard money loans work?
4. BiggerPockets forum: Financing for flip with hard money
5. BiggerPockets forum: LTV/ARV with hard money
6. BiggerPockets forum: Hard money lenders discussing high-leverage, cost-based financing
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 Down Payment vs HELOC Draw for an Investor Purchase · How Hard Money Lenders Count a Self-Employed Borrower’s Down Payment · Hard Money Bridge Down Payment Documents for a Single-Family Home
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.