The Quick Read: Covering the last sixty days of a six-month hard money note means treating the maturity date as fixed, checking four gates early (seasoning, appraisal, rent coverage, and paperwork), and running a refinance, an extension request, and a sale or paydown plan side by side so that one failure does not become a default. Nothing in the note adjusts for a late appraisal or a seasoning clock that has not run. The investors who exit cleanly are the ones who test each gate while there is still room to change course.
- Order a written payoff statement first, because every other number depends on it.
- Seasoning generally runs from the recorded deed, not from rehab completion or lease signing.
- The new lender sizes on its own appraisal, never on your after-repair estimate.
- Ask for an extension while the loan is still performing, not after maturity.
- Run the refinance application and the extension request in parallel.
Key Terms Defined
Maturity date: the day the full principal balance comes due on an interest-only hard money note.
Payoff statement: a written figure from the hard money lender showing principal, accrued interest, and fees through a stated date.
Per diem: the interest that accrues each day, which is why a payoff figure expires.
Seasoning: the minimum time a long-term lender wants you to have owned the property before it will treat a refinance as a cash-out.
Take-out loan: the long-term financing that replaces the hard money note. A DSCR loan is one example. It qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
Break-even appraisal: the lowest appraised value at which the new loan still repays the old one.
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.
Why the Last Sixty Days Behave Differently
A hard money note is a balloon product by design. NAR describes the interest-only balloon as a loan where payments cover interest and the entire principal comes due at the end of the term. NAR names foreclosure as the main risk of that structure.
Hard money terms in the network typically run 6 to 18 months, interest-only, with no prepayment penalty. Exact terms vary by lender, property, and experience. A six-month note sits at the short end of that range. Rehab, lease-up, seasoning, appraisal, and underwriting all have to fit inside it.
Two independent clocks run at once. One is the note’s maturity. The other is the long-term lender’s seasoning wait. Neither bends to accommodate the other, and seasoning is lender policy rather than law. That is why the final sixty days are a diagnosis window and not a waiting period.
Day 60 to Day 45: Diagnose the Gates
Four checks decide which exit is realistic. Run all four before spending money on an appraisal.
1. Read the note and get a payoff statement. Check the maturity date, extension terms, minimum-interest clauses, exit fees, and the per diem. Ask for a statement with a valid-through date. An expired statement forces a refresh later.
2. Check seasoning. Across the wholesale network, most long-term lenders count seasoning from the recorded deed. Rehab completion and lease signing do not restart or shorten it. Strong rent does not shorten it either, because rent and time are separate tests. Cash-out refinances on investment properties commonly expect about six months of ownership, though the exact wording differs by program. Get the start-date language in writing.
3. Check rent. Confirm a signed lease, a deposit, and a first month’s rent receipt. The new loan is usually fully amortizing, so rent has to cover a larger obligation than the old interest-only bridge did. DSCR compares monthly rent to the full monthly payment of principal, interest, taxes, insurance, and any HOA dues. Many select programs start at 1.00 coverage, and stronger ratios open better leverage and pricing. Clearing 1.00 does not mean the property produces positive cash flow. Repairs, vacancy, management, utilities, and capital expenses all sit outside the calculation.
4. Run the break-even appraisal math. This is the step most investors skip.
The Payoff Math Worksheet
Fill in the blanks with your own numbers, using the payoff as of the maturity date and not today’s payoff.
- Payoff = principal drawn + accrued interest + extension fees + any exit fee.
- Break-even appraisal = (payoff + exit costs) ÷ the new loan’s LTV cap.
- Cash back = new loan amount − payoff − closing costs. A negative result means you bring cash to close.
Here is a modeled illustration, not market data. Say payoff plus exit costs equals 100 units. A cash-out DSCR refinance on a rental typically caps near 75% LTV. The lender’s appraisal then has to come in at roughly 133 units (100 ÷ 0.75) just to repay the bridge, with nothing returned to you. Every month of delay adds interest and possibly an extension fee, so the payoff and the break-even number both rise.
The new lender’s appraisal sets value, and your ARV is only a planning figure. The loan is also the lesser of what value allows and what rent supports. A property can clear on value and still fall short on coverage, or the reverse.
Day 45 to Day 30: Pick the Path and File
By this point you should know which gates are open. The table below compares the exits.
| Exit | Best when | Main risk |
|---|---|---|
| Cash-out DSCR refinance | Seasoning has run and appraisal clears break-even | Low appraisal or unseasoned deed |
| Payoff-only (rate-and-term) DSCR | Seasoning has not run but rent is documented | No cash returned to you |
| Extension of the note | Loan is performing and a refinance is pending | Discretionary, usually carries a fee |
| Sale or cash paydown | Property is listed, under contract, or equity is liquid | Price pressure, capital out of pocket |
A refinance that covers only the payoff and closing costs is generally treated as rate-and-term. It becomes cash-out when money comes back to you, and that label sets the leverage cap and the seasoning rule. Rolling extra fees or unpaid draws into the new loan can tip a payoff-only deal into cash-out treatment, so watch what goes into the loan amount.
Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path through select lenders in its wholesale network. The complete DSCR loans guide covers how coverage, leverage, credit, and reserves fit together.
If coverage falls below 1.00, a separate path exists through select lenders in the network, with leverage and terms adjusted. That path is a structural choice and not a fix, so weigh it against extending instead.
Day 30 to Day 0: Protect the Exit
Most stalled files stall on paperwork rather than on seasoning. Keep these items ready:
- Settlement statement from the original purchase
- Hard money note and draw history
- A current written payoff statement
- Signed lease, deposit, and first rent receipt
- Entity documents, if the property is held in an LLC (subject to lender program eligibility)
- Reserve verification, which commonly runs around six months of PITIA but varies by lender, leverage, and loan size
Order the appraisal only after the work is finished and photographed. Leave room at the end for the lender’s file review. Re-check the payoff statement’s valid-through date each time the calendar moves, since an expired figure stops a closing as surely as a missing lease.
Asking for an Extension Without Weakening Your Position
Extensions are discretionary. A hard money lender has no obligation to grant one, and the request lands very differently before maturity than after it. Before maturity it is a negotiation with a performing borrower. After maturity it is a default conversation.
Prepare the request the way you would prepare a loan file. Bring the status of the project, the refinance application already filed, an estimate of the new payoff, and evidence the property is rentable or under contract. Some lenders want a partial paydown, a signed contract, or a refinance application on file before they agree. Extension fees are a budget item, and no reliable neutral public source gives a typical figure, so use the number in your own note and ask for it in writing.
Run the extension request and the refinance application in parallel. If the extension is denied, the refinance is already moving. If the refinance stalls, the extension is already in discussion.
If the plan includes a sale, build the listing, price-reduction, and contract calendar backward from the maturity date. Tax treatment varies; consult a qualified professional.
Where the General Rule Breaks
Cash buyers get a seasoning exception; you probably do not. Delayed-purchase style exceptions are built for cash purchases. A property bought with hard money shows financing on the settlement statement, so it generally does not fit.
Unfinished rehab at day sixty. Most lenders want the property in rentable condition. If the scope is not done, the realistic choices are an extension while you finish the work or a program built for unfinished properties, if equity is sufficient. A long-term loan will not close on an unfinished property.
Low appraisal. Remedies run from more affordable to most expensive: bring cash, switch to payoff-only, extend for a second appraisal or more seasoning, or sell. A second appraisal makes sense only when the gap is large and the comparable-sales evidence is real.
Coverage below the program floor. A sub-1.00 path through select lenders is one option, and an extension is the other. Be careful about locking a weak position into a long-term loan with a prepayment penalty.
Refinancing into another hard money loan. This is possible, but it adds cost and only moves the balloon. Refinance leverage on a non-owner-occupied 1-4 unit hard money loan typically tops out at 65% of value, varying by lender, property, and experience.
Recourse. Do not assume a small-balance hard money note is non-recourse. Guarantees vary, so read your own note.
Properties outside the network. DSCR loans are not offered on manufactured homes, log homes, or barndominiums, so a take-out plan for one of those property types needs a different exit.
If It Goes Wrong
The CFPB explains that refinancing before a balloon comes due can avoid the payment, but a drop in property value or a worse financial position can block that refinance. It also notes that failing to pay can lead to foreclosure. That page describes consumer mortgages, and hard money notes are business-purpose investor loans, so the exact protections differ. The core lesson still applies: a refinance is a plan and not a promise.
If the appraisal comes in low, the extension is denied, or the lender drops out, triage in this order:
1. Call the hard money lender at once and say what happened.
2. Ask whether a short extension or forbearance is possible with a paydown.
3. Check whether a payoff-only refinance clears at the lower value.
4. Bring in cash or partner capital to close the gap if the numbers justify it.
5. Move to sale if none of the above fits.
Default pricing is spelled out in the note, so read it before maturity and not after.
What the Decision Looks Like in Practice
Picture three investors at day sixty. The first has a finished, leased property, owned long enough that seasoning has run, and a break-even number the property should clear. That investor files the cash-out DSCR application and asks for a short extension as insurance. The second has a finished, leased property that was bought recently. That investor files a payoff-only refinance, which retires the bridge, and plans to pull equity later once seasoning runs. The third still has rehab left. That investor skips the refinance, asks for an extension now, and finishes the scope.
The better fix is usually deciding the exit before the bridge closes. A broker can run a scenario against several lenders’ guidelines at that stage, and that review is not a commitment to lend. If a refinance is a possibility rather than a certainty, a six-month term on a heavy rehab leaves very little slack, and a longer term in the 6-to-18-month range may be the better bridge. Lendmire’s article Can a Rehabber Skip the Six-Month Wait Out of Hard Money Into DSCR? explores that tradeoff.
Waiting only pays when expected appreciation times the LTV cap exceeds the cost of carry plus any extension fee. If it does not, the delay is a loss.
Frequently Asked Questions
Can I refinance a hard money loan before the seasoning period ends?
Yes, through a payoff-only refinance that returns no cash. It retires the bridge without a cash-out label, and you can pull equity later once seasoning runs. The exact treatment varies by lender and program.
Does a signed lease shorten the seasoning wait?
No. Seasoning generally runs from the recorded deed, and rent is a separate test. A lease helps the coverage ratio but does not move the ownership clock.
Is an extension automatic if my loan is performing?
No. Extensions are discretionary, usually carry a fee, and are easier to get before maturity than after. Ask early and bring evidence that an exit is underway.
What if my appraisal comes in below the break-even number?
You can bring cash to close, switch to payoff-only if the numbers allow, extend for more time, or sell. A second appraisal is worth it only when the gap is large and the comps support a higher value.
Does clearing 1.00 coverage mean the rental is profitable?
No. DSCR compares rent to the full monthly payment and nothing else. Vacancy, repairs, management, and capital expenses sit outside it.
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 and DSCR exits based on the project, the exit plan, leverage, and your goals. Lendmire arranges financing through select lenders in its wholesale network, across 41 markets including Washington, D.C. Program terms vary by lender, property, and experience, and nothing here is a commitment to lend.
The calendar in the final sixty days rewards the investor who treated day one of the loan as the start of the exit.
For current guidelines and terms, see Lendmire’s DSCR loan programs page.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage focused on DSCR investor financing, helping arrange programs through wholesale and investor-lending channels in 41 markets, including Washington, D.C. DSCR loans are evaluated by the lender on property cash flow rather than personal income, subject to lender guidelines, supporting LLC closings and accommodating investors with four or more financed properties. Scotsman Guide Top Mortgage Workplace in both 2025 and 2026.
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References
2. CFPB – What is a balloon payment?
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 Payoff Requirements When the Loan Matures · Does a Hard Money Lender Cap Loan to Cost on a Flip? · Hard Money Loan Recourse Terms for Individual Borrowers
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.