The Quick Read: You cover a hard money flip down payment by documenting your own cash, or by structuring outside money the lender accepts, because the lender finances only a share of project cost and you fund the rest, plus fees and early rehab costs, before the first reimbursement draw arrives.
- Across the network Lendmire places files through, fix-and-flip leverage runs 85% of project cost with fewer than two completed projects, 90% at two or more, and 93% at five or more. Every tier is capped at 75% of after-repair value. Exact terms vary by lender, property, and experience.
- The lower of the cost test and the after-repair-value test sets your loan. Overpay, and your cash requirement grows.
- There is no true 100% purchase program. Up to 100% of the rehab budget can fund in draws against completed work, and that is a different thing.
- The down payment is only one bucket. Fees, prepaid interest, reserves, and early rehab spending sit on top of it.
- Lenders care where the cash came from. Document it before you need it.
Why Does the Lender Want Your Cash in the Deal?
Because your own money is the lender’s cushion. Hard money is asset-based lending on a short loan, so the lender sizes against the property, the plan, and the exit. If the flip stalls, your equity absorbs the first losses.
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.
Underwriting here looks at two values at once. One is the cost of the project: purchase plus rehab. The other is the after-repair value (ARV), meaning what the finished house should sell for. The lender runs both tests, and the smaller loan wins.
That is why a lender can offer a high cost percentage and still hand you a smaller check than you expected. On the programs we see, the cost percentage depends on how many projects you have completed. The ARV cap is the same for every tier.
The pattern holds across most lenders: the most experienced investors get the most leverage, and first-timers fund the most themselves. Credit matters too. A 620 score is the minimum on the program we work from, with extra conditions below 660. First-time investors qualify at the lower leverage tiers, subject to lender guidelines. Underwriting stays asset-based, meaning property, plan, and exit.
What Cash Do You Actually Need?
You need more than the gap between price and loan. Think in buckets, and plan for all of them.
| Bucket | What it pays for | Borrowed funds? |
|---|---|---|
| Equity gap | Your share of project cost | Confirm with lender |
| Closing costs | Lender fees, title, insurance, appraisal | Confirm with lender |
| Prepaid interest | Interest-only carry set aside at closing | Confirm with lender |
| Reserves | Cushion for carry and overruns | Often must be your own |
| Early rehab | Phase one of work, before reimbursement | Usually flexible |
Two points deserve emphasis. First, rehab money is reimbursement, not cash in hand. The renovation budget sits in a holdback and is released in stages after work is completed and inspected. You front each phase and get repaid. Tactica RES describes investors covering that first round with their own cash or a card, then paying the balance down when the draw lands.
Second, the carry is real. Offer Market notes that payments are interest-only, that points come out of the closing, and that lenders expect reserves. Reserves cover the carry and the surprises. A plan that funds the down payment and leaves nothing for reserves is a plan that can fail.
How Underwriting Sizes the Loan, Step by Step
Here is the sequence a lender follows, and where your cash gets decided.
1. The lender establishes two values. One is the as-is value or purchase price. The other is the projected ARV.
2. It applies the cost percentage. On the program parameters we work from, that is 85%, 90%, or 93% of project cost, depending on your completed projects.
3. It applies the ARV cap. Every tier is capped at 75% of ARV.
4. It takes the smaller number. That is the loan. Your equity is everything else.
5. It splits the loan. The purchase portion funds at closing. The rehab portion funds in draws against completed work.
Now run it with modeled assumptions, expressed as percentages of ARV. These are illustrations, not market data.
Clean deal. Say you buy at 60% of ARV and budget rehab at 15% of ARV. Project cost is 75% of ARV. At the 90% tier, the cost test gives 67.5% of ARV, which sits under the 75% cap. Your equity is about 7.5% of ARV.
Overpaid deal. Now say you buy at 70% of ARV with the same rehab at 20% of ARV. Project cost is 90% of ARV. At the 90% tier, the cost test gives 81% of ARV, but the cap holds the loan to 75%. Your equity is about 15% of ARV, double the clean deal’s, on a project that is only modestly bigger.
That is the part many new investors miss. Deal quality is a financing variable, not only a profit variable. A thin margin does not just shrink your profit. It increases the cash you must find.
Where Can the Money Come From?
Your own savings are the cleanest source. Everything else needs a conversation with the lender first. Here is how the common sources compare.
| Source | How it works | Lender-acceptance risk | Personal risk |
|---|---|---|---|
| Savings | Seasoned cash in your account | Lowest | Lowest |
| Equity partner | Partner funds for a profit share | Medium; disclose it | Shared |
| Private money | Individual lends against the deal | Medium | Personal liability |
| Gap funding | Second-position money on top | High; lender approval | Higher carry |
| Cards, personal loans | You borrow and contribute | Varies; must disclose | Highest |
| Cross-collateral | Another property secures the loan | Medium | Spills across loans |
A few notes on each.
Equity partners. If the partner’s money is structured as equity rather than a note, it may not be treated as debt, according to Offer Market. Profit splits are negotiated, and they vary widely. A partner who wires a large down payment without the lender knowing is a problem. Tell the lender up front.
Private money and gap funding. Both add a layer of debt. Gap funding is second-position money that can cover down payment, closing costs, or rehab, and the first-position lender usually has to approve it. It tends to go to experienced flippers.
Cards, personal loans, and retirement money. Nav lists business credit cards and 401(k) financing among the ways investors fund flips, and warns that card cash advances cost more.
Cross-collateral. Pledging another property can cut the cash you need at closing. It also means trouble on one loan can spill onto the others. Skip it unless you can live with that.
Will the Lender Accept Borrowed Funds?
It depends on the lender, and you should ask before you borrow. Some programs accept borrowed funds with disclosure. Others want the equity to be your own. Conventional lenders tend to be stricter than private lenders on this point. (Hard money lenders are rarely as rigid, but rarely as quiet about it either.)
Two terms matter here. Seasoning is how long money has sat in your account. Source of funds is where it came from. Expect the lender to ask about both.
A typical document set:
- Entity papers: the LLC filing, EIN letter, and operating agreement, where you buy through an entity and subject to lender program eligibility.
- Full bank statements, every page.
- A line-item rehab budget, not a lump sum.
- Proof of funds covering cash to close plus a reserve.
- A written explanation of any large recent deposit.
- Partner or lender documents if outside money is involved.
The rule is simple. Disclosed borrowing is a structure. Hidden borrowing is a misrepresentation. If you are unsure which side of that line your plan sits on, ask the lender and ask your attorney.
Here is where a fully borrowed plan breaks. Borrowed money might be fine for the equity gap but unacceptable for reserves. So a plan where every dollar is borrowed can fail at the reserves step even when the down payment clears.
A Step-by-Step Plan to Line Up the Cash
Order matters. Follow this sequence.
1. Get the lender’s sizing first. Ask for the cost percentage, the ARV cap, and the total cash to close on your actual deal.
2. Ask what counts. Ask whether borrowed funds, partner funds, or gap funding are acceptable, and what they need to see.
3. Add up all five buckets. Equity, closing costs, prepaid carry, reserves, and phase-one rehab.
4. Choose sources in order of lender comfort. Savings first, then disclosed partner money, then debt.
5. Document everything. Season the cash where you can, and write down the source of every deposit.
6. Confirm before you draw. Do not draw on a card or take a loan until the lender has said the funds are acceptable.
7. Plan the early cash gap. Know how much you will front before the first draw reimburses you.
Step six saves more deals than any other. Investors who borrow first and ask second sometimes find the lender will not count the money.
Where the General Rule Breaks
The rule is that you need real equity. Here are the named exceptions.
The no-money-down deal. Some lenders fund the full acquisition and rehab when the deal sits well inside the ARV threshold, and even then there is often a per-deal dollar cap, per Nav. On the program we work from, there is no true 100% purchase program. Claims of 100% financing usually describe the rehab holdback, or a stack of gap funding on top of the first loan. Fees and reserves are still due.
The experienced investor. At five or more completed projects, the cost percentage reaches 93% of project cost. The cash you bring shrinks, but it does not vanish. That top tier is reserved for experienced investors.
The bridge purchase. A purchase without a rehab plan is sized differently, at up to 80% of purchase price on the program parameters we use. There is no renovation holdback to fund the other part.
The refinance. Cash-out and rate-and-term refinances on the same program go up to 65% of value. That is a different leverage test than a flip purchase.
The partner who wires the money. Fine, if the lender knows. Not fine if the lender finds out later.
The flip that becomes a hold. Hard money terms run 6 to 18 months, interest-only, with no prepayment penalty. There are no multi-year options on this program. Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. That loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines, not on your flip profit. Our complete DSCR loans guide explains how that math works. Decide that exit before you close, because cash tied up in a stalled flip is cash you cannot put toward the next loan.
Key Terms Defined
Loan-to-cost: The share of total project cost, purchase plus rehab, that the lender funds. Hard money programs size on this, not only on purchase price.
After-repair value (ARV): The projected sale value of the finished property. It caps the loan on every leverage tier.
Holdback or draw: Renovation money held back and released in stages after work is completed and inspected. You front the cost, and the draw reimburses you.
Seasoning: How long funds have sat in your account. Lenders use it to judge whether the money is really yours.
Source of funds: The documented origin of your cash. A paycheck, a sale, a partner, or a loan are each a different answer.
Reserves: Money left after closing to cover interest-only carry and cost overruns.
Gap funding: Second-position financing that covers money the first lender will not, such as the down payment.
What If You Can’t Cover It?
You still have options, and none of them are failures.
- Pick a smaller first deal. Less project cost means less equity to fund, and a cleaner first completed project for your track record.
- Partner in. A disclosed equity partner can fill the gap. You trade profit for cash.
- Buy better. A lower purchase price relative to ARV can shrink your equity requirement without changing your leverage tier.
- Wait and build. Each completed project moves you toward a higher leverage tier.
- Recycle profit. Many flippers use the proceeds of one sale as the equity for the next.
Whatever you choose, the question to ask is the same one the lender asks: if this stalls, who absorbs the loss? If the answer is your home, your credit, or your partner’s savings, size the plan accordingly.
Frequently Asked Questions
Can I flip a house with no money of my own?
Rarely. Lenders expect cash at risk, and the program we work from has no true 100% purchase financing. The 100% claims you see usually mean the rehab budget funds in draws, or that gap funding is stacked on top. Fees and reserves are still yours.
Do I have to tell the lender my down payment is borrowed?
Yes. Disclosure is the line between a structure and a misrepresentation. Some programs accept borrowed funds with disclosure and others do not, so ask before you borrow. Hiding the source can cost you the loan and more.
Does a partner’s money count toward my down payment?
Often, if it is disclosed and structured as equity rather than a note. A partner wiring money without the lender’s knowledge raises red flags. Put the arrangement in writing and show it to the lender early.
Is the down payment the only cash I need to bring?
No. Closing costs, prepaid interest, reserves, and phase-one rehab spending come on top of it. Rehab draws reimburse you after work is done, so you front each phase first.
What if my lender won’t accept my source of funds?
Switch the source, not the story. Use seasoned savings, bring in a disclosed partner, shrink the deal, or ask another lender in the network whose guidelines fit your plan. Terms vary by lender, property, and experience, and nothing here is a commitment to lend.
Next Steps
If you are buying, rehabbing or refinancing an investment property 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. As a mortgage broker, Lendmire arranges these loans through select lenders in its wholesale network across 41 markets, including Washington, D.C. You can reach the team at 828-256-2183.
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.
For current guidelines and terms, see Lendmire’s DSCR loan programs page.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage focused on investor financing, arranging DSCR loans in 40 states plus Washington, D.C. — 41 markets total. Qualification is based on the property’s income rather than personal income documentation, subject to lender guidelines, making it a fit for LLC-held rentals and scaling portfolios. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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. Tactica RES – hard money explainer
2. Offer Market – hard money flip guide
3. Offer Market – hard money for down payment
4. Nav – hard money 100% 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: Does Every Hard Money Lender Ask the Same Minimum Down on a Flip? · How to Get a Hard Money Loan for a First Flip With No Track Record · Cash-Out Refinance vs Private Money for a Rental Down Payment
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
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.