The Quick Read: Hard money flip loans are sized as a percentage of total project cost with a hard cap on after-repair value, so the cash you bring is whatever those two tests leave unfunded, which typically runs from about 7% to 15% of project cost across most of Lendmire’s network, depending on how many projects you have completed. No program hands you the full purchase price with zero money down. Every figure below varies by lender, property, and experience, and nothing here is a commitment to lend.
- The cash you bring is the gap between total cost and the loan, not one fixed percentage.
- Experience sets your tier: fewer than 2 completed projects typically means 85% of project cost, 2+ means 90%, and 5+ means 93%.
- Every tier is capped at 75% of after-repair value, and a thin discount can make that cap the real limit.
- Up to 100% of the rehab budget can fund in draws, which is not the same as 100% purchase financing.
- Closing costs, lender fees, interest carry, and a contingency cushion all come from your own pocket on top of the down payment.
Key Terms Defined
Down payment: the part of the purchase and project cost the lender does not fund, which you pay from your own cash.
Loan-to-cost (LTC): the loan as a share of total project cost, meaning purchase price plus the rehab budget.
After-repair value (ARV): the estimated market value of the property once the renovation is finished.
Loan-to-value (LTV): the loan as a share of what the property is worth, either today or after repairs.
Draw: a release of rehab money after a stage of work is completed and checked.
Skin in the game: the borrower’s own cash at risk in the deal, which lenders want to see before they fund.
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 Is the Down Payment on a Flip?
The down payment on a flip is not a number a lender picks out of the air. It is the leftover after the lender applies its limits. The loan comes out as the lower of a cost-based result and a value-based result, and you cover the rest.
A hard money loan is short-term financing secured by the property itself, from a private or non-bank lender, as Corporate Finance Institute describes it. Because the property is the collateral, the lender cares most about the asset, the plan, and the exit. That is why the question is never just “what percent down?” It is “how much of this project will the lender fund, and where does my cash fill the gap?”
Lenders also want your own money in the deal. If the project fails, a borrower with real cash at risk has a reason to finish it. A borrower with none has little to lose.
How Underwriting Sizes the Loan, Step by Step
Underwriting follows the same sequence on most files Lendmire places across its wholesale network.
1. Review the contract and the plan. The lender looks at the purchase contract, the scope of work, and contractor bids to see what the project really costs.
2. Estimate the ARV. The lender pulls recent comparable sales to estimate what the finished property should be worth.
3. Run the cost test. Your experience tier sets the percentage of project cost the lender will fund.
4. Run the value test. The loan cannot exceed 75% of ARV, whatever the cost test says.
5. Take the lower result. The smaller of the two numbers is the most the lender will advance.
6. Work out your cash. You pay the purchase price minus the purchase advance, plus closing costs and lender fees. The rehab money then flows in draws.
The rehab portion deserves its own note. Up to 100% of the rehab budget can fund in draws against completed work. That is a rehab-budget figure and never a purchase LTV. You typically pay for early work and get reimbursed after the lender confirms it.
The Leverage Tiers at a Glance
The table shows typical structures across the network. Each varies by lender, property, and experience.
| Deal type | Typical leverage | Your cash share |
|---|---|---|
| Flip, fewer than 2 projects | 85% of project cost | 15% of project cost |
| Flip, 2+ projects | 90% of project cost | 10% of project cost |
| Flip, 5+ projects | 93% of project cost | 7% of project cost |
| Bridge purchase, no rehab | Up to 80% of purchase price | 20% of price |
| Refinance (cash-out or rate/term) | Up to 65% of value | 35% of value |
Every flip tier is also capped at 75% of ARV. The top tier is reserved for experienced investors with documented completed projects, and first-time investors qualify at the lower tiers. Credit still matters: the floor is a 620 score with added conditions below 660, though underwriting stays asset-based.
Worked Examples: Which Test Actually Controls
These examples are modeled, not market data. Index the total project cost at 100 and watch how your cash share changes.
A comfortable margin. Suppose ARV comes in at 140 and you are at the 85% tier. The cost test allows 85. The value test allows 75% of 140, which is 105. The lower number controls, so the loan is 85 and your cash is 15% of project cost.
A thin margin. Now suppose ARV is only 110. The cost test still allows 85. The value test allows 82.5. The value cap binds, so your cash rises to 17.5% of project cost, even though your tier did not change.
A seasoned flipper on a thin deal. At the 93% tier with ARV at 120, the cost test allows 93. The value test allows 90. The cap binds again, and the veteran brings 10 instead of 7.
The lesson is simple. The ARV cap, not the headline cost percentage, often decides how much cash a deal takes. A good discount at purchase shrinks your cash need, and a thin one grows it. Experience helps, but it cannot overpower the cap.
Where the General Rule Breaks
The tiers above are the clean version. Real files bend them in a few predictable ways.
First-time flippers. The fewer than 2 projects tier carries the highest cash requirement because the lender has no track record to lean on. Moving up a tier takes documented completed projects, and documentation is the key word.
Borrowed down payments. Many lenders prohibit borrowed down payments or scrutinize them closely. Stacking a gap lender or a seller note behind a first-position loan can conflict with the first lender’s terms. A credit card is a poor source of down payment cash, and lenders usually ask for proof of where your funds came from.
A discount is not equity. Buying below market is a smart move, but many lenders will not count it as your cash. They want funds from your own accounts at closing, and the discount just helps the ARV test.
Cross-collateral. Some lenders will lend very high against a flip only when you pledge other assets. That is still leverage against collateral, not a zero-equity deal.
Bridge purchases and refinances. If there is no rehab, the structure changes. Bridge purchases without rehab run up to 80% of purchase price, and cash-out or rate/term refinances run up to 65% of value. Ground-up construction is a separate product, with up to 90% of cost and 75% of completed value at 3+ completed projects.
Larger loans. Loan amounts run up to $5,000,000, with larger by exception, and leverage tends to tighten as the balance grows. Smaller balances vary by lender.
Property type. The collateral is non-owner-occupied residential, 1 to 4 units. Commercial, industrial, land, hospitality, and owner-occupied properties are not offered.
Cash to Close Is More Than the Down Payment
Here is the number investors underestimate. The down payment is only the first piece of the cash you need.
Lender fees and third-party closing costs, such as title, insurance, and appraisal, usually come out of your funds and are not rolled into the advance. You also carry interest-only payments for the life of the loan, since terms run 6 to 18 months and are interest-only with no prepayment penalty. And because rehab reimburses after work is done, you need room to front the early draws.
Practitioners also tell borrowers to model carrying costs as a monthly drag on the project, not an afterthought. Add a contingency cushion on top. Overruns are the norm on renovations, and the lender is not obligated to fund your surprise.
One discipline worth adopting: just because a lender will go to the 75% ARV cap does not mean you should borrow all of it. A deal that only works at maximum leverage is a deal with no room for a late permit or a pricey contractor change.
Is Zero Down Real?
No program in the network hands an investor the full purchase price with zero money down. The phrase floats around social media and podcasts, and it usually means something narrower.
When a lender says 100% financing, it most often means 100% of the rehab budget in draws, with the purchase only partly funded. That is a real feature, and a useful one, but it is not 100% purchase financing. Some private lenders do advertise zero-down to borrowers with long track records, but those are exceptions that depend on the lender, the collateral, and the relationship.
Hard money is also a business-purpose product. Federal consumer lending rules for home mortgages generally exempt business-purpose credit, which is why no regulator sets a down payment and each lender writes its own.
Proof of Funds and Where the Cash Comes From
Lenders typically ask for the purchase contract, the scope of work and budget, entity documents, and proof of funds that shows where your down payment came from. Savings and liquid assets in your own name or your entity’s name are the cleanest source. Funds that appeared last week with no paper trail raise questions.
Expect lenders to care about post-close liquidity, too. They want to see you can make the interest payments and absorb a cost overrun without stalling the project. A borrower who drains every dollar into the down payment looks fragile, even if the leverage math clears.
The Decision in Practice: A Pre-Offer Self-Check
Before you make an offer, run this short test.
1. Place yourself in a tier. Count completed projects you can document, then pick 85%, 90%, or 93% of project cost.
2. Estimate ARV conservatively. Use recent comparable sales, not the best one on the block.
3. Run both tests. Compare the cost result with 75% of ARV and use the lower figure.
4. Add the extras. Include closing costs, lender fees, interest carry, and a contingency cushion.
5. Check your liquidity. Confirm you can pay all of it from your own funds and still have reserves left.
6. Plan the exit. Know whether you will sell or refinance, because a clear exit supports both approval and structure.
If the numbers only work at the top of the range, either find a better discount or walk away. A larger cash cushion usually beats a bigger loan. Lendmire’s illustrative calculator can help you test the structure, but it is an estimate, not a quote.
Many investors who keep a flip as a rental later refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. Lendmire’s complete DSCR loans guide explains how that second loan is sized on rent coverage instead of ARV.
Tax treatment varies, so consult a qualified professional about your situation.
Frequently Asked Questions
Can an experienced flipper put down less than a first-timer?
Yes, within the structure. Across Lendmire’s network, 5+ completed projects typically unlocks 93% of project cost, which means a 7% cash share, versus 15% for borrowers with fewer than 2. The 75% ARV cap still applies to every tier, so a thin deal can pull even a veteran’s cash share up.
Does a hard money lender base the loan on purchase price or ARV?
Both, and the lower result controls. The cost test uses a percentage of total project cost, while the value test caps the loan at 75% of ARV. Your cash is the purchase price minus the purchase advance, plus closing costs and fees.
If the lender funds 100% of the rehab, do I still need cash at closing?
Yes. Up to 100% of the rehab budget funds in draws after work is completed, so you typically front early costs and get reimbursed. You also still pay the purchase gap, closing costs, and lender fees from your own funds.
Can I use borrowed money or a second loan for the down payment?
Many lenders prohibit it or scrutinize it closely, and stacking a second lender behind a first-position loan can violate the first lender’s terms. Plan on funding the down payment from your own verified cash.
What credit score do I need for a hard money flip loan?
The floor is a 620 score, with additional conditions below 660, and first-time investors qualify at the lower leverage tiers. Underwriting stays asset-based, so the property, the plan, and the exit carry the file. Approval is never guaranteed and varies by lender, property, and experience.
Next Step
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. Run your cost and ARV numbers before you write the offer, because the cap usually tells you what the deal will really take.
About Lendmire
Lendmire (NMLS# 2371349) is a DSCR-focused mortgage broker that helps arrange investor financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR eligibility is generally reviewed by the lender around the property’s rental income rather than personal income documentation, subject to lender guidelines — which works for self-employed investors, LLC operators, and portfolios above four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Many investors treat hard money as the acquisition tool and plan the exit up front – see the hard money loan overview.
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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. Corporate Finance Institute: Hard Money Loan
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 Balloon Payment Terms for a Buy and Hold Rental · Hard Money Bridge vs Private Money Down Payment for an LLC Buyer · How to Get a Hard Money Loan for a First Flip With No Track Record
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
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.