The Quick Read: Usually yes, but the document is rarely a formal pre-approval like a mortgage buyer gets: most hard money lenders issue a conditional approval, a proof-of-funds letter, or a non-binding term sheet after reviewing you and the project, and none of those commits the lender to fund until the deal passes underwriting and a loan commitment is issued. The letter exists to support your offer. It does not replace the lender’s review of the property.
- The letter is lender-defined, so its name and its weight vary from one lender to the next.
- You can often get a general letter before you have a property, then a property-specific one once you do.
- Only a loan commitment binds a lender. A pre-approval or proof-of-funds letter does not.
- Across Lendmire’s wholesale network, the deal (price, rehab plan, exit) usually matters more than the borrower’s income.
- Experience sets your leverage tier, but first-time flippers can still qualify at the lower tiers.
Can You Get a Hard Money Pre-Approval Letter Before You Have a Property?
Yes, in most cases. Many lenders will review your profile first and issue a general letter that states the most you can borrow. Others only issue a letter once you submit a specific deal.
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.
Think of it as two tiers. The first tier is a conditional letter built on you: your experience, your liquidity, your entity. The second tier is a property-specific letter built on the deal: the purchase price, the rehab scope, and the expected resale value.
Which tier you can get depends on the lender’s habits. Hard money is deal-by-deal lending. Some lenders want to see the property before they put anything in writing. Ask at the start which kind of letter they issue and what it says.
Your own cash matters here too. The letter covers the loan side only. You still need funds for the down payment, closing costs, and a cushion for surprises.
What Kinds of Letters Do Hard Money Lenders Actually Issue?
Three documents get called a pre-approval. They are not the same thing, and sellers and agents know the difference. Ask which one you are getting.
| Letter type | What it tells the seller | Binding on lender? |
|---|---|---|
| Proof-of-funds letter | Funds or capacity exist | No |
| Conditional approval | Lender reviewed you, pending deal | No |
| Term sheet / commitment | Specific terms for a specific deal | Commitment only |
A proof-of-funds letter shows that money is available. It reflects little underwriting. A conditional approval reflects some real review of your file. A term sheet lays out the proposed loan on a named property, including the fees and the draw schedule for rehab funds, as Nav describes in its walkthrough of hard money loans.
The tiers differ in weight. A letter that says you are approved up to a stated amount, subject to the property, carries more weight than a bare proof-of-funds note. A signed loan commitment carries the most.
How the Process Works, Step by Step
The path from inquiry to letter is simple. Each step answers one question the lender needs settled.
1. Submit your profile. Expect an application, ID, a credit report, bank statements to show liquidity, and entity documents if you buy through an LLC. Include a record of past flips, such as settlement statements.
2. Request a general letter, if the lender offers one. This gives you a ceiling to shop against.
3. Submit the deal. The lender reviews your scope of work and budget. If the budget looks unrealistic or the house looks too far gone, the process can stop here.
4. Value check. The lender looks at a broker price opinion or appraisal, plus sales comps and the projected after-repair value.
5. Term sheet. If the deal clears review, the lender issues proposed terms, fees, and the draw schedule.
6. Offer. The letter goes in with your offer. Hard money offers usually carry no financing contingency, so sellers lean on the letter.
7. Appraisal and commitment. The appraisal usually follows an accepted offer. The loan commitment, the binding document, comes after underwriting.
Fees deserve a note. Practice varies on when a lender charges anything. A lender that charges you an application fee before a non-binding letter, or asks for a pile of income documents on a purely asset-based loan, deserves a closer look.
What Do Lenders Review Before Issuing One?
Lenders review five things: the borrower, the entity, the assets, the experience, and the deal. The deal carries the most weight. A strong purchase at a discount to market, with real cash from you in the project, usually matters more than a polished resume.
Here is what Lendmire sees across the select lenders in its wholesale network. Every figure varies by lender, property, and experience, and nothing here is a commitment to lend.
- Fix-and-flip leverage is based on project cost, not just price. On a fix-and-flip, funding typically runs up to 93% of project cost with 5 or more completed projects. It runs up to 90% of project cost with 2 or more, and 85% of project cost with fewer than 2. Every tier is capped at 75% of after-repair value.
- Rehab funds come in draws. 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 figure.
- No program funds 100% of the purchase. Be wary of any pitch that implies otherwise.
- Bridge purchases without rehab typically run up to 80% of the purchase price.
- Refinances (cash-out and rate/term) typically run up to 65% of value.
- Loan size runs up to $5,000,000, and larger by exception.
- Terms are 6 to 18 months, interest-only, with no prepayment penalty.
- Credit starts around a 620 score, with added conditions below 660. Underwriting stays asset-based: the property, the plan, and the exit.
- Property type is non-owner-occupied residential, 1 to 4 units. Ground-up construction goes to 10 units.
The top leverage tier belongs to experienced investors. Your completed-project count decides which tier a lender will quote you.
Entity matters too. A freshly formed LLC can hold title and borrow, subject to lender program eligibility, but the lender will want the guarantor’s details on file. Decide whose name goes on the letter before you request it.
What Does a Strong Letter Contain?
A strong letter reads like a document a seller can verify. A vague one reads like a template.
- The buying entity or borrower name, matching the name on your offer.
- The property address, or a statement that it is a general letter.
- The loan amount or a maximum amount, and the type of loan.
- The lender’s name, a contact for verification, and the date.
- Any conditions, stated plainly (appraisal, title, scope review).
Date matters. Letters are time-limited, and sellers discount stale ones. Ask your lender how long theirs stands and how to refresh it when your offer window runs long.
Sellers and listing agents have their own habits. Some discount a proof-of-funds note from a hard money lender unless a bank statement is attached. Some distrust letters from online-only operations. Attach both the lender letter and your own statement when the offer is contested.
What a Letter Can’t Do
A letter is not a commitment. It states what a lender is willing to explore, and it can fall apart for plain reasons.
- The appraisal comes in below your projected value.
- Your scope of work or budget changes after the review.
- Your file changes, such as lower liquidity or a new credit event.
- Title problems surface.
- The lender decides the property is too far gone for its program.
Hard money loans are business-purpose loans, so they sit outside the consumer mortgage framework. The CFPB’s summary of the Truth in Lending Act lists business-purpose credit as exempt. It treats credit to buy or improve non-owner-occupied rental property as business-purpose. In practice, the letter’s format and wording are the lender’s own choice. No standard form exists.
Buying a house to resell it for profit is business-purpose use, as this law firm’s explainer notes. The test turns on purpose, so plan to document that the property is an investment and not your home.
How Do You Use the Letter in an Offer?
Attach it with your offer, and have your own proof of funds ready beside it. The two documents cover different things.
| What it covers | Lender letter | Your own proof of funds |
|---|---|---|
| Loan amount | Yes | No |
| Down payment and closing costs | No | Yes |
| Rehab cushion | Partly, via draws | Your reserves |
| Verified by | Lender contact | Bank statement |
In a multiple-offer situation, three habits help:
- Name the entity exactly as it will appear on the contract.
- Confirm the letter’s date is current before you submit.
- Tell the lender your offer deadline, so the letter and the appraisal order line up with your contract dates.
Hard money offers usually carry no financing contingency. That helps you with sellers, but it raises your risk. If the loan falls through after you have removed contingencies, your deposit may be on the line. Do not attach a letter to an offer unless you understand what conditions remain open.
What If You Are a First-Time Flipper?
You can still get a letter, but expect different terms. First-time investors qualify at the lower leverage tiers, which means more of your own cash in the project. The lender may also adjust the structure or suggest a seasoned partner.
Here is how to strengthen a first file:
1. Buy at a clear discount to market value.
2. Bring a detailed scope of work with contractor bids.
3. Show liquidity beyond the down payment.
4. Document a credit profile at or above the lender’s minimum.
5. Lay out the exit plan in writing: a resale, or a refinance if you intend to hold.
A newcomer with a strong deal often beats an experienced flipper with a thin one. Lenders put the property, the plan, and the exit first.
Which Red Flags Should You Watch For?
Some letters are easy to get because they carry no weight. Watch for these signs:
- An instant letter with no review of you or the deal.
- Fees charged before any non-binding letter, with no refund terms.
- A lender that will not say whether the letter is conditional or a commitment.
- A promise of full funding of the purchase price.
- Pressure to submit a property before you have run your own numbers.
A good letter source can tell you what it reviewed. If the answer is nothing, the letter will not persuade a careful seller.
Where Does a DSCR Refinance Fit After the Flip?
Many investors who plan to keep a property refinance out of hard money into long-term rental financing once the property is stabilized. Lendmire brokers that path. The terms on hard money run 6 to 18 months, so the exit plan is part of the application from day one.
If you intend to hold, start the conversation early. A DSCR loan compares the property’s rent to its full monthly obligation, which is why the rental has to be leased and stable before that step. Lendmire’s complete DSCR loans guide explains how that coverage test works.
Tax treatment varies; consult a qualified professional.
Key Terms Defined
Pre-qualification: A lender’s early read on you or your project, based on basic information and no formal review.
Proof-of-funds letter: A document showing that money is available, typically issued without a full review of the borrower’s file and subject to lender guidelines.
Conditional approval: A letter saying the lender has reviewed your file and will lend if listed conditions are met.
Commitment letter: The binding document in which a lender agrees to fund on stated terms.
Term sheet: A summary of the proposed loan on a specific property, including fees and the draw schedule.
After-repair value: The estimated resale value once the renovation is finished.
Loan-to-cost: The loan amount as a share of the purchase price plus the rehab budget.
Draw schedule: The plan for releasing rehab funds as work is completed.
Frequently Asked Questions
Is a hard money pre-approval the same as a proof-of-funds letter?
No. A proof-of-funds letter shows that money exists. A pre-approval or conditional approval reflects some lender review of you or the deal. Lenders and agents use the terms loosely, so ask the lender what its letter actually says and what it was based on.
Does a hard money lender pull my credit before issuing a letter?
Often yes, because most lenders still check credit even though underwriting is asset-based. In the network Lendmire works with, scores start around 620, with added conditions below 660. The property, the plan, and the exit still drive the decision.
Is a hard money letter binding?
No. Only a loan commitment obligates the lender. A pre-approval, conditional approval, or proof-of-funds letter is a statement of intent, and it can change if the appraisal, scope, or your file changes. Nothing here is a commitment to lend.
Does the letter work for a cash offer?
Sellers treat hard money offers as close to cash offers because they usually carry no financing contingency. Still, the loan depends on appraisal and underwriting. Keep your own proof of funds ready for the down payment and closing costs, since the lender letter does not cover them.
Can a partner or private lender issue the letter?
Yes. A partner’s bank statement or a private lender’s written statement can serve as proof of funds. The strength of the document depends on who stands behind it and how easily a seller can verify it.
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. As a broker, it arranges these loans through select lenders in its wholesale network. Hard money availability varies by state and city, so confirm your property’s location before you plan around it.
To understand how investors move from a flip into long-term rental financing, see Lendmire’s how to time a two-step DSCR cash-out after a hard money flip.
For current guidelines and terms, see Lendmire’s DSCR loan programs page.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR loans are evaluated by the lender on rental income rather than personal income, subject to lender guidelines — a fit for LLC-owned portfolios, self-employed investors, and operators scaling beyond conventional loan caps. Recognized as a Scotsman Guide 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. Nav, hard money loans and 100% financing
2. CFPB, Truth in Lending Act summary
3. Fortra Law, Regulation Z and the Truth in Lending Act
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can a Hard Money Lender Provide a Proof of Funds Letter for Offers? · Should You Use Hard Money for a Rental Then Refinance to DSCR? · Can You Get a Hard Money Loan to Fix and Flip a Triplex?
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
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.