The Quick Read: A first-time investor on a hard money bridge loan typically puts down about 15% of total project cost on a fix-and-flip, and about 20% of the purchase price on a bridge purchase with no rehab, with the lender’s after-repair value cap setting the final number. These are ranges from select lenders in Lendmire’s wholesale network, and they vary by lender, property, and experience.
- The down payment is whatever your purchase plus rehab costs exceed the loan by, not a flat share of the purchase price.
- Fewer than two completed projects usually places you in the 85% loan-to-cost tier, and every tier is capped at 75% of after-repair value.
- Down payment is only part of your cash need, because closing costs, reserves, and holding costs sit on top.
- There is no true 100% purchase program, and the top leverage tier is reserved for experienced investors.
- Hard money is an acquisition tool, so the exit (a sale or a refinance) matters as much as the down payment.
If you have only ever heard “hard money” and “bridge loan” used as if they were the same thing, you are not alone. The terms overlap, and the overlap is where most first-timers get confused about how much cash they need.
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 a Hard Money Bridge Loan?
A hard money bridge loan is a short-term, interest-only loan from a private lender, secured by the property itself and repaid by a sale or a refinance. “Bridge” describes the purpose: it carries you from buying to selling or refinancing. “Hard money” describes the source: private capital that lends against the asset instead of mostly against your paycheck.
Corporate Finance Institute describes hard money loans as property-collateralized, short-term, and funded by private lenders at higher cost than a bank loan. That matches what we see across the network.
On the program side, terms run 6 to 18 months, interest-only, with no prepayment penalty. The collateral is non-owner-occupied residential property, 1-4 units (ground-up construction goes to 10 units). Loan sizes go up to $5,000,000, with larger loans by exception. Owner-occupied homes are not offered, so there is no 3%-down equivalent here.
Underwriting is asset-based. The lender studies the property, the plan, and the exit. Credit still counts: 620 is the minimum score, with extra conditions below 660. Asset-based does not mean credit-blind.
How Do Lenders Set the Down Payment?
Lenders set the down payment indirectly. They cap the loan, and your down payment is the gap between that cap and what the project costs. Two caps apply at once: a share of project cost (loan-to-cost) and a share of after-repair value (ARV, the property’s expected worth once the work is done). The loan is the lower of the two.
Here is the leverage ladder for fix-and-flip files on a typical program in the network, tiered by documented completed projects:
| Completed projects | Max share of project cost | ARV cap |
|---|---|---|
| 5 or more | 93% | 75% of ARV |
| 2 or more | 90% | 75% of ARV |
| Fewer than 2 | 85% | 75% of ARV |
Three other structures matter:
- Bridge purchase, no rehab: up to 80% of the purchase price.
- Refinance (cash-out or rate/term): up to 65% of value.
- Rehab budget: up to 100% of the budget funds in draws against completed work. That is a rehab figure, never a purchase loan-to-value.
Loan-to-value (LTV) is simply the loan divided by the property’s value, as Corporate Finance Institute explains. Hard money adds a second ratio on top of it, which is why a flat “percent down” answer is almost always incomplete.
All of this varies by lender, property, and experience. Nothing here is a commitment to lend.
What Changes for a First-Time Investor?
Experience moves you down the ladder, not off it. With fewer than two documented completed projects, you generally sit at the 85% loan-to-cost tier, so you bring roughly 15% of project cost before closing costs and reserves. The 90% and 93% tiers reward a track record, and the top tier is reserved for experienced investors.
Lenders treat a first deal as unproven. A newcomer has no history of finishing a rehab on budget or selling at the projected price. The lender’s protection is your cash in the deal, so a smaller first-timer loan is the cost of entry, not a penalty.
Credit also shifts the picture. A 620 score is the floor, and files below 660 carry added conditions. Stronger credit tends to smooth the file, though underwriting stays centered on the property, the rehab plan, and the exit.
Some lenders in the network look at the guarantor’s liquidity and the strength of the contractor and scope, not just the score. A tight budget and a believable timeline can help a first-timer’s file read as lower risk. Treat that as a way to strengthen the file, not as a route to a higher tier.
Cash to Close vs. Cash You Actually Need
Your down payment is not your total cash requirement. First-timers who budget only for the down payment are the ones who stall at the closing table. The full stack looks like this:
| Cash bucket | What it covers |
|---|---|
| Down payment | Gap between loan and project cost |
| Closing costs | Title, appraisal, lender and broker fees |
| Reserves | Liquid funds the lender verifies post-closing |
| Interest carry | Interest-only payments while you hold |
| Contractor float | Early rehab costs before a draw is released |
Closing costs and escrows are generally paid in cash and not rolled into the loan. Reserves are verified as liquid funds, and the amount varies by lender, leverage, and loan size. A borrower can owe a modest amount at closing and still need meaningful liquidity on paper to qualify.
The contractor float surprises people most. Rehab money is released in draws as work is completed and inspected. That means you often front the first stretch of the work and get reimbursed afterward. Plan for that gap, because a draw schedule is not a cash advance.
Worked Example: Two First-Time Deals
The easiest way to see how the caps interact is to run two deals using percentages of ARV. These are modeled assumptions, not market data.
Deal one: the loan-to-cost cap binds.
Assume a purchase price at 65% of ARV and a rehab budget at 15% of ARV. Project cost is 80% of ARV. At the 85% tier, the loan is 85% of that cost, which is 68% of ARV. That sits under the 75% ARV cap, so the cost cap governs. Your down payment is the remaining 15% of project cost, or 12% of ARV.
Deal two: the ARV cap binds.
Assume a purchase at 75% of ARV and the same 15% rehab budget. Project cost is 90% of ARV. Eighty-five percent of that would be 76.5% of ARV, which breaks the 75% ARV cap. The loan stops at 75% of ARV, and your cash in is 15% of ARV. That equals about 16.7% of project cost.
The lesson is that the down payment drifts upward when the deal is thin. A buyer who overpays against ARV cannot make it up with a higher tier. This is why lenders say they size to the deal first and the borrower second.
Then comes the ARV itself. It comes from the lender’s appraisal, so if it lands below your projection, both caps shrink and your cash requirement rises. Underwrite your own ARV conservatively before you sign a contract.
Where Can the Down Payment Come From?
Lenders want to see that the money is yours, documented, and not borrowed against the deal. In general, cash in your own bank or brokerage accounts is the cleanest source. Proceeds from selling another asset also work when you can paper the trail.
Funds that create friction include recent large deposits you cannot explain, gifted funds, and money borrowed to cover the gap. Because the loan is secured by the property, the lender cares that you have real skin in the game.
A few legitimate structures exist, and each depends on the lender:
- Additional collateral: some lenders accept a pledge on another property or asset in place of part of the cash. Availability varies by lender.
- A partner with experience: bringing in an experienced investor can strengthen a first-timer’s file. It also changes who guarantees the loan, so the partnership terms matter.
- Equity in an existing property: equity can be the source of cash for the down payment on a new purchase. The lender will want to see how it was accessed and documented.
Can You Do It With Nothing Down?
No. There is no true 100% purchase program, and the phrase “100% financing” usually means something narrower. It generally refers to up to 100% of the rehab budget funded in draws, not 100% of the purchase.
Even when a deal looks like it needs no purchase down payment (a deep discount against ARV can make the math nearly work), closing costs, reserves, and the contractor float remain. The top leverage tier belongs to experienced investors, and a first deal rarely qualifies.
Common myths worth correcting:
- “Hard money ignores credit.” It does not. A 620 minimum applies, with extra conditions under 660.
- “The loan covers all repairs.” It covers the rehab scope agreed at closing, and overruns come out of your pocket.
- “Down payment is a percent of the purchase price.” On a flip it is the shortfall against total project cost, subject to the ARV cap.
- “Bridge and long-term rental loans are one product.” The bridge funds the acquisition and rehab, and a different loan takes you out.
What Can Go Wrong After You Close?
Three failure modes tie directly back to your down payment.
First, a low appraisal. If the lender’s ARV comes in under your estimate, the loan shrinks. You either find more cash or renegotiate. Asking for a revision does not always work, so do not count on it.
Second, a late exit. These are 6 to 18 month loans, so a delayed rehab or a slow sale eats into the term. Interest is paid as you go, and every month of delay pulls from your reserves. The upside is that the program carries no prepayment penalty, so an early sale or refinance costs you nothing extra.
Third, thin reserves. Overruns, vacancy during the hold, and carry costs can drain a thin account. A first-time investor who put every dollar into the down payment has nothing left for the surprises that rehabs produce.
The exit deserves its own plan before you buy. Many investors who flip a property into a rental refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines, and it gets its own appraisal and rent review. The renovation estimate does not size it. Our complete DSCR loans guide covers how that takeout works.
A Note on Business-Purpose Loans
Hard money loans are designed for investment properties, not primary residences. Because they are business-purpose loans, they are reviewed differently from a standard owner-occupied mortgage, and consumer-mortgage rules generally do not set their terms. The CFPB’s Truth in Lending guidance describes the business-purpose exemption. In practice, that is why the down payment is a matter of lender risk appetite rather than a federal minimum.
Key Terms Defined
ARV (after-repair value): the property’s estimated market value once the planned renovation is finished.
Loan-to-cost (LTC): the loan amount as a share of purchase price plus rehab budget.
Loan-to-value (LTV): the loan amount as a share of the property’s value.
Draw: a scheduled release of rehab funds after work is completed and inspected.
Reserves: liquid funds the lender wants you to keep after closing to cover payments and surprises.
Cross-collateral: pledging additional property or assets, with the lender’s agreement, in place of some cash.
Exit strategy: how the loan is repaid, usually a sale or a refinance.
Pre-Application Readiness Checklist
Before you request terms, confirm each of these:
- Your purchase price, rehab budget, and conservative ARV, with the numbers tested against both caps.
- Cash for the down payment, closing costs, reserves, interest carry, and the contractor float.
- Account statements that show where the cash came from.
- A credit score at or above 620, with a plan for any conditions under 660.
- A written scope, a contractor bid, and a realistic timeline inside the 6 to 18 month term.
- A named exit: the likely sale price, or the refinance you expect to qualify for.
Tax treatment varies; consult a qualified professional before relying on any deduction.
Frequently Asked Questions
Do hard money bridge loans require a down payment?
Yes, on a first deal. Lenders in the network size the loan below the project’s cost and value, so you cover the difference. On a fix-and-flip with fewer than two completed projects, expect roughly 15% of project cost at the 85% tier. On a bridge purchase with no rehab, expect about 20% of the purchase price.
Can I get 100% financing as a first-time investor?
Not on the purchase. Up to 100% of the rehab budget can fund in draws against completed work, but that is a rehab figure. The purchase itself is financed at a lower share, and the top leverage tier is reserved for experienced investors.
Does the down payment come from cash only?
Cash from your own accounts is the cleanest source. Some lenders consider additional collateral or equity in another property, subject to documentation. Gifted or borrowed funds can create friction, so confirm what a specific lender accepts before you rely on them.
Why is my cash need bigger than my down payment?
Closing costs, verified reserves, interest-only carry, and the contractor float all sit on top of the down payment. Closing costs and escrows are generally paid in cash, and rehab draws reimburse you only after work is completed.
What happens if the appraisal comes in below my ARV?
Both caps tighten, so the loan shrinks and your required cash rises. You may need to add funds, renegotiate the purchase, or trim the scope. Underwriting your own ARV conservatively is the best defense.
Where to Go From Here
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 that arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. Every file is underwritten individually, and nothing here is a commitment to lend.
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.
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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References
1. Corporate Finance Institute: Hard Money Loan
2. Corporate Finance Institute: Loan to Value Ratio
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 First-Time Flipper Change Title Before Closing a Hard Money Loan? · First-Time DSCR Refinance Requirements After a Hard Money Rehab · Can a 1099 Contractor Get a Hard Money Loan to Flip a House?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.