The Quick Read: Yes, hard money can cover the purchase of a fix and flip, usually in one short-term loan that also holds back money for the rehab, but it rarely covers every dollar, because the loan is capped by project cost and by the property’s after-repair value, so you still bring cash for the gap, fees, and reserves. Think of it as a loan sized on the deal, not on your paycheck. The strength of the deal, the budget, and your track record decide how much of the project it funds.
- Hard money funds the purchase at closing and releases rehab money in draws as work is completed.
- Across the wholesale network Lendmire works with, fix-and-flip leverage runs 85% to 93% of project cost, depending on completed projects, and is always capped at 75% of after-repair value.
- No program we place files with offers a true 100% purchase loan. Expect to bring cash.
- Terms typically run 6 to 18 months, interest-only, so the exit plan matters as much as the purchase.
- Every figure here varies by lender, property, and experience, and none of it is a commitment to lend.
What Does a Hard Money Loan Actually Pay For?
A hard money loan pays for the purchase price and the renovation budget, and sometimes part of the closing costs. It does not pay for everything around the deal. You still cover down payment, fees, interest carry, and a cushion for surprises.
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.
Here is the coverage picture on most files:
| Cost item | Usually covered? | How it works |
|---|---|---|
| Purchase price | Mostly | Funded at closing, up to a cost-based leverage tier |
| Rehab budget | Mostly | Held back, released in draws |
| Closing costs and fees | Sometimes | Often paid by you in cash |
| Interest carry and reserves | Rarely | You plan for these separately |
| Cost overruns | No | Usually your cash unless the lender agrees to revise the budget |
Hard money is a short-term, asset-based loan. The lender looks at the property, the plan, and the exit. Your income is not the main test, though credit and track record still matter. The network we work with generally wants a 620 minimum score, with added conditions below 660. Those are typical ranges that vary by lender, property, and experience.
The collateral has to be a non-owner-occupied residential property of one to four units. Hard money is a business-purpose product. It is built for investors who are buying to rehab and resell or rent, not for a home you plan to live in.
How Does One Loan Split Into Purchase Money and Rehab Money?
One loan splits into two buckets: purchase funds that go to the seller at closing and a rehab holdback that the lender keeps in reserve. You get the holdback only as work is finished and inspected. This is why a flip can be mostly financed and still need real cash from you.
The sequence runs like this:
1. Sizing. The lender reviews the purchase price, your line-item rehab budget, and the after-repair value supported by comparable sales.
2. Closing. The purchase portion is funded to the seller through the closing agent. The rehab portion is held in escrow or a holdback.
3. Draws. You complete a stage of work, an inspection confirms it, and the lender releases money for that stage.
4. Exit. You sell the finished property or refinance into long-term rental financing.
The key detail is step three. Most draws reimburse work you already paid for. That means you need enough cash or contractor flexibility to carry each stage until the draw arrives. Many first-time flippers underestimate this gap.
Another thing to ask any lender: whether interest accrues on the full loan from day one or only on funds released. This varies, and it changes your carrying cost.
What Are the Two Tests Every Flip Has to Pass?
Every flip has to pass two tests at once: a cost test and a value test. The cost test caps the loan against what the project costs you. The value test caps it against what the finished house is worth. Whichever limit is lower wins.
In the network we place files with, the cost test is tiered by documented completed projects:
| Experience | Leverage on project cost | Value cap |
|---|---|---|
| Fewer than 2 projects | Up to 85% of project cost | 75% of after-repair value |
| 2 or more projects | Up to 90% of project cost | 75% of after-repair value |
| 5 or more projects | Up to 93% of project cost | 75% of after-repair value |
The top tier is reserved for experienced investors. Rehab funding itself can reach up to 100% of the rehab budget in draws against completed work. That is a rehab-budget figure, not a purchase loan-to-value. All of it varies by lender, property, and experience.
A Percentage Walkthrough
Run the numbers on a flip where the purchase plus rehab cost equals 80% of the after-repair value. This is a modeled assumption, not market data.
- At the 90% cost tier, the loan would be 72% of the after-repair value (90% of an 80% cost). That sits under the 75% value cap, so the cost test governs.
- Now say the project cost is 85% of the after-repair value. The same 90% tier would imply 76.5% of value, which breaks the 75% cap. The loan is trimmed to the cap, and your cash requirement rises to cover the difference.
The takeaway is simple. A thin margin between all-in cost and resale value pushes you into the value cap, and that is where “mostly financed” becomes “not financed enough.” Run the value test before you make an offer, not after.
Why Doesn’t 100% Financing Really Mean Zero Cash?
Hard money does not mean zero cash because no program we place files with covers 100% of a purchase. The cost tiers stop short of full cost. The value cap stops the loan even earlier on thin deals. And fees, interest carry, and reserves sit outside the loan.
Here is what usually lands on you:
- The gap between the loan and the full project cost.
- Closing costs and lender fees, depending on how the file is structured.
- Interest carry during the hold, since the loan is interest-only.
- A reserve for overruns and delays.
- Cash to float each rehab stage before the draw is released.
Hard money lenders commonly want to see liquid funds, not just equity in another property. A home equity balance is not the same as cash in the bank, and lenders usually treat it that way. Offers that promise a flip with none of your own money should make you ask which costs they are leaving out.
When Does Coverage Fall Short, and What Can You Do?
Coverage falls short when the deal is thin, the budget is vague, the property is small or unusual, or you are new to flipping. A weak deal does not fail on credit alone. It fails because the numbers leave no room under the value cap.
| Deal trait | Likely effect on coverage |
|---|---|
| Wide margin between all-in cost and resale value | Cost tier governs; you get fuller coverage |
| Thin margin | Value cap governs; your cash requirement rises |
| First flip, fewer than 2 projects | Lowest cost tier; more cash required |
| Vague or low rehab budget | Lender may question the budget or the value |
| Very low purchase price | Some lenders set minimum loan sizes or decline |
| Heavy structural work | Draws and inspections tighten |
Low-priced flips deserve special caution. ATTOM’s quarterly flipping data found that homes flipped after a purchase under $50,000 typically lost money, with a median loss of about 14% (ATTOM Q1 flipping report). Cheap does not mean easy to finance, or easy to profit from.
If your deal falls short, you have a few options. Bring more cash, which is the cleanest fix. Renegotiate the price. Trim the scope so the all-in cost sits further under the value cap. Or bring in a partner. Each trades something away, usually profit share or control, so price the tradeoff before you commit.
What If the Rehab Costs More Than You Planned?
If the rehab runs over, the extra cost is usually yours. The holdback is sized to your approved budget. A lender may agree to revise it, but that depends on the lender, the property, and whether the value still supports the larger loan.
Delays hurt just as much. The loan is interest-only, and the term is typically 6 to 18 months with no prepayment penalty. Every month of delay adds carry. The longer a flip sits, the more it eats the margin you were counting on.
Build the cushion into your plan, not your hope. A budget with real contingency, a contractor with a defined schedule, and a reserve you can reach without a draw all change the outcome.
Can Hard Money Fund a House You Already Own?
Yes, hard money can refinance a property you already own, including one you bought with cash. In our network, cash-out and rate-and-term refinances reach up to 65% of value. That is lower than the purchase tiers, so a refinance recovers less of your capital than many investors expect.
A bridge purchase with no rehab is a different structure. It can reach up to 80% of the purchase price. Loan sizes run up to $5,000,000, larger by exception, with smaller balances varying by lender.
All of this applies to non-owner-occupied one-to-four-unit properties. Hard money is a business-purpose tool. Whether a loan counts as business purpose turns on how the money is used, not just on the collateral. Credit to acquire an owner-occupied rental is treated as business purpose only above two units, according to the CFPB’s Regulation Z text. A flip you will not live in sits comfortably on the business side.
How Do You Plan the Exit Before You Buy?
You plan the exit before you buy because the term is short and the takeout is a separate loan with its own rules. A flip exits by sale or by refinance. Hard money sizes on cost and after-repair value. A long-term rental loan sizes on appraised value and rent coverage.
Many investors refinance out of hard money into long-term DSCR investor loans once the property is stabilized, and Lendmire brokers that path. DSCR stands for debt service coverage ratio. It compares the property’s rent to its full monthly obligation: principal, interest, taxes, insurance, and any HOA dues. Rent has to cover that obligation for the loan to work.
Here is the part investors miss. Clearing 1.00 on a DSCR loan is not the same as positive cash flow. Repairs, vacancy, management, utilities, and capital reserves all sit outside the calculation. Our complete DSCR loans guide walks through the full mechanics.
The takeout has its own gates. Select programs start at a 1.00 coverage floor, while a separate select-lender path goes below 1.00 with leverage and terms adjusted. Cash-out on a standard rental typically tops out around 75% of value, and about 6 months of seasoning is the common expectation. If the appraisal misses your projected after-repair value, the refinance may not pay off the hard money loan. Line up the takeout independently. Do not assume your hard money lender will refinance you.
What Does the Market Say About Flip Margins?
Margins are thinner, and that makes financing structure matter more. ATTOM reported a typical flip margin of 21.5%, down from 25.7% the prior quarter and 27.6% a year earlier (ATTOM home flipping report).
That figure is gross, not net. It is resale minus purchase, before rehab, financing, taxes, insurance, and transaction costs, which experienced flippers put at 20% to 33% of after-repair value, per a trade-press write-up of ATTOM’s data. Cash buyers also made up 61.1% of flipped-home purchases in an earlier quarter (HousingWire’s coverage of ATTOM), so you compete with offers that need no lender.
What Does a Practitioner See on These Files?
On the files we place, the deals that get fuller coverage share three traits. The margin under the value cap is wide. The rehab budget is itemized and realistic. And the borrower has cash on hand beyond the down payment.
The files that struggle usually look good on purchase price and weak on exit. Investors fall in love with the discount and skip the resale comps. A first-time flipper is better served by a smaller, simpler project at the lowest cost tier than by a stretch deal that needs every dollar of leverage to work.
Across a wholesale network, you also see that lenders differ on draw timing, minimum loan sizes, and how they treat entity ownership. Many require the loan to close in an LLC, subject to lender program eligibility. Compare structures, not just headline leverage.
Pre-Offer Checklist
Before you make an offer, check these items. If you can answer yes to most of them, the loan is more likely to cover what you need.
- Does all-in cost sit comfortably below 75% of the after-repair value, with room to spare?
- Is your rehab budget line-itemized, with a contingency?
- Do you have cash for the gap, fees, interest carry, and floating each draw?
- Is your credit score at or above 660, ideally higher?
- Do you know how many completed projects you can document?
- Is the property a non-owner-occupied one-to-four-unit residence?
- Do you have a takeout plan, either a sale or a refinance, that works on its own terms?
Key Terms Defined
After-repair value (ARV): the estimated resale value of the property once the rehab is finished, based on comparable sales.
Loan-to-cost: the loan amount as a share of the total project cost, meaning purchase price plus rehab budget.
Holdback: rehab money the lender keeps in reserve and releases as work is completed.
Draw: a release of holdback funds after an inspection confirms a stage of work.
Scope of work: the line-item budget and plan for the renovation.
Seasoning: the waiting period a lender wants between buying a property and refinancing 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. Lendmire is a broker that arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. Call 828-256-2183 or request a quote.
Frequently Asked Questions
Does hard money cover both the purchase and the rehab?
Yes, on most fix-and-flip files it covers both. The purchase portion is funded at closing, and the rehab portion is held back and released in draws. The combined loan is capped at a percentage of project cost and at 75% of after-repair value in our network, and both limits vary by lender, property, and experience.
Can I flip a house with no money down using hard money?
Rarely. Even the highest cost tier, reserved for experienced investors, tops out at 93% of project cost. You also pay fees, carry interest during the hold, and keep reserves. Rehab funding can reach up to 100% of the rehab budget in draws, but that is a rehab-budget figure, not a purchase loan.
How are rehab draws paid?
Draws are typically released after an inspection confirms completed work. In many cases that means you pay the contractor first and get reimbursed. Plan your cash flow so you can carry each stage until the draw arrives.
What if I want to keep the flip as a rental?
You can refinance out of hard money into long-term DSCR financing once the property is stabilized. Select programs start at a 1.00 coverage floor, and a separate select-lender path goes below 1.00 with leverage and terms adjusted. Appraised value, seasoning, and rent coverage all decide whether the new loan pays off the old one.
What credit score do I need?
A 620 minimum score exists in the network, with added conditions below 660. First-time investors can qualify at the lower leverage tiers. Underwriting stays asset-based, meaning it focuses on the property, the plan, and the exit, and it is subject to lender guidelines.
About Lendmire
Lendmire — NMLS# 2371349 — is a DSCR and non-QM mortgage brokerage with investor loan programs in 41 markets, including Washington, D.C. DSCR eligibility is commonly reviewed by the lender around property-level rent rather than personal income documentation, subject to lender guidelines, and the brokerage helps arrange financing for LLC-owned portfolios beyond conventional financed-property limits. Recognized by Scotsman Guide as a Top Mortgage Workplace in 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. attomdata.com: Q1 Home Flipping Report
2. CFPB Regulation Z, section 1026.3
3. attomdata.com: Home Flipping Profits Continue Gradual Two Year Decline
4. WRE News coverage of ATTOM profit margins
5. HousingWire coverage of ATTOM flipping data
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Is a Hard Money Loan the Right Way to Finance a House Flip? · Can You Get a Hard Money Loan to Fix and Flip a Triplex? · Can You Buy a Flip in an LLC With a Hard Money Loan?
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.