The Quick Read: Your down payment on a hard money flip loan is the gap between total project cost and what the lender will advance. That advance is limited by a percentage of cost tied to your experience and by a hard cap of 75% of after-repair value (ARV). Across the wholesale network Lendmire works with, leverage typically runs from 85% to 93% of project cost, leaving roughly 7% to 15% of cost for you to fund before fees. Programs vary by lender, property, and experience, and nothing here is a commitment to lend.
- Leverage is tiered by completed projects: typically 85% of project cost with fewer than 2, 90% at 2 or more, and 93% at 5 or more.
- Every tier is capped at 75% of ARV, and the smaller of the two tests sets your loan.
- Up to 100% of the rehab budget funds in draws as work is completed, but there is no true 100% purchase program.
- Your down payment is not your cash to close, because fees, title, insurance, and reserves come on top.
How Does a Flip Lender Size the Loan?
The lender runs two tests on every flip and uses whichever produces the smaller loan. The first test is a percentage of project cost, meaning purchase price plus rehab budget. The second is a ceiling on the loan as a share of the property’s projected value after the work is done.
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.
A hard money loan is a short-term, collateral-based loan from a private or non-bank lender, as Corporate Finance Institute describes it. Underwriting is asset-based. The lender reviews the property, your renovation plan, and your exit, not traditional personal-income documentation. Documents usually include bank statements, a scope of work, a rehab budget, and comparable sales that support the ARV.
That is why one investor can get a very different down payment than another on the same house. Experience moves the cost test. The deal itself moves the ARV test.
What Are Hard Money Flip Loan Down Payment Requirements Measured Against?
They are measured against project cost first, and the ARV cap acts as a ceiling on top. Most programs in the network tier the cost percentage by how many projects you have completed. These are typical ranges that vary by lender, property, and experience.
| Completed projects | Loan-to-cost | Cash in, as % of cost |
|---|---|---|
| Fewer than 2 | 85% | 15% |
| 2 or more | 90% | 10% |
| 5 or more | 93% | 7% |
Every tier is also capped at 75% of ARV. The top tier is reserved for experienced investors, and first-time investors generally qualify at the lower tiers.
Two other structures sit beside the flip loan. A bridge purchase with no rehab typically goes up to 80% of the purchase price. A cash-out or rate-and-term refinance typically goes up to 65% of value. Ground-up construction can reach 90% of cost and 75% of completed value at 3 or more completed projects.
Where the ARV Cap Overrides the Tier
The ARV cap decides the outcome whenever total cost is high relative to finished value. Run the numbers on two modeled deals. These are assumptions for illustration, not market data.
Deal one: cost is 80% of ARV. At the 85% tier, the loan is 68% of ARV, well under the cap. Your cash in stays at 15% of cost. At the 93% tier, the loan is 74.4% of ARV, still under the cap, so cash in is 7% of cost.
Deal two: cost is 90% of ARV. At the 85% tier, the loan would be 76.5% of ARV, which breaks the cap. The lender trims the loan to 75% of ARV. That works out to about 83% of cost, so your cash in rises to roughly 17% of cost instead of 15%.
Nothing about you changed, yet your down payment grew. Thin margins cost you cash. A deal with real room between cost and ARV is the one lenders fund at full tier leverage.
What About Rehab Money?
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. Your down payment is set on the purchase and total-cost side, and the renovation money is held back.
The lender releases draws as work is finished, so you often need cash flow to bridge between milestones. The same holdback idea appears in the government’s FHA 203(k) program, where rehab funds sit in escrow and release as work is completed. That program is built for owner-occupants, so it is not a flip investor product. It simply shows how renovation money is normally controlled.
How a given lender splits purchase advance from rehab holdback varies. Ask for the split in writing before you commit to a purchase contract.
Down Payment Is Not Cash to Close
The down payment is only the largest line in your cash requirement. A realistic budget covers all of these:
- The down payment on the purchase and cost side.
- Lender and broker fees, title, and closing costs.
- Appraisal and insurance, plus any earnest deposit already paid.
- Reserves the lender wants to see after closing.
- Interest-only carry while the project runs, since these loans typically run 6 to 18 months with no prepayment penalty.
- Any rehab shortfall between your real costs and the draws released.
A quoted down payment that ignores these items understates what you need. Here is a clean test. Add the down payment, fees and closing costs, reserves, and a few months of carry. If that total strains your liquid cash, the deal is too big for your current position, even if the leverage looks generous.
Key Terms Defined
After-repair value (ARV): The projected market value of the property once the planned renovation is finished.
Loan-to-cost: The loan amount as a share of purchase price plus rehab budget.
Rehab holdback: Renovation money the lender keeps back at closing and releases in draws.
Draw: A payout from the holdback after the lender confirms a stage of work is complete.
Cash to close: Everything you must bring at closing, including the down payment, fees, and prepaids.
Reserves: Liquid cash a lender wants you to hold after closing as a safety cushion.
Business-purpose loan: A loan made to acquire or improve a property for investment, not to live in.
Does Zero Down Actually Exist?
Not as a true 100% purchase program. Marketing that says no money down usually means one of two things. Either total cost sits far enough under the ARV cap that the lender covers most of it, or the rehab portion is fully funded while you still bring cash for the purchase side.
Even in the best case, you still pay fees, title, insurance, and reserves. The strongest tier in the network leaves about 7% of cost on you, and that tier is for borrowers with a documented record of completed projects.
Other structures exist in the wider market, such as pledging another property as extra collateral in place of cash. Whether a given program allows that is a lender-by-lender question. The same goes for borrowed down payment money, which some lenders restrict. Ask before you build a plan around either one.
Where the General Rule Breaks
A few situations bend the usual math.
Small purchase prices. When the purchase price is low, the down payment dollars can be modest even at the lowest tier. Fees do not shrink in proportion, so fees can dominate your cash needs on cheap houses.
Thin ARV cushion. As the second modeled deal showed, a tight margin pushes your cash in above the tier percentage.
Lower credit. A 620 score is the typical minimum, with additional conditions below 660. Underwriting stays asset-based, but a weaker score can mean tighter terms.
Property type. Collateral is non-owner-occupied residential property with 1 to 4 units, and ground-up construction can go to 10 units. Commercial, industrial, land, hospitality, and owner-occupied properties are not offered.
Condos and small multifamily. Both fit the 1-to-4-unit collateral rule, and the same cost and ARV tests apply. Condo comps are often thinner, so the ARV support deserves extra care before you rely on a full tier.
Same Deal, Two Borrowers
Consider a flip whose total cost lands at 80% of ARV. A first-time investor sits at the 85% tier and brings 15% of cost. A flipper with five completed projects sits at the 93% tier and brings 7% of cost.
The experienced investor is not getting a favor. The lender is paying for track record. A documented history of finishing projects on budget lowers the odds that the draws run out before the work does.
If you are the first-time investor, you have two honest levers. You can bring more cash, or you can buy a deal with a wider ARV cushion. Both reduce lender risk, and the second also protects your profit.
Proving Your Funds
Lenders want to see that your cash exists and is yours. Savings in a bank account, proceeds from a prior sale, and a partner’s contributed capital are common sources. Expect to provide recent bank statements. Large recent deposits usually draw questions, so keep a paper trail.
If you plan to partner, settle the structure before you apply. The lender will want clarity on who owns the borrowing entity, and subject to lender program eligibility, a flip can be held in an LLC.
Planning the Exit Before You Buy
The down payment is half the story. The other half is how you leave the loan. Terms run 6 to 18 months, interest-only, and there are no multi-year options on the current program. Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. The long-term loan is a different test: it looks at rent against the full payment rather than at your renovation plan. The complete DSCR loans guide covers how that works.
Tax treatment varies; consult a qualified professional.
Common Mistakes
- Treating the quoted percentage as your total cash need.
- Ignoring the ARV cap and assuming the tier percentage always applies.
- Spending down cash on the purchase and leaving nothing for carry and reserves.
- Underestimating rehab cost, which creates a shortfall between draws.
- Assuming a first flip gets the same terms as a fifth.
Frequently Asked Questions
How much do I need down on my first flip?
Expect around 15% of project cost at the 85% tier, plus fees, reserves, and carry. The ARV cap can push that higher on thin deals. Terms vary by lender, property, and experience.
Can hard money cover my entire purchase?
No. There is no true 100% purchase program. Up to 100% of the rehab budget can fund in draws, but you bring cash against the purchase and cost side.
Does my credit score change the down payment?
Credit sets eligibility more than the percentage. A 620 minimum is typical, with additional conditions below 660, and underwriting stays tied to the property, the plan, and the exit.
Is the down payment the same as cash to close?
No. Cash to close adds fees, title, insurance, prepaids, and any earnest money, and lenders also want reserves after closing.
What if I have no flips behind me and little cash?
Look for a deal with a wide gap between cost and ARV, consider a partner, or start with a smaller project. Experience and cushion are what lenders reward.
Ready to Run Your Own Numbers?
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 mortgage broker arranging financing through select lenders in its wholesale network, across 41 markets, including Washington, D.C. Any illustrative calculator estimate is only that, not a quote.
Flip margins reward the investor who counts cash to close first and leverage second.
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.
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References
1. Corporate Finance Institute: Hard Money Loan
2. HUD: Single Family Mortgage Programs 203k
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 Maximum Loan Amount Requirements for a Flip · Hard Money Bridge Down Payment Requirements for Out-of-State Investors · Hard Money Down Payment vs HELOC Draw for an Investor Purchase
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.