The Quick Read: A hard money lender does not size a loan on the land contract itself; it sizes a new loan against the property’s value and funds the payoff of the contract so that the lender can record a first lien, with the final amount set by that lender’s leverage tier, the appraised value, and what the payoff must clear. Hard money is asset-based, so the amount follows the property and the exit plan, not the paperwork form the seller used. Every figure below varies by lender, property, and experience, and none of it is a commitment to lend.
- On a purchase without rehab, leverage runs up to 80% of purchase price.
- On a refinance or cash-out, leverage runs up to 65% of value.
- Loans reach up to $5,000,000 on interest-only terms of 6 to 18 months.
- Collateral must be non-owner-occupied residential property of 1 to 4 units. Vacant land and lots are not offered.
- The seller has to be able to deliver legal title at the payoff, and a clean title search is the gate.
Key Terms Defined
Land contract: A seller-financed sale in which the seller keeps the deed while the buyer makes payments. It goes by other names, including contract for deed.
Legal title: Formal ownership, shown on the deed. A lender needs the borrower to hold it before taking a lien.
Equitable title: The buyer’s right to the property under a land contract. It carries the duties of ownership but not the deed.
Payoff statement: A written figure from the seller showing what must be paid to end the contract. It also shows any seller loan that sits underneath.
Loan-to-value (LTV): The loan amount divided by the property’s value. Hard money often uses loan-to-cost on rehab deals, meaning the loan divided by total project cost.
Seasoning: The waiting period a lender wants between two events, such as owning a property and refinancing it.
PITIA: Principal, interest, taxes, insurance, and association dues. It is the full monthly housing payment that DSCR loans measure rent against.
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.
Can a Hard Money Lender Fund a Land Contract Rental?
Usually yes, but only at the payoff. A hard money lender takes a recorded lien on real property. That lien has to come from a borrower who holds legal title. Under a land contract, the buyer holds equitable title while the seller keeps the deed until the last payment. BiggerPockets describes the same split and notes the buyer must insure the property and pay the taxes.
So the lender cannot lend against the contract in place. This is an inference from how title works, since no lender guideline spells it out in those words. In practice, files move down one of three paths.
Path one: payoff and new purchase. The seller delivers the deed at closing. The new lender pays the seller’s payoff and records its lien in first position. Title handles the money flow.
Path two: payoff with no new cash. You have been paying the seller for a while. The new loan clears the remaining balance, and the seller hands over the deed. Lenders tend to treat this like a refinance.
Path three: payoff plus cash out. The loan clears the balance and returns extra cash to you. It carries the same refinance ceiling, and the extra is sized against value.
The contract stays in place under none of these. The deed moves, and the lien gets recorded. Everything else on the file serves that moment.
Hard money suits this setup because it looks at the asset and the plan. The lender asks what the property is worth and how you will exit. For a rental, the usual exit is long-term rental financing once the property is stable.
How the Loan Amount Gets Set
The amount comes from three inputs: a value basis, the lender’s leverage tier for that transaction type, and what the payoff must clear. The land contract form sets none of them. The table shows the likely pairing, using the network’s hard money ceilings. Which row applies is the lender’s call, and the pairing is our reading of how the files line up.
| Situation | Likely sizing base | Ceiling |
|---|---|---|
| Payoff of existing contract | Appraised value | Up to 65% of value |
| Payoff plus cash out | Appraised value | Up to 65% of value |
| Deed delivered at purchase | Purchase price | Up to 80% of purchase price |
| Rehab included | Project cost | 85%-93% of project cost, capped at 75% of after-repair value |
Rehab tiers depend on how many projects you have completed. The top tier is reserved for experienced investors. Up to 100% of the rehab budget can fund in draws against completed work, which is a budget figure and not a purchase LTV. There is no true 100% purchase program.
Credit matters too. The floor is 620, with added conditions below 660. First-time investors qualify at the lower leverage tiers. Underwriting stays asset-based, meaning property, plan, and exit.
Worked Examples (Modeled, in Index Units)
These use indexed figures, not dollars. Treat them as modeled assumptions for illustration, not market data. Set the appraised value at 100.
Example one: balance well under the ceiling. The remaining contract balance is 50. A refinance-style payoff allows up to 65 of value. The loan clears the 50 and leaves room for closing costs. Any amount above the payoff would be treated as cash-out, and the lender reviews it.
Example two: balance above the ceiling. The balance is 72. The ceiling is 65, so the loan cannot clear the payoff. You would need to bring the 7 gap plus closing costs. You could also wait while the balance falls, or negotiate a lower payoff with the seller.
Example three: a fresh purchase. The agreed price is 100, and the seller delivers the deed at closing. Leverage runs up to 80 of purchase price on a bridge purchase without rehab. You bring at least 20 plus costs. Lenders commonly look at the lower of price and appraised value, so a soft appraisal can shrink the loan. The seller’s own payoff comes out of the seller’s proceeds at title.
Example two is the most common surprise. Investors assume the contract balance sets the loan. It does not. Value sets the ceiling, and the balance is only what has to be paid.
What Shrinks the Loan
Several things pull proceeds below the headline ceiling.
- A seller mortgage underneath. The seller may still owe a mortgage on the property. The payoff must clear it before the deed can go out clean.
- Back taxes and liens. Unpaid taxes and judgment liens come out of proceeds at title.
- A low appraisal. If value comes in under the price, the loan shrinks and your cash requirement grows.
- Unverified payment history. If you paid the seller directly, you need proof of what was paid. Bank records and receipts matter, because the payoff statement has to match.
- A balloon already due. A contract with a balloon coming due can force the payoff on a set date, which limits how long you can shop.
- Property type. The network does not offer hard money on vacant land or lots. A contract on a raw parcel falls outside the program.
Title and Recording: What the Search Must Show
The title search tells the lender who holds legal title and whether the contract was ever recorded. Recording rules vary by state, and Landmodo notes recording is sometimes skipped. An unrecorded contract is harder to confirm, so expect extra questions about the seller’s cooperation.
Plan your document pile before you call a lender:
1. The original land contract and any amendments.
2. A current payoff statement from the seller.
3. Proof of every payment you made.
4. A title commitment showing liens and legal title.
5. The deed the seller will deliver.
6. Insurance and tax receipts, since the buyer carries both.
7. Rent roll and leases for the rental.
State law matters here. Some states regulate these contracts heavily, and the rules for notice, cure periods, and forfeiture differ. Have an attorney in your state review the contract before you rely on any payoff plan.
Land Contract, Seller-Financed Mortgage, or Land Loan?
Three terms get mixed up constantly. They are different things.
| Item | Land contract | Seller-financed mortgage | Land loan |
|---|---|---|---|
| Legal title during term | Seller | Buyer | Buyer |
| Lien | None the buyer can grant | Seller records a lien | Lender records a lien |
| Hard money fit | Funds the payoff | Easier to refinance | Not offered on vacant land |
The CFPB’s report on contract for deed lending lists the alternate names: installment land contracts, land sales contracts, and bonds for deed. Paperstac explains the contrast. In a seller-financed mortgage the buyer gets legal title and the seller records a lien. That setup is simpler for a new lender to refinance.
A land loan is a separate product. It finances a vacant parcel and has nothing to do with a land contract. The words overlap, which is why searches get tangled.
Where the General Rule Breaks
The general rule is that hard money funds the payoff and sizes on value. Four situations bend it.
Business purpose versus consumer rules. Hard money loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. The CFPB advisory opinion on contracts for deed treats these contracts as credit under federal lending rules, with a focus on consumer home purchases. Whether your investor contract is covered depends on its facts, so ask counsel instead of assuming.
Forfeiture. Default under many land contracts runs through forfeiture, where the buyer can lose the payments made. Landmodo’s explainer also notes that selling or refinancing before payoff is usually restricted or needs seller approval. That is why the seller’s cooperation is a gating item.
Rehab on the property. If the rental needs work, the lender sizes on project cost and caps the loan at 75% of after-repair value. That is a different calculation from the table above.
Seller-financed mortgage structures. If the buyer already holds legal title with a seller lien recorded, the file looks like an ordinary refinance. The land contract hurdles mostly disappear.
The Exit: From Hard Money to Long-Term Rental Financing
Hard money terms run 6 to 18 months, interest-only, with no prepayment penalty. There is no multi-year option. A land contract rental that stabilizes usually needs a longer runway, so the plan has to include a refinance out.
Many investors refinance from hard money into long-term DSCR financing once the property is leased and stable, and Lendmire arranges that path through select lenders in its wholesale network across 41 markets, including Washington, D.C. A DSCR loan compares rent to PITIA. Lenders reviewing the file look at that ratio, not your personal income documents. The complete DSCR loans guide walks through the mechanics.
Here is how the DSCR side usually looks across the network:
- On a purchase, most files land at 75% to 80% LTV on an investment property. Select high-leverage programs reach 85% LTV with roughly a 700+ score.
- On a cash-out refinance, leverage tops out around 75% LTV, and about six months of seasoning is the common expectation.
- Coverage of 1.00 is where select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted.
- Most programs want a credit score around 660. A 620 floor exists in parts of the network. A 700+ score unlocks the strongest tiers.
- Reserves commonly run around six months of PITIA, though they vary by lender, leverage, and loan size.
Clearing 1.00 is not the same as positive cash flow. Repairs, vacancy, management, utilities, and capital spending sit outside the calculation. A rental can pass the test and still lose money.
Once the deed has moved and the new loan is recorded, the property is a normal title-held rental.
Frequently Asked Questions
Can a hard money lender lend while the seller still holds the deed?
Not against the contract itself. The lender needs the deed delivered and its lien recorded as a first lien. The usual route is a payoff at closing, with the seller’s deed coming through title.
Does the lender size the loan on the contract balance or the appraised value?
Value sets the ceiling. The balance only tells the lender what the payoff must clear. If the balance sits above the program ceiling on a refinance-style payoff, you cover the difference.
Can I get 80% on a land contract rental?
On a bridge purchase without rehab, leverage runs up to 80% of purchase price. A payoff of a contract you already hold generally looks like a refinance, which runs up to 65% of value. The lender decides which applies, and leverage varies by lender, property, and experience.
What if my land contract was never recorded?
It can still be handled, but expect more questions. The title search must show who holds legal title, and the seller’s cooperation becomes essential. A recorded contract makes the file cleaner.
Do hard money lenders look at the rent?
Hard money is asset-based, so it leans on value and your exit plan. Rent supports the exit, because the long-term loan that replaces hard money qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
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.
For current guidelines and terms, see Lendmire’s hard money loan programs page.
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.
Short-term financing tends to work best when the long-term plan is decided early – see the hard money loan overview.
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References
1. BiggerPockets: Land Contracts
2. Landmodo: Land Contract vs Owner Financing
3. CFPB: Report on Contract for Deed Lending
4. Paperstac
5. CFPB Advisory Opinion on Contracts for Deed
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Refinance Out of Hard Money With a DSCR Loan Before the Payoff · How Much Equity a DSCR Refinance Releases on a Short-Term Rental · DSCR Cash-Out Now vs Waiting for Hard Money and Rehab Card Payoff
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.