The Quick Read: A flip loan is sized by running two tests on the deal, a cost-based test tied to your experience tier and a value-based cap tied to after-repair value, and funding whichever result is lower, so an out-of-state property changes how closely the lender checks value and watches the rehab, not the math itself.
- The lower of the cost test and the after-repair-value (ARV) cap sets the loan, and that is rarely the headline percentage.
- Across the lenders Lendmire works with, every experience tier is capped at 75% of ARV, and the cost percentage rises with documented completed projects.
- The purchase portion funds at closing, and the rehab portion is held back and released in draws after verified work.
- Out of state, the lender’s risk shifts from valuation to execution, so expect more documentation and a local representative on the ground.
- Your cash need is the gap between all-in cost and the loan, plus closing costs, reserves and the float between draws.
How the Loan Amount Gets Set
Loan size on a flip comes from the deal, not from your income. The lender asks what the property is worth, what it will be worth after the work, and what the whole project costs. Then it lends against those numbers.
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.
Two measures do the work. Loan-to-cost (LTC) is the loan divided by total project cost. After-repair value (ARV) is the projected value after renovation, usually built from recent comparable sales, and lenders often compare the loan to it as well.
Hard money is collateral-based lending. That is why the lender settles the value question first and everything else second.
On the programs Lendmire places files with, fix-and-flip leverage is tied to your record. The tiers run about 93% of project cost with five or more completed projects, 90% with two or more, and 85% with fewer than two. Every tier is capped at 75% of ARV. Up to 100% of the rehab budget funds through draws against completed work. Those figures vary by lender, property, and experience, and nothing here is a commitment to lend.
Step by Step: From Deal to Sized Loan
The sizing sequence is the same for every flip, and it runs in this order.
1. Submit the deal. You send the address, purchase price, your ARV estimate, the rehab budget, the scope of work and your comps. The lender tells you whether it will lend and on what basis. Many investors then make offers as financed buyers with a pre-approval letter.
2. The lender checks value. Your ARV is a claim, not a fact. Lenders order a broker price opinion or an appraisal, usually at the borrower’s expense, and they test your comps for location, recency, size and condition.
3. The lender tests the scope and budget. A budget that looks thin for the scope shrinks confidence in the whole file.
4. Run the cost test. Apply your experience tier to purchase price plus rehab budget.
5. Run the ARV cap. Take 75% of the verified ARV.
6. Take the lower number. That is the maximum loan.
7. Split it. The purchase portion funds at closing. The rehab portion is held back and released in draws.
8. Total your cash. Subtract the loan from all-in cost, then add closing costs, reserves and a buffer for draw timing.
Most investors stop at step four and quote the tier percentage as their loan. Steps five and six are where the real answer lives.
Worked Example: When Each Ceiling Binds
Take the same investor in two different deals. These inputs are modeled assumptions, expressed as shares of ARV so the math stays visible. The investor has five or more completed projects, so the 93% cost tier applies.
| Step | Deal A (wide margin) | Deal B (thin margin) |
|---|---|---|
| All-in cost, as % of ARV | 70% | 90% |
| Cost test at 93% of cost | 65.1% of ARV | 83.7% of ARV |
| ARV cap | 75% of ARV | 75% of ARV |
| Loan sized | 65.1% of ARV | 75% of ARV |
| Which test binds | Cost test | ARV cap |
| Your cash before fees | 4.9% of ARV | 15% of ARV |
In Deal A, the tier percentage is the answer. The loan is 93% of cost, and you bring 7% of cost. In Deal B, the cost test would produce 83.7% of ARV, but the 75% cap overrides it. You cover the difference, which is 15% of ARV before closing costs and reserves.
That is the point most first-time flippers miss. A thin margin between cost and ARV, not a weak credit profile, is what blocks full financing. The same investor with the same experience brings three times the cash on the second deal.
Market guides give a rough check. Homes.com’s flipping guide reports that hard money lenders often want 10-20% in borrower cash. The tiers above imply roughly 7%, 10% or 15% of project cost out of pocket by experience level, and the ARV cap can push the number higher.
Two smaller variations exist. A bridge purchase with no rehab runs up to 80% of purchase price. A cash-out or rate-and-term refinance on a hard money program runs up to 65% of value. All of this is subject to lender guidelines.
What Changes When the Property Is Out of State
Almost nothing changes in the formula. The lender values the property with a broker price opinion or an appraiser licensed in the property’s state. Your home state plays no role in valuation.
What changes is where the lender sees risk. A local flipper can walk the site. You cannot. So the lender’s concern moves from “is the value right” to “will the work actually get done and be documented.”
Expect three things:
- Heavier documentation. The scope, budget, contractor details and draw schedule matter more when no one from your side is on site.
- A local representative. A remote investor generally needs someone local to meet inspectors and verify progress, plus a documentable payment trail for every dollar paid out. Lendmire’s piece How to Vet a Hard Money Lender’s Draw Process From Out of State covers that side in detail.
- Closer scrutiny of comps. A comp set built in a market you do not know is the likeliest place for ARV to go wrong. Unfamiliar neighborhoods hide block-by-block value swings that a spreadsheet will not show.
Some lenders also like to see a local general contractor already on file. That is lender-specific, so treat it as something to ask about, not a rule.
Remote does not make the loan a different product. It makes the execution plan part of the underwriting. If you can show a credible contractor, a local point person and clean comps, the file reads much like a local one.
The Cash Timeline Nobody Sizes For
The loan amount tells you the ceiling. It does not tell you when the money arrives. Draws reimburse verified work, so you generally pay first and get repaid after an inspection.
| Stage | Who pays | Cash gap risk |
|---|---|---|
| Closing | You fund the gap and fees | Equity plus closing costs |
| Early draw | You pay contractors first | Float until inspection clears |
| Mid draws | You, then reimbursed | Missing lien waivers stall release |
| Final draw | You, then reimbursed | Holdback released after sign-off |
| Sale or refinance | Proceeds repay the loan | Exit value must hold |
The inspection result usually decides whether a draw releases. Missing contractor lien waivers are a common reason one stalls. Some lenders also charge a fee per draw, so a project with many small draws costs more than one with a few large ones.
Out of state, the float gets worse because inspections are harder to schedule and verify. Hold working capital for at least one stalled draw, on top of the cash the sizing math already requires. Investors who skip this step tend to discover it mid-project.
Where the General Rule Breaks
The two-test method holds, but several situations bend the outcome.
A low appraisal. When leverage ties to ARV, a lower value shrinks the loan and raises your cash need. Ask the lender before you commit whether it will restructure the loan or walk away if value comes in short. Lenders differ on this, and the answer belongs in your offer decision, not your post-closing surprise.
Lender-to-lender variation. Some lenders cap at the lesser of a cost percentage and an ARV percentage, as the network programs do. Others use a lower ARV cap on higher-value properties. Each lender’s loan agreement controls. Comparing only the headline percentage will mislead you.
Simple deals get more leverage. Small, straightforward projects with a tight cost-to-ARV ratio are easier to size at the top of a lender’s range. Complex scopes and thin margins either get declined or get cut back. A heavy structural rehab in a market you cannot verify is the hardest file to size.
Experience tiers move the number. First-time flippers land in the 85% cost tier on the network programs. The top tier is reserved for experienced investors with documented completed projects. A 620 credit score is the minimum on the network’s hard money programs, with added conditions below 660. The underwriting stays asset-based, since the property, plan and exit drive the decision. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Cross-collateral and gap funding. Some programs reach near-total financing by adding a second property as collateral. That is program-specific and never typical. There is no true 100% purchase program. When a lender advertises 100% financing, it generally means 100% of the rehab budget through draws, or it applies only up to the ARV cap.
Cap questions. Investors often ask whether there is a ceiling on loan size or count for remote flips. Lendmire’s article Is There a Cap on Hard Money Flip Loans for Out-of-State Investors? covers the topic in more detail.
Key Terms Defined
Loan-to-value (LTV): The loan amount divided by the property’s appraised value.
Loan-to-cost (LTC): The loan amount divided by total project cost, meaning purchase price plus rehab budget.
After-repair value (ARV): The estimated market value of the property once renovation is complete, built from comparable sales.
As-is value: What the property is worth today, before any work.
Holdback: The rehab portion of the loan that the lender keeps back at closing and releases later.
Draw: A release of held-back rehab funds after the lender verifies completed work.
Lien waiver: A signed document from a contractor confirming they have been paid and give up lien rights for that work.
Broker price opinion (BPO): A value estimate from a licensed agent or broker, used in place of a full appraisal.
What the Decision Looks Like in Practice
Pre-size the deal before you call anyone. It takes about ten minutes.
1. Write down purchase price and rehab budget, and add them.
2. Multiply by your tier percentage (93%, 90% or 85%).
3. Take 75% of a conservative ARV, one you would defend to an appraiser with three nearby sales.
4. Use the lower result as your loan.
5. Subtract it from all-in cost to find your cash gap.
6. Add closing costs, reserves, and the float for one delayed draw.
If the number does not work with a conservative ARV, it will not work with an optimistic one. The lender will check your ARV against its own value anyway.
Programs on the network run terms of 6 to 18 months, interest-only, with no prepayment penalty. Loan sizes go up to $5,000,000, with larger loans by exception. Those terms are short, so your exit has to be real. Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. The complete DSCR loans guide explains how that second loan is sized.
Plan the exit appraisal early. The refinance lender never sees your ARV, only its own appraisal. Back-solve the break-even appraisal this way: add your bridge payoff and exit costs, then divide by the cash-out LTV cap. That cap is around 75% LTV on a standard rental cash-out refinance, and lower for short-term-rental collateral, around 70%. Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
One more practitioner point. On remote flips, the files that size cleanly tend to share a pattern: comps pulled from sales near the subject, a budget with contractor bids behind it, and a named local contact for inspections. The files that stall tend to share the opposite pattern, a round-number ARV and a budget with no bids.
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 Federal Register notice on ability-to-repay standards describes how business-purpose credit sits outside that consumer rule. Tax treatment varies; consult a qualified professional.
Frequently Asked Questions
Does the lender care that I live in a different state?
Not for valuation. The property is valued by a broker price opinion or an appraiser licensed in its own state. Your location matters for execution, since the lender wants a local representative for draw inspections and a clear payment trail. Heavier documentation is normal for remote files.
Can I get 100% financing on an out-of-state flip?
No true 100% purchase program exists. Programs may fund up to 100% of the rehab budget through draws, but the purchase portion is limited by your tier and the 75% ARV cap. You still cover the gap, closing costs and reserves. Lender terms vary by property and experience.
Why is my loan smaller than 93% of my project cost?
The ARV cap probably overrode the cost test. If all-in cost is 90% of ARV, then 93% of cost equals 83.7% of ARV, and the 75% cap cuts it back. The thinner the margin between cost and ARV, the more cash you bring.
What happens if the appraisal comes in below my ARV?
The loan shrinks and your cash need rises. Ask the lender up front whether it will restructure or walk away on a low value. Pressure-test your comps before you submit, especially in a market you do not know.
Do I need to visit the property?
Not as a requirement of sizing. You do need a plan for verifying work, which usually means a local representative, an inspector, and lien waivers at each draw. Many remote investors still visit once to meet their contractor.
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. The brokerage arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C.
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.
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References
1. Homes.com: How to Flip a House
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 a Hard Money Lender Sizes a Flip Without Income Documents · How a Hard Money Lender Sizes a Bridge Loan for a First-Time Investor · How a Lender Sizes a Fix and Flip Loan on a 2-4 Unit Property
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- 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.