The Quick Read: A hard money lender sizes your down payment by running two tests, a cost test and a value test, and funding the lower result, so your cash is the gap between the project’s total cost and that loan, plus fees and reserves.
- The down payment is never one fixed percentage. It changes with the deal type, the value the lender accepts, and your track record.
- Across the network Lendmire works with, a bridge purchase with no rehab typically goes up to 80% of the purchase price. Leverage varies by lender, property, and experience.
- Fix-and-flip files are sized on project cost in tiers, and every tier is also capped at 75% of after-repair value.
- Your real cash to close includes fees, interest carry, and reserves, so compare lenders on total cash in, not headline leverage.
- A low appraisal can raise your cash need after you have already committed to the deal.
What Is the Down Payment on a Bridge Loan?
The down payment is whatever the lender will not fund. Because the property is the main protection, the lender wants you to carry a meaningful share of the risk.
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 bridge loan is gap financing. Hard money names the source of the funds and bridge names the job. Many investor bridge loans are both, but the terms are not identical.
This article covers business-purpose investor bridge loans on non-owner-occupied property. It does not cover the owner-occupant sell-then-buy bridge, which is sized on equity in a current home.
Key Terms Defined
Loan-to-value (LTV): the loan divided by the property’s appraised value. Lenders use it to gauge risk, and the U.S. Treasury defines it the same way.
Loan-to-cost (LTC): the loan divided by total project cost, meaning purchase price plus the renovation budget.
After-repair value (ARV): the lender’s estimate of what the property is worth once the work is finished.
Draws: rehab money released in installments as completed work is verified.
Reserves: cash the borrower holds after closing, which some lenders require as a cushion.
The Two-Test Logic: Cost Cap and Value Cap
The lender takes the lower of two numbers. The cost test asks how much of your total spend it will fund. The value test asks how much it will lend against what the property is worth, or will be worth after the rehab.
Hard money leverage on rehab deals is usually quoted as a loan-to-cost figure, not a true LTV. A lender advertising 90% funding is almost always talking about cost. The value cap sits behind it and is often the number that actually binds.
Always ask which basis a quoted percentage uses. A cost percentage and a value percentage can describe the same file and produce very different cash requirements.
How Underwriting Sizes the Loan, Step by Step
Here is the sequence a lender runs on a typical file.
1. Pick the deal type. A purchase bridge with no rehab, a purchase plus rehab, a refinance, and a ground-up build each use a different basis.
2. Fix the value the lender will accept. On a rehab, that is usually the ARV supported by an appraisal or broker price opinion. On a no-rehab bridge, it is purchase price or as-is value. The lender’s number controls, not your estimate.
3. Place you in an experience tier. The count of documented completed projects sets the cost percentage.
4. Run the cost test. Multiply total project cost by the tier percentage.
5. Run the value test. Multiply the accepted value by the value cap.
6. Fund the lower result. That is the loan.
7. Subtract the loan from the purchase side of the deal. The remainder, plus fees and reserves, is the cash you bring.
Programs placed through Lendmire’s network run along these lines. Loan sizes go up to $5,000,000, with larger loans by exception. Terms run 6 to 18 months, interest-only, with no prepayment penalty. Credit typically starts at a 620 score, with added conditions below 660. Everything varies by lender, property, and experience, and nothing here is a commitment to lend.
Which Test Binds? Three Worked Examples
These examples use percentages only, because the percentages are what move. They are modeled assumptions, not market data. Each assumes a borrower with 2 or more completed projects, which typically fits the 90% of project cost tier with a 75% of ARV cap.
Example 1: the cost test binds. Total project cost is 70% of ARV. Funding 90% of cost means a loan of 63% of ARV. That sits under the 75% value cap, so the loan is 63% of ARV and you fund the other 10% of cost, or 7% of ARV. Fees and reserves come on top.
Example 2: the value test binds. The margin is thin and total cost is 85% of ARV. Funding 90% of cost would reach 76.5% of ARV, which is over the cap. The loan is held to 75% of ARV, and you fund 10% of ARV, about 11.8% of cost. A stronger experience tier would not change this result, because the cap sits above it.
Example 3: a no-rehab bridge purchase. There is no renovation, so the basis is the purchase price. A bridge purchase without rehab typically goes up to 80% of purchase price, so you fund at least 20%, plus fees and reserves.
Example 2 is the one investors miss. Thin-margin deals need more cash than the headline cost percentage suggests, because the value cap takes over.
Sizing by Deal Type
| Deal type | Basis | Typical network leverage |
|---|---|---|
| Bridge purchase, no rehab | Purchase price | Up to 80% of price |
| Fix-and-flip | Project cost, capped by ARV | 85%-93% of cost, 75% ARV cap |
| Cash-out or rate/term refinance | Appraised value | Up to 65% of value |
| Ground-up construction | Cost and completed value | Up to 90% of cost, 75% of completed value |
Ground-up leverage at 90% of cost is reserved for borrowers with 3 or more completed projects. All figures vary by lender, property, and experience.
How Experience Moves the Number
Experience is the largest lever on a rehab file. Lenders count documented completed projects, because a track record lowers their execution risk.
| Completed projects | Fix-and-flip loan-to-cost | Value cap |
|---|---|---|
| 5 or more | Up to 93% of project cost | 75% of ARV |
| 2 or more | Up to 90% of project cost | 75% of ARV |
| Fewer than 2 | Up to 85% of project cost | 75% of ARV |
First-time investors can qualify, but at the lowest tier. The top tier is reserved for experienced investors. Without a record, expect to bring a meaningfully larger share of the cost.
No true 100% purchase program exists. Some marketing talks about funding the whole deal, and in practice that means rehab funding. Up to 100% of the rehab budget can fund in draws against completed work. That is a rehab-budget figure, not a purchase LTV, and you still fund the purchase gap.
Rehab Draws and Your Cash at Closing
The rehab budget does not arrive at closing. The lender releases it in draws as work is completed and verified. At closing you fund the purchase gap, fees, and closing costs. During the project you often front some costs and get reimbursed when a draw is approved, so your cash needs run past the closing date.
A tight scope matters here. A bloated budget raises total cost and, under the cost test, raises the loan. It also raises ARV risk, and the value cap may hold the loan flat anyway.
What You Really Bring to Closing
The down payment is only one line in your cash need. Think of the build-up in five parts:
- The purchase gap, which is the down payment itself.
- Lender fees and closing costs, which vary by lender.
- Appraisal or price opinion, title, and inspection charges.
- Interest carry, because the loan is interest-only and payments continue for the whole term.
- Reserves and draw float, which cover costs you front before a draw is released.
Compare offers on total cash in. A lender with a higher headline percentage but heavier fees can cost you more upfront than one with a slightly lower percentage. Tax treatment varies by how the funds are used and how the property is held, so consult a qualified professional.
Where the General Rule Breaks
The appraisal comes in low. Lenders size on the value they accept. Buying below market does not reduce your down payment on price alone. If the accepted value is lower than you expected, your required cash goes up, because the value cap shrinks the loan.
Cost percentage mistaken for LTV. A lender quoting 93% is quoting a cost percentage. Reading it as 93% of value overstates what you will receive.
Maxing out the loan. The bridge is built to be paid off by a long-term refinance. If you take the largest loan and the new appraisal comes in short, the refinance may not cover the payoff. A smaller bridge leaves room for a value miss.
Entity funding and sourcing. Lenders want your cash documented and sourced. Lendmire’s piece Can an LLC Pay the Down Payment on a Hard Money Bridge Loan? covers how entity funds are treated, subject to lender program eligibility.
Property eligibility. Programs in the network cover non-owner-occupied residential property of 1-4 units, and ground-up construction up to 10 units. Commercial, industrial, land, hospitality, and owner-occupied property are not offered.
What the Investor Decision Looks Like
Start with the exit. Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. Lendmire’s complete DSCR loans guide explains how the rent-to-payment test works on that side. The bridge down payment should be sized so the exit still works if the appraisal is modest.
Then run both caps on your own numbers before you make an offer. Work out total cost as a share of ARV. If it sits near or above the point where 90% of cost would breach the 75% cap, plan on the value test controlling and budget your cash accordingly.
Finally, decide how much cushion you want. Lendmire’s article Does an Investor Need a Down Payment on a Hard Money Bridge Loan? gives the baseline answer, and this sizing logic explains why the number moves.
Frequently Asked Questions
Can I get a bridge loan with zero down?
Not on the purchase. No true 100% purchase program exists on the network’s current sheet. What exists is rehab funding, where up to 100% of the rehab budget is released in draws against completed work. You still fund the purchase gap, fees, and reserves. Terms vary by lender, property, and experience.
Can a first-time investor qualify?
First-time investors can qualify at the lower leverage tiers, typically 85% of project cost with the 75% of ARV cap. Credit generally starts around 620, with extra conditions below 660. Expect more cash in than an experienced borrower brings, and approval depends on the property, plan, and exit.
Does credit matter if the loan is asset-based?
Credit still matters, but underwriting centers on the property, the plan, and the exit. A score at or above 660 avoids the extra conditions that apply below it. A stronger score does not erase the experience tier or the value cap.
How do I lower the cash I need to bring?
Tighten the budget, document your completed projects, and pick deals with room between total cost and ARV. A larger margin keeps the cost test in control instead of the value cap. A clear exit also helps the lender view the file favorably.
What happens if the appraisal comes in low?
The loan shrinks, because both caps apply to the lender’s accepted value. Your cash requirement rises by the difference. Some borrowers renegotiate price, add cash, or reduce scope. Raising the bridge to the limit leaves no room for that.
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 mortgage broker arranging financing through select lenders in its wholesale network, across 41 markets including Washington, D.C. Reach the team at 828-256-2183.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage built around DSCR investor lending, with programs available in 41 markets, including Washington, D.C. DSCR lenders commonly evaluate rental-income coverage instead of personal income paperwork — a practical fit for LLC-owned and multi-property investors. Terms vary by lender, property, leverage, and program. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. U.S. Treasury: Loan-to-Value
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 Bridge Down Payment Requirements for Out-of-State Investors · How a Hard Money Lender Sizes the Maximum Term for a Flip · How a Hard Money Lender Counts Equity as a Flip Down Payment
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.