The Quick Read: Lenders do not apply a fixed mileage cutoff or a set haircut to far-away comparable sales. Distance gets layered onto similarity, recency, and neighborhood boundaries, and the weaker the comp support, the more conservative the after-repair value (ARV) the lender sizes the loan on. That lower value then shrinks the loan or raises the cash you bring. Each flip is valued on its own comps, so a strong deal in one submarket does not rescue a thin one in another.
- A distant comp is allowed when the appraiser explains why it competes with your property.
- The “discount” usually comes from larger adjustments, less weight, and a lender cap applied to the lower number.
- Across our wholesale network, hard money fix-and-flip leverage is capped at 75% of after-repair value on every experience tier.
- Experience changes your cost-based leverage tier. It does not loosen comp scrutiny.
- Parameters vary by lender, property, and experience, and nothing here is a commitment to lend.
Key Terms Defined
After-repair value (ARV): the value of the property as if the planned renovation were finished.
Comp (comparable sale): a recently closed sale of a similar property that helps set the value.
Adjustment grid: the appraiser’s table that adds or subtracts dollars from each comp for differences like condition, size, or lot.
Loan-to-cost: the loan as a percentage of the total project cost, meaning purchase plus rehab.
Reconciliation: the final step where the appraiser weighs the adjusted comps into one value.
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.
Is There a Mileage Limit on Comps?
No. Appraisal practice sets no fixed distance cap. McKissock, an appraiser-education publisher, notes that guidance imposes no fixed distance limits. The focus is on whether each comp reflects the same market influences as the subject property.
So a comp three blocks away can be worse than one a few miles away. A far comp in the same buyer pool and school zone can beat a close one across a highway. The appraiser has to explain why each sale competes with your property and how the adjustments were derived.
You will hear flat rules like stay within a mile. That is a lender preference for a typical file, not a regulation, and it bends when the market is thin. The discount you actually feel comes from several steps stacked together.
How the Discount Happens, Step by Step
Step 1: Comp selection. The appraiser picks closed sales with similar site, room count, finished area, style, and condition. Where nearby sales are thin, the appraiser widens the search and documents why.
Step 2: The adjustment grid. Each comp gets dollar adjustments for its differences. NAR explains that these are shown as gross and net percentages of the comp’s sale price. Gross adds the absolute values. Net nets the pluses and minuses. In NAR’s example, a $100,000 comp with a $5,000 kitchen adjustment down and a $2,000 land adjustment up shows 7% gross and 3% net negative.
Step 3: Reconciliation. The final value must land inside the range of the adjusted comps. Distant comps usually need more adjustment, so they carry less weight. NAR also warns that very low adjustments are not automatically a sign of a better comp, since they can mean the comp was under-adjusted.
Step 4: After-repair valuation. For a flip, the valuation assumes the scope of work is finished. Lenders typically look at both the as-is value and the ARV.
Step 5: Lender review. A lender may add its own desk review or internal comp analysis. This is where reviewer discretion enters, and a weakly supported distant comp is the easiest piece to discount.
Step 6: Sizing. The lender applies its leverage caps to the lower of the supported values. A more conservative ARV flows straight into a smaller loan.
Four Ways a Lender Can Treat a Distant Comp
A lender rarely just throws the comp out. In practice it lands in one of four treatments, and which one applies depends on how strong the comp is and what else is in the pack.
| Treatment | When it happens | Effect on ARV |
|---|---|---|
| Exclude | Different buyer pool or stale sale | Comp drops out |
| Adjust | Good match, some differences | Value moves by adjustment |
| Down-weight | Heavy adjustments needed | Counts for less |
| Ceiling | Only used to cap the high end | Limits upside |
This table describes general underwriting behavior, not any one program’s terms. Adjusting and down-weighting are the quiet discounts. Nobody sends a letter saying a comp was discounted. You just see an ARV that comes in lower than yours.
Distance Is Not Just Miles
Boundaries often matter more than raw distance. Think of a major road, a school district line, a flood zone edge, or a change in neighborhood character. A comp 0.4 miles away on the wrong side of a boundary can be a worse indicator than one farther away in the same pocket.
Market type matters too. Dense urban blocks turn over fast, so comps are close and recent. Rural or low-turnover areas may have no good sale for miles. A lender who understands that will accept wider comps, but only with a written reason.
Product type works the same way. A unique property with no true peers may have its best comps far away, and the appraiser has to say so plainly.
A Worked Comp Grid
Take a subject property that will be renovated. Three renovated sales support the ARV: one near, one mid-distance, one far. This is a modeled illustration, not market data.
| Comp | Distance and boundary | Adjustments | Likely lender read |
|---|---|---|---|
| A | Close, same street pattern | Small | Anchor of the value |
| B | Mid-distance, same school zone | Moderate | Supports the range |
| C | Far, different buyer pool | Large | Down-weighted or ceiling only |
The appraiser reconciles inside the adjusted range. Comp A does most of the work. Comp C might tempt some reviewers to lean higher, but a careful reviewer will not let it set the value. If you picked Comp C as your headline comp because it had the biggest number, expect the lender’s ARV to land below yours.
The fix is not to argue harder. It is to bring a second near comp, or to underwrite to the low end of the range.
What a Lower ARV Does to Your Loan
Here is how the leverage works on our wholesale network. Fix-and-flip loans typically run up to 93% of project cost at 5 or more completed projects, 90% of project cost at 2 or more, and 85% with fewer than 2. Every tier is capped at 75% of after-repair value. Parameters vary by lender, property, and experience.
Two limits sit on every file, and the lower one wins. When your ARV is strong, the cost-based tier usually binds. When comps are weak or distant, the 75% of ARV cap often binds first. At that point every dollar of ARV the lender removes takes 75 cents off the maximum loan, and you cover the gap with cash.
That is why a distant comp is not a paperwork issue. On a thin file, it can turn a high-leverage deal into a cash-heavy one. Rehab money works differently. Up to 100% of the rehab budget can fund in draws against completed work, but that is a rehab-budget figure, not a purchase leverage figure.
What Changes Across Several Flips
Experience moves the cost-based tier, and that is about all it moves. Moving from the 85% tier to the 90% or 93% tier depends on documented completed projects. It does not buy you looser comp rules.
Several things hold across a run of flips:
- Each file is valued alone. Comps do not transfer between submarkets. A flip across town needs its own comp radius and its own support.
- A weak ARV on one deal can strain the rest. If you run several flips at once, a lender-trimmed value on one file means more cash tied up there, which leaves less for the next.
- Your own closed flips can inform the pack. Sales from earlier projects in the same area may be useful data points, but the appraiser decides whether they qualify as comps.
- Pick markets where comps stay defensible. A repeat submarket with steady sold-and-renovated sales is easier to support than a string of thin one-off areas.
The practical lesson is to treat comp support as part of choosing the deal, not an afterthought. Operators who scale well tend to repeat neighborhoods where the comp pool is deep.
Where the Rule Breaks
Rural and thin markets. Freddie Mac’s guide accepts considerably distant or older comps in rural areas, with justification, support, and adjustments. Its example is a 44-acre ranch whose best comps sit 8 to 18 miles away. Fannie Mae’s guide likewise lets the appraiser expand the market area with commentary and location adjustments. These agency rules do not govern hard money loans. They simply show that a distant comp is acceptable when it is explained.
Contradictory write-ups. A mortgage-insurer training deck from Enact flags a common review problem. An appraiser defines the neighborhood as a 10-mile radius, then uses sales outside it while claiming all comps are local. Reviewers want that contradiction resolved before they rely on the value.
Non-appraisal valuations. Some flip lenders use broker opinions or internal models in place of a full appraisal. Distant-comp scrutiny then depends on the model and the reviewer, so ask early which valuation method your lender uses.
The exit appraisal. If you plan to refinance after the flip, the new valuation is a separate event. A flip ARV that leaned on distant comps does not carry over. Hard money refinance leverage on our network runs up to 65% of value, and a long-term DSCR refinance is valued on its own comp support, typically with an appraisal that includes a rent schedule. Thin comps at exit can leave cash trapped in the property.
Building a Comp Pack That Survives Review
The goal is a pack a reviewer can trust without calling you.
1. Use closed sales, not active listings. Listing prices are hopes, not evidence.
2. Match condition. Use sold renovated comps in the same buyer pool as the finished product.
3. Keep size and layout close to your subject.
4. Include at least one conservative comp, so your range has a defensible low end.
5. If you rely on a distant comp, write down why it competes: same schools, same price band, same buyer type.
6. Keep each flip’s pack separate. Do not recycle comps from a different submarket.
A short written explanation beats a long argument. Appraisers already have to justify distant comps, and a clear note from you makes their job easier.
Common Mistakes
- Using comps from a different neighborhood because the number looks better.
- Using active listings instead of closed sales.
- Over-improving for the block, so your finished product beats every comp.
- Assuming your ARV is the lender’s ARV. The lender controls the number.
- Assuming more completed flips mean looser comp review. They mostly change your leverage tier.
When clean comps do not exist, the better move is usually to renegotiate the purchase price rather than stretch the value.
Frequently Asked Questions
Why is the lender’s ARV usually lower than mine?
The lender leans on closed sales, heavier adjustments, and the low end of the range, while investors often lean on the best comp they can find. A distant or aspirational comp widens that gap. The lender’s value then sets the loan size, not yours.
Can a lender use a comp from far away?
Yes, when it is the best indicator of value and the reason is written down. Appraisal practice sets no fixed distance cap. The comp may be adjusted, down-weighted, or used only to cap the value.
Does doing more flips change how comps are judged?
Not much. More completed projects can move you into a higher cost-based leverage tier, with 93% of project cost at 5 or more projects on our network. Every tier still sits under the 75% of ARV cap, and each deal gets its own comp review.
Can I refinance out of hard money into a rental loan?
Often, once the property is stabilized. Many investors refinance into long-term DSCR financing, and Lendmire arranges that path. The refinance needs its own valuation, so do not assume the flip ARV carries over.
What credit score do hard money lenders look for?
Typically a 620 minimum, with additional conditions below 660. First-time investors can qualify at the lower leverage tiers. Underwriting stays asset-based, meaning the property, the plan, and the exit, and the details vary by lender.
Next Steps
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. For a broader look at the long-term exit, read the complete DSCR loans guide.
For current guidelines and terms, see Lendmire’s hard money loan programs page.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR loans are evaluated by the lender on rental income rather than personal income, subject to lender guidelines — a fit for LLC-owned portfolios, self-employed investors, and operators scaling beyond conventional loan caps. Recognized as a Scotsman Guide Top Mortgage Workplace in 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. McKissock: Arriving at an Accurate Appraisal Even When Comps Are Few
2. NAR: How Can Two Appraisers Value the Same Property Differently
4. Fannie Mae Selling Guide B4-1.3-08
5. Enact Rural Appraisal Training
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 to Document Private Loan Money on Your First DSCR Rental Loan · Do DSCR Lenders Use Loan-Level Price Adjustments Like Agency Lenders?
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.