The Quick Read: Hard money lends against the property’s value or project cost, not against what you owe the seller, and it funds only when the seller can deliver a deed at closing. A seller who will not cooperate holds the usable loan amount at effectively zero. Once the seller delivers the deed, the loan is limited by the lender’s value test and your cost basis, and the leverage tier depends on the file.
Key takeaways
- The buyer refinances, and the seller gets paid off. “The seller refuses” really means the seller won’t give a payoff statement, deliver the deed, or accept the payoff.
- Across select lenders in Lendmire’s network, hard money on non-owner-occupied 1-4 unit property typically runs up to 65% of value on a refinance and up to 80% of purchase price on a bridge purchase without rehab. These figures vary by lender, property, and experience.
- Fix-and-flip files are sized on project cost, typically 85% to 93% of project cost depending on completed projects, and always capped at 75% of after-repair value.
- A signed contract, a recorded memorandum, or years of on-time payments do not create a lien position. A deed does.
- Title comes before loan terms. Until it can transfer, shopping for leverage is wasted effort.
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.
What Does “Refuses to Refinance” Actually Mean?
The phrase gets the mechanics backward. A land contract seller never refinances anything. The seller already holds the debt, because the seller financed your purchase. When you refinance, a new lender sends money to the seller, the seller delivers the deed, and the contract ends.
So when an investor says the seller refuses, one of three things is usually happening:
1. The seller will not issue a payoff statement.
2. The seller will not sign and deliver the deed at closing.
3. The seller will not accept a payoff the contract does not require them to accept.
Each one blocks the loan differently, and each has a different fix. The table below sorts the common situations.
| Seller situation | What it blocks | Realistic path |
|---|---|---|
| Willing, just slow | Payoff statement | Written request; escalate to the title company |
| Contract bars early payoff | The loan itself | Wait for the balloon date or negotiate an amendment |
| Refuses to deliver deed | Lien position | Attorney review of contract and state law |
| Seller’s own lender still has a lien | Clear first lien | Pay the seller’s lender off at closing |
| Seller deceased or unable | Signature on deed | Probate or legal authority first |
The first and fourth rows are the easy ones. A willing seller with a mortgage of their own is a common, solvable problem. The rest need legal help before any lender can act.
Why the Deed Matters More Than the Seller’s Opinion
A hard money lender wants a first-lien mortgage or deed of trust on the property. The lender can record that lien only if the person signing as owner holds legal title. In most land contracts, you do not.
The Wisconsin Realtors Association legal hotline explains the split. The buyer gets equitable title at signing, which is the right to take legal title once the price is paid. The seller keeps legal title as security for the unpaid balance. That is why your signature alone cannot give a new lender a first lien.
This also explains a common misconception. Recording the contract, or a memorandum of it, puts the public on notice that you have an interest. A law firm’s summary of the federal consumer advisory on these contracts, published by Hogan Lovells, notes that buyers can file the contract in local land records to receive notices about deed transfers, mortgages, and liens. Notice protects you. It does not move title.
Hard money lenders also avoid second position. If the seller still holds a lien on the property, the lender will want that lien paid off or removed at closing. A lender cannot sit behind the seller’s claim and call it a first lien.
Key Terms Defined
Land contract (contract for deed): An agreement where the seller finances the sale and keeps the deed until the buyer pays in full.
Equitable title: The buyer’s right to receive ownership once the contract is paid.
Legal title: Formal ownership recorded in the seller’s name until payoff.
Payoff letter: A written statement from the seller or the seller’s lender showing the exact amount needed to retire the debt.
First lien: The lender’s claim on the property that gets paid ahead of any other claim.
Balloon date: The date the contract requires the remaining balance in one lump sum.
After-repair value (ARV): The property’s estimated value once the planned rehab is finished.
Loan-to-cost: The loan as a percentage of the total project cost, meaning the payoff plus any funded rehab.
How Hard Money Sizes the Loan on a Land Contract Payoff
Hard money underwriting is asset-based. The lender looks at the property, the plan, and the exit. Your contract balance is only one input. It tells the lender how much cash the payoff needs, but it does not set the loan amount.
The loan is limited by the lesser of two tests:
- The value test. The lender orders an appraisal. It looks at as-is value, plus ARV if there is rehab.
- The cost test. For a payoff, cost basis is the contract payoff plus any rehab you fund.
Across the select lenders Lendmire works with, the typical ceilings look like this. Every figure varies by lender, property, and experience, and none is a commitment to lend.
| Deal type | Typical ceiling |
|---|---|
| Rate/term or cash-out refinance | Up to 65% of value |
| Bridge purchase, no rehab | Up to 80% of purchase price |
| Fix-and-flip, 5+ completed projects | 93% of project cost |
| Fix-and-flip, 2+ completed projects | 90% of project cost |
| Fix-and-flip, fewer than 2 | 85% of project cost |
Every fix-and-flip tier is also capped at 75% of ARV. Rehab money funds in draws against completed work, up to 100% of the rehab budget. That is a rehab-budget figure, not a purchase leverage figure. There is no true 100% purchase program, and the top tier is reserved for experienced investors.
Which Ceiling Applies to a Payoff?
Lenders differ on how they classify a land contract payoff. Some treat it as a purchase-style bridge. Others treat it as a refinance. The classification matters because it changes the ceiling, and “purchase price” is not always obvious on a payoff. Expect the lender to ask what you paid under the contract, what you have paid down, and what the property appraises for today.
Three Worked Examples in Percentages
The examples below use shares of appraised value, not dollars, so you can map them onto your own file.
Example one: payoff well under the ceiling. Say the payoff equals 50% of appraised value, and the lender treats the file as a refinance at up to 65% of value. The payoff fits inside the ceiling. The room above the payoff is limited, and lenders look harder at any cash-out portion than at a pure payoff.
Example two: payoff above the ceiling. Say the payoff equals 70% of appraised value under the same refinance treatment. The ceiling is 65%, so you fund the gap, which is about 5% of value, plus closing costs. If the lender treats the file as a bridge purchase at up to 80% of purchase price, the math may change. That depends on what the lender accepts as the purchase basis.
Example three: payoff plus rehab. Say the payoff equals 60% of ARV and the rehab budget equals 15% of ARV, so project cost is 75% of ARV. An investor in the lowest tier at 85% of project cost lands far below the 75% ARV cap. The cost tier is what limits the loan, not the ARV cap. The rehab portion funds in draws as work is completed.
In all three cases, the gap between payoff and loan is your cash. Title, appraisal, and closing costs sit on top of it.
Title and Deed Problems That Stop the Closing
Most failed payoffs do not die on leverage. They die on title. A title search will turn up the problems, and a real estate attorney should handle any that involve the contract or state law.
| Defect | Why it blocks closing | Typical fix |
|---|---|---|
| Seller’s mortgage still open | New lender cannot take first lien | Pay seller’s lender from loan proceeds |
| Judgments or liens against seller | They attach to the property | Pay off or release at closing |
| Unpaid property taxes | Tax liens rank ahead | Pay from proceeds |
| Seller deceased | No one can sign the deed | Probate or court-appointed authority |
| Heirs or co-owners | Everyone must sign | Obtain all signatures or a court order |
| Contract unrecorded | No public notice of your interest | Record the contract or memorandum |
The seller’s own mortgage deserves special attention. If the seller stopped paying their lender while collecting your payments, LegalClarity’s explainer on land contracts describes the risk. The seller’s lender can foreclose and wipe out your interest. A payoff closing that retires the seller’s mortgage first protects you, which is one more reason to run the title search early.
What to Do When the Seller Simply Says No
Start with the contract, not the argument. Check for these terms:
- A balloon date, and whether the seller must accept payoff before it.
- A prepayment clause or penalty.
- Any acceleration terms triggered by default.
- Whether you have met every obligation that would trigger delivery of the deed.
If the contract gives you the right to pay off and the seller still refuses, the question moves to law. Depending on state law and the contract terms, an attorney may pursue remedies to compel delivery of the deed. Those remedies vary by state, so this is a referral, not a rule.
Some deals set up a deed in escrow from the start, or add one by amendment. When that exists, a title company can sometimes close the new loan out of the escrow. It depends entirely on what the signed documents say.
One more point matters for residential buyers. The federal consumer regulator’s advisory opinion on contracts for deed describes the typical structure, including seller-held deeds and forfeiture clauses that can strip a defaulting buyer’s payments and equity. It treats these contracts as credit. Pew’s summary says sellers must consider ability to repay. That may give a residential buyer leverage in a dispute. It is not a lending rule for your new loan, and investor and business-purpose contracts may not be covered. Positions like this can also shift, so an attorney should confirm the current status.
When Hard Money Is the Wrong Tool
Hard money fits a narrow set of facts. Several common land contract situations fall outside it.
You live in the property. DSCR 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. Hard money is also business-purpose and non-owner-occupied, so it is not the tool for a home you live in.
The collateral is land. Hard money through Lendmire’s network covers non-owner-occupied residential property with 1-4 units, plus ground-up construction up to 10 units. Raw land and lots are not offered.
The title cannot transfer. No loan solves a missing deed. Fix title first.
You need a long runway. Hard money terms run 6 to 18 months, interest-only, with no prepayment penalty. There are no multi-year options. If you need years rather than months, a long-term rental loan is the right destination, and hard money is only a bridge to it.
A negotiation would work better. If the balloon date is the pressure point, an extension from the seller may cost less than a bridge loan. Selling the property is also an exit when equity is thin.
Credit matters too. Most files want at least a 620 score, with additional conditions below 660. First-time investors qualify at the lower leverage tiers, subject to lender guidelines.
The Exit: What Happens After the Bridge
Hard money gets you out of the contract. It is not where you stay. The exit plan is part of the underwriting, so think about it before you apply.
Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire arranges that path. DSCR is the debt service coverage ratio, which compares monthly rent to the full monthly payment of principal, interest, taxes, insurance, and any HOA dues, abbreviated PITIA. DSCR loans qualify primarily on property-level rental income covering the payment, subject to lender guidelines.
Two points to plan around:
- Seasoning. Seasoning is the waiting period a lender wants between events, usually between purchase and refinance. On a DSCR cash-out refinance, about 6 months of seasoning is a common expectation, and leverage tops out around 75% LTV on most programs in the network. Lendmire’s piece How Seasoning Works When You Refinance Out of Hard Money goes into the details.
- Timing the payoff. The hard money term is short, so the take-out should be lined up before it ends.
One caution on the numbers. Clearing a 1.00 coverage ratio is not the same as positive cash flow. Repairs, vacancy, management, utilities, and capital expenses sit outside the DSCR calculation. For the full picture of how these loans work, read the complete DSCR loans guide.
What to Gather Before You Call a Lender
A clean file makes the lender’s job easier. Collect these first:
- The signed land contract and any amendments or recorded memorandum.
- Proof of every payment you made to the seller. Contract payments are usually not reported to credit bureaus, so your own records matter.
- A current payoff statement, or a written request you sent for one.
- Evidence of the seller’s identity, authority, and any mortgage on the property.
- Proof of taxes and insurance paid.
- Rehab scope and budget, if there is a rehab.
- A written exit plan: a sale, or a refinance into longer-term rental financing.
- Your entity documents if you hold the property in an LLC, subject to lender program eligibility.
Frequently Asked Questions
Can I get a loan if the seller won’t sign anything?
Not for a payoff. The lender needs a first lien, and that requires the seller to deliver a deed at closing. If the seller will not sign, the first step is legal, not financial. An attorney can review the contract and your state’s remedies.
Does the seller have to approve the loan?
The seller does not approve your loan, but the seller must cooperate with the payoff. That means issuing a payoff statement and delivering the deed when paid. Whether the seller must accept an early payoff depends on the contract’s prepayment and balloon terms.
What if the seller still has a mortgage on the property?
It is a common situation and often solvable. A title search will find the seller’s mortgage. The loan proceeds can pay the seller’s lender first, then the seller, so the new lender can record a clean first lien. If the seller’s lender has already started foreclosure, the file needs legal review before anything else.
What if the contract was never recorded?
Recording does not transfer title, so an unrecorded contract does not necessarily block a payoff. It does leave your interest unprotected, and a title company may want it addressed. Recording the contract or a memorandum of it is usually a sensible step once you decide to go forward.
Can I use hard money if I live in the property?
No. Hard money through Lendmire’s network is for non-owner-occupied residential property with 1-4 units. If the property is your primary residence, that is a different loan category with different rules.
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 that arranges financing through select lenders in its wholesale network, covering 41 markets, including Washington, D.C. Program terms vary by lender, property, and experience, and nothing here is a commitment to lend.
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. Wisconsin Realtors Association legal hotline
2. Hogan Lovells summary of the federal advisory on contracts for deed
3. LegalClarity: How a land contract works for buying property
4. CFPB Advisory Opinion on Contracts for Deed
5. Pew Charitable Trusts: Federal guidance improves protections for land contract homebuyers
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 Much a Florida Reassessment Moves the DSCR Payment · Should a W-2 Investor Scaling Rentals Use Seller Carry With DSCR? · How Much Equity a DSCR Refinance Releases on a Short-Term Rental
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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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.