The Quick Read: Hard money lenders size a flip loan with two tests at once, a percentage of total project cost and a cap at a percentage of after-repair value, and the lower result sets your loan, so little money down never means zero cash. The first test rewards experience. The second protects the lender if the flip underperforms.
- Across Lendmire’s wholesale network, flip leverage typically runs 85% of project cost with fewer than 2 completed projects, 90% at 2 or more, and 93% at 5 or more. Every tier is capped at 75% of after-repair value. Figures vary by lender, property, and experience.
- Up to 100% of the rehab budget can fund in draws against completed work. That is a rehab-budget figure, not a purchase loan-to-value.
- There is no true 100% purchase program. Even the top tier leaves a gap, plus fees and reserves.
- The top tier is reserved for investors with a documented record of finished flips. First-time investors typically land in the lowest tier.
- Nothing here is a commitment to lend. Every file is reviewed on the property, the plan, and the exit.
Key Terms Defined
Loan-to-cost (LTC): The loan as a percentage of purchase price plus rehab budget. It measures how much of the project the lender funds.
After-repair value (ARV): What the property should be worth once the work is finished, based on comparable sales or an appraisal.
Loan-to-value (LTV): The loan as a percentage of a property’s value. On a flip, lenders often measure it against ARV rather than today’s value, which is why the same word means different things on different term sheets.
Draw: A release of rehab money after the lender confirms work is done, usually by inspection.
Interest-only: You pay interest during the term and repay the principal at sale or refinance.
Gap: The difference between your total project cost and what the lender will fund. You cover it with cash or other approved capital.
Seasoning: The waiting period a lender wants after you buy before it will refinance. It matters at the exit.
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.
Why Little Money Down Is Not the Same as No Money Down
When a lender advertises full funding on a flip, the claim usually refers to the rehab budget, not the whole project. Loan-to-cost tiers generally stay below full cost and step up with experience, and the loan is also capped relative to value. Nav’s explainer on maximum-leverage hard money loans makes the same point: the total still has to sit inside the lender’s after-repair-value cap, which it describes as commonly around 70% to 75%.
That cap is the part many first-time flippers miss. A lender can fund a large share of your cost and still stop short of covering it. Say the cost of a project is close to the value ceiling. The cap trims the loan, and the difference comes from you.
Hard money is also business-purpose credit, meaning it is made for non-owner-occupied investment property, not a home you live in. Lenders therefore underwrite the property, the plan, and the exit more than your paycheck. That is why leverage on a flip depends on the deal math and your track record, not on a standard down-payment percentage.
How Does a Lender Size a Flip Loan, Step by Step?
The sizing follows the same order on most files in the network.
1. Screen the deal with ARV. Lenders start by checking whether purchase plus rehab leaves enough room under after-repair value. A common screen is the 70% rule: all-in cost at or under about 70% of ARV. It is a rule of thumb, not a law, and it fits poorly on very low-value or very high-value properties.
2. Compute ceiling A. Multiply your tier’s loan-to-cost percentage by purchase plus rehab.
3. Compute ceiling B. Multiply the ARV cap, 75% in this network, by the ARV.
4. Take the smaller number. That is your maximum loan. The other ceiling does not matter on that deal.
5. Split the loan. The purchase portion funds at closing. The rehab portion is held back and released in draws as work is completed and inspected.
6. Add the cash that is not a down payment. Lender fees, closing costs, insurance, interest carry, reserves, and contractor float all sit on top of the gap.
Step 4 is where most surprises happen. Investors tend to run the first ceiling in their heads because it is the number on the marketing page. The binding number is often the second one.
What Do the Experience Tiers Look Like?
Leverage on a flip is tiered by documented completed projects. These are typical figures from select lenders in Lendmire’s network. They vary by lender, property, and experience.
| Completed projects | Loan-to-cost | Value cap |
|---|---|---|
| Fewer than 2 | 85% of project cost | 75% of ARV |
| 2 or more | 90% of project cost | 75% of ARV |
| 5 or more | 93% of project cost | 75% of ARV |
Credit matters too. A 620 score is the typical minimum, with extra conditions below 660. First-time investors qualify at the lower leverage tiers. Strong credit and cash in the bank can improve a file, but they do not move you into a higher tier on their own. Underwriting stays asset-based, so the property, the scope of work, and the exit plan carry real weight.
Loan size runs up to $5,000,000, and larger by exception. Smaller balances vary by lender. Eligible collateral is non-owner-occupied residential property of 1 to 4 units.
Worked Example: Which Limit Binds?
To keep this clean, treat ARV as 100 and express everything as a percent of ARV. These are modeled assumptions, not market data. Rehab is the same in each deal, so only the price changes.
| Total cost (% of ARV) | Loan at 85% tier | Loan at 93% tier | Binding limit |
|---|---|---|---|
| 60 | 51 | 55.8 | Loan-to-cost |
| 70 | 59.5 | 65.1 | Loan-to-cost |
| 80 | 68 | 74.4 | Loan-to-cost |
| 85 | 72.25 | 75 | Cap binds at 93% tier |
Now read the gap. Loan-to-cost is the lender’s percentage of your total cost, so your cash in the deal is simply the rest. On the deal at 70, a first-time borrower brings about 10.5% of ARV before fees and reserves. A five-project borrower brings about 4.9%.
On the deal at 85, the picture changes. The experienced borrower’s 93% would imply 79.05, but the 75 cap cuts it. Their gap is 10% of ARV, nearly double what the 70-cost deal required, even though they are in the top tier. A higher tier does not rescue a deal with thin margin.
A forward note: your lender may use a more conservative ARV than you do. Lower ARV means a lower cap, which is the stress-test section’s lesson.
How Do You Find the Highest Price That Needs Little Cash?
Work backward from the cap. This is the reverse math few investors run before they make an offer.
The two ceilings meet where your tier’s loan-to-cost percentage times total cost equals the 75% ARV cap. Divide 75 by your tier percentage, and the result is the cost level, as a share of ARV, where the cap takes over. Higher tiers reach that point sooner, because they fund a bigger share of each dollar of cost.
Below that point, your tier governs and your gap is the rest of the cost. Above it, the cap governs and every extra dollar of price comes from you.
To get a maximum purchase price, subtract the rehab budget from that cost level. In the top tier, if rehab is 20% of ARV, purchase price stays under roughly 61% of ARV before the cap starts to bite. Do the same math at your own tier, then test the deal against the 70% screen. Few deals clear both without negotiation, which is the honest reason the best flips start with a discount at purchase.
What Cash Do You Still Bring Beyond the Gap?
The gap is only the first piece. Plan for the full list:
- Lender fees and closing costs. These vary by lender and are paid at funding.
- Insurance and legal costs. Hard money collateral must be insured, and title and legal work add up.
- Interest carry. The loan is interest-only, so you carry it every month until exit, and some lenders ask for a reserve.
- Proof of funds. Lenders want to see money left after closing for carry and early rehab costs.
- Contractor float. Because draws reimburse completed work, you commonly front some rehab costs to get started.
Rehab draws are a cash-flow problem more than a leverage problem. Up to 100% of the rehab budget can fund in draws against completed work, but the money arrives after the work does. A contractor who wants a deposit does not wait for your inspection. Work that out before you sign, not after.
Document requirements are typically light compared with income-based loans. Connected Investors lists the purchase contract, property details, and investment experience as core items. In practice, add a scope of work, a budget, an ARV opinion or appraisal, and evidence of liquidity.
Where the General Rule Breaks
The tiers and the cap give you a clean framework. Several situations bend it.
The cap binds before the tier does. The deal at 85 in the table is the classic case. If you pay near market for a property that needs real work, the cap controls and the lender’s percentage barely matters.
The lender wants skin in the game. Some lenders will not fund the full tier even when the math technically allows it. The tier is a ceiling, not a promise.
No rehab means a different product. A bridge purchase without a renovation can reach up to 80% of purchase price. Cash-out and rate/term refinances on hard money typically go up to 65% of value. Neither resembles flip leverage, so do not mix the ratios.
Ground-up construction runs separately. It can reach up to 90% of cost and 75% of completed value at 3 or more completed projects, with collateral up to 10 units. That sits outside the flip tiers above.
Gap or second-position funding. Some investors fill the gap with a junior loan or cross-collateral on another property. Whether that works depends on whether the first lender allows other debt behind it. Ask before you commit to the structure, because it is a lender-specific condition and some will not permit it. Lendmire’s piece Larger Hard Money Loan vs Gap Funding for a Flip’s Down Payment walks through that tradeoff.
Partner capital. A joint venture can supply the gap, but then the question becomes who is on title and who holds the experience that earns the tier. Settle that with the lender up front.
Low- and high-value properties. The 70% screen assumes enough margin to absorb fixed costs. On a very low-value property, fixed costs eat the margin before the loan math matters. On a high-value property, lenders may allow a higher ratio, but your own cushion is what protects you.
Stress Test Before You Sign
Leverage is easy when the deal goes right. Test it where it can go wrong.
ARV comes in 10% below plan. The cap drops from 75 to 67.5 percent of your original ARV figure. On the deal at 70 and the top tier, the loan of 65.1 still fits. On the deal at 80, the top-tier loan of 74.4 gets cut to 67.5, and your gap jumps from 5.6% to 12.5% of the original ARV.
Rehab overruns. The rehab money funds against the approved budget. An overrun is yours to pay, and it comes after you have already put in the gap, the fees, and the carry.
The sale is slow. Interest-only means the meter runs every month. The loan term is typically 6 to 18 months, with no prepayment penalty, so you can sell or refinance at any point. A slow sale eats cushion, not term.
A deal where all-in cost sits near the cap has no room for any of these. Tight margin is the main risk of thin-cash flips, and no tier changes that.
Exit Check: Will the Next Loan Repay This One?
Hard money is short-term, so every flip has an exit by design. There are two common ones.
If you sell, the numbers must cover the payoff, selling costs, and a profit worth the risk.
If you keep the property as a rental, the exit is a refinance. Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. Plan it when you underwrite the flip, not at month 11. Start with the complete DSCR loans guide to see how that loan is evaluated.
Three checks matter at the exit:
- Leverage. A DSCR cash-out refinance tops out around 75% LTV across most of the network, on a standard rental. If your hard money loan sits near 75% of ARV, the new loan only repays it if the appraisal confirms your ARV.
- Coverage. DSCR compares rent to the full monthly payment of principal, interest, taxes, insurance, and any association dues. Many select programs start at 1.00. A separate select-lender path goes below 1.00, with leverage and terms adjusted. Clearing 1.00 is not the same as positive cash flow, because repairs, vacancy, management, and utilities sit outside the ratio.
- Seasoning. About 6 months of ownership is the common expectation for a cash-out refinance, which fits inside most hard money terms. Programs vary, so confirm the seasoning rule before you pick a timeline. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
The most expensive mistake is entering at maximum leverage on a property that cannot refinance out.
What Does the Decision Look Like in Practice?
Here is the sequence a sensible low-cash flipper follows.
1. Find your tier honestly. Count completed projects you can document. Fewer than 2 means the 85% tier.
2. Start from ARV, not price. Use conservative comps and apply the 75% cap.
3. Run both ceilings. Whichever is smaller is your loan.
4. List every other cash need. Add fees, carry, insurance, reserves, and contractor float to the gap.
5. Stress the ARV and the rehab budget. If a 10% ARV miss breaks the deal, the margin is too thin.
6. Pick the exit now. If it is a rental, check refinance leverage, coverage, and seasoning.
7. Walk away or restructure. If the gap is too large, negotiate the price, use approved gap or partner capital, or pass. A cheaper deal beats a clever structure.
Short on experience? Your best leverage move is not a better pitch. It is one finished flip, documented, so you qualify for the next tier.
Frequently Asked Questions
Is there a true 100% hard money loan for a flip?
No. In Lendmire’s network, there is no true 100% purchase program. Up to 100% of the rehab budget funds in draws, and the top tier reaches 93% of project cost for experienced investors, always capped at 75% of ARV. Terms vary by lender, property, and experience.
Why would a lender cut my loan below the advertised percentage?
Usually because the value cap bound. The lender takes the lower of the cost-based amount and the cap on after-repair value. A lower appraisal or a more conservative ARV shrinks the cap, and the loan shrinks with it.
Which matters more, cost or ARV?
Whichever produces the smaller loan on that deal. On a discounted purchase, loan-to-cost typically binds. On a purchase near market value with heavy rehab, the ARV cap usually binds.
Can a first-time investor get high leverage?
Typically the lowest tier, 85% of project cost, capped at 75% of ARV. The top tier is reserved for experienced investors. A 620 score is the typical minimum, with extra conditions below 660, and strong credit and cash can help the file without changing the tier.
Is rehab money paid up front?
No. The rehab portion is held back and released in draws after work is completed and inspected, so you commonly float early costs. Budget working capital for that before closing.
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, across 41 markets including Washington, D.C. Tax treatment varies; consult a qualified professional.
For help choosing between funding sources on a small down payment, see Lendmire’s piece Hard Money vs. Private Money for a Flip With a Small Down Payment.
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.
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References
1. Nav: Hard Money Loans With Maximum Financing
2. Connected Investors: Hard Money Loans Guide
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 Application Fee Rules for a Fix-and-Flip Purchase · How Much Down Payment a Hard Money Lender Requires on a Flip · Hard Money Maximum Loan Amount Requirements for a Flip
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.