The Quick Read: A hard money loan can pay a buyout only up to the lender’s cap on the property’s value minus the liens that must be paid off, and on a refinance of a non-owner-occupied rental that cap is typically up to 65% of value, varying by lender, property, and experience. The buyout itself is set by the settlement, not by the lender. The gap between the two is what the settlement has to fill some other way.
- The most a loan can put toward the departing spouse is the lender’s cap on value, less existing liens, less closing costs and fees.
- The buyout owed is value, minus all liens, times the departing spouse’s share.
- Heavy existing mortgage debt shrinks the buyout the loan can fund.
- Hard money fits non-owner-occupied rentals of one to four units, not a home the borrower lives in.
- The loan is short-term, interest-only bridge debt, so the plan to refinance out matters as much as the sizing.
The Buyout Math Comes First
The buyout is a formula, and the formula never changes. Take the property’s value, subtract every lien, and multiply what is left by the departing spouse’s share. A 50/50 split is common but not required. Settlements sometimes trade the property against other assets or adjust for separate-property contributions.
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.
Then add the cost side. The new loan has to cover three things: payoff of the existing liens, the equity payout, and closing costs and fees. The lender sets the ceiling on that total. If the total exceeds the ceiling, the settlement needs another source of money for the difference.
Hard money is asset-based. The lender looks at the property, the plan, and the exit before it looks at the borrower. That is why the ceiling is a percentage of value rather than a multiple of income.
How the Loan Gets Sized, Step by Step
On a buyout there is no purchase price and usually no rehab budget, so the loan is sized against value. Here is the sequence a lender and a broker follow.
1. Establish value. An as-is appraisal or broker price opinion sets the base. After-repair value only enters the picture when a real renovation plan exists.
2. List every lien. That means the first mortgage and any second mortgage, plus tax or judgment liens. All of them come out of the proceeds at closing.
3. Compute equity and the share. Equity is value minus liens. The decree or settlement agreement sets the departing spouse’s percentage.
4. Apply the lender’s cap. On a refinance, hard money programs in Lendmire’s network typically go up to 65% of value, varying by lender, property, and experience. The new loan, meaning payoff plus buyout plus costs, has to fit under that number.
5. Subtract costs. Fees and closing costs reduce what can reach the departing spouse, whether they are deducted from proceeds or added to the balance.
6. Document the payout. The settlement should state the buyout amount and the property. Expect title work, the valuation, payoff statements, and a deed that moves the departing spouse’s interest at closing.
Most loan amounts run up to $5,000,000, with larger loans handled by exception and smaller balances varying by lender. A 620 credit score is the minimum, with added conditions below 660. A divorce buyout rarely hits the size limit. It hits the percentage cap first. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Three Scenarios in Percent of Value
The table below uses percentages of the property’s value, so you can see where the ceiling bites. These are modeled assumptions with a 50% share to the departing spouse and a 65% cap. Costs are left out, and they would reduce each result.
| Existing liens | Buyout owed | Payoff + buyout | Result vs. 65% cap |
|---|---|---|---|
| 25% of value | 37.5% of value | 62.5% | Fits, with thin room for costs |
| 40% of value | 30% of value | 70% | Over the cap by 5 points |
| 55% of value | 22.5% of value | 77.5% | Over the cap by 12.5 points |
In the second row, the loan can retire the 40% in liens and put only 25% of value toward a 30% buyout. The remaining 5% of value, plus costs, has to come from savings, an asset offset, or a renegotiated split. In the third row, the loan can retire the liens and fund only about 10% of value toward a 22.5% buyout.
The first row is the rare clean case. A property with low debt and a 50/50 split can fit under the cap, but costs eat the thin margin.
The pattern is simple. Every point of existing lien debt is a point the loan cannot spend on the buyout. Run this arithmetic before signing a settlement, not after.
What the Loan Cannot Do
A common mistake is to assume equity equals borrowing power. It does not. Hard money lends a fraction of value, so the cap comes from the lender, not from how much equity exists.
A second mistake is to read 100% financing as 100% of value. Hard money advertising that mentions 100% financing generally means 100% of cost inside a cap on after-repair value, as Nav explains. In Lendmire’s network the same logic holds. Up to 100% of a rehab budget can fund in draws against completed work, but that is a rehab-budget figure, not a purchase or buyout figure. There is no true 100% program for a buyout.
Leverage on the cost side is tiered by documented completed projects. Flip and bridge tiers reward experience, and the top tier is reserved for experienced investors. A first-time investor qualifies at the lower leverage tiers. For a plain buyout of a stabilized rental, the refinance cap of up to 65% of value is the number that matters.
Which Properties Qualify
Hard money in this network is business-purpose only. The collateral is non-owner-occupied residential property of one to four units. Owner-occupied homes, commercial property, land, and hospitality are not on the sheet.
That limits who this article applies to. If the spouse keeping the property will live in it, a hard money loan is not the tool. If one spouse is buying out the other on a rental, a duplex, or a small multifamily, it can be.
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. The same logic applies to hard money. The test looks at what the loan proceeds are used for, and the CFPB’s lending-law summary treats credit to acquire or improve non-owner-occupied rental property as business purpose. How a particular buyout is characterized is a question for your attorney.
Hard Money Compared With Other Ways to Fund the Payout
| Option | Typical fit | Spouse released from old loan? | Main risk |
|---|---|---|---|
| Hard money refinance | Rental with low liens | Yes, if old loan is paid off | Short term, exit required |
| DSCR cash-out refinance | Stabilized rental | Yes, if old loan is paid off | Seasoning, leverage cap |
| Asset offset | Other assets of equal value | No, not by itself | Needs matching assets |
| Sale | Thin equity, no takeout | Yes, at closing | Loses the property |
Two lines in that table deserve a note. First, a decree or a quitclaim deed does not take anyone off an existing mortgage. Only payoff or a release of liability does that. A buyout that leaves the departing spouse on the old note has not finished the job.
Second, a DSCR cash-out refinance can pay for a buyout and pay off the old mortgage at the same time, which is what takes the departing spouse off the note.
Stacking Money When the Loan Falls Short
When the cap leaves a gap, the settlement fills it with other sources. The usual ones are cash savings, retirement-asset offsets, a written family loan, or a smaller buyout share traded for other assets. The loan covers the part it can, and the rest comes from outside the property.
This is a negotiation point, not a financing trick. If a 50/50 split produces a gap that the borrower cannot fill, the parties can adjust the split, trade assets, or phase the payout. Bring the sizing table to the attorney before the number is fixed.
One boundary matters here. This kind of loan is for a business-purpose property purchase or refinance, not a personal divorce loan for legal fees. Those are a different product entirely.
The Exit Plan Is Half the Loan
Hard money terms in Lendmire’s network run 6 to 18 months, interest-only, with no prepayment penalty. There are no multi-year options on the current program. So the question is not just how much the loan can pay. It is also what retires the loan.
Many investors refinance out of hard money into long-term DSCR investor loans once the property is stabilized, and Lendmire brokers that path. DSCR qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Personal income is not the main test, which is the contrast with a consumer buyout that one spouse must qualify for alone.
The takeout is not automatic. A DSCR cash-out refinance tops out around 75% LTV across most of the network, and about 6 months of seasoning is the common expectation. Most programs want a score near 660, and 700 or higher unlocks the strongest leverage tiers. Clearing a 1.00 coverage ratio, where many select programs start, does not mean positive cash flow. Repairs, vacancy, management, and utilities sit outside that calculation.
The complete DSCR loans guide covers coverage ratios, leverage tiers, and reserves in full.
Stress test the exit before you agree to a payout figure. Ask what happens if the appraisal comes in low, or if rent does not cover the new payment at the takeout loan’s size. If the exit fails, the borrower is holding a loan that matures.
Costs and Basis
The cost of short-term money has two parts: the interest carry over the hold and the fees to put the loan in place. To compare options, add the carry over your expected hold to the fees, then divide by the cash the loan puts toward the buyout. Ask each lender for both figures, in writing, before you compare. This article does not quote them, since they vary by lender, property, and experience.
Tax treatment varies; consult a qualified professional. In general, IRS Publication 504 describes transfers between spouses incident to divorce as non-taxable, with the receiving spouse carrying over the original basis.
Key Terms Defined
Loan-to-value (LTV): The loan amount divided by the appraised value of the property.
Loan-to-cost (LTC): The loan amount divided by what the project costs, which rarely applies to a plain buyout.
After-repair value (ARV): The estimated value of a property once a renovation is finished.
Lien: A legal claim against the property, such as a mortgage, that must be paid off at closing.
Quitclaim deed: A deed that moves one person’s ownership interest to another without releasing anyone from a loan.
Seasoning: The ownership period a lender expects before it will make a cash-out loan on a property.
Frequently Asked Questions
Can a hard money loan pay the whole buyout?
Only when existing liens are low enough that payoff, the buyout, and costs fit under the lender’s cap. On a refinance, hard money in this network typically goes up to 65% of value, varying by lender, property, and experience. With meaningful mortgage debt, the loan usually covers part of the buyout and other money covers the rest.
Does equity or the lender’s cap set the limit?
The cap sets it. Hard money lends a fraction of value, and the buyout owed is a share of equity, so the two numbers rarely match. The lower of the two controls how much the loan can pay.
Can I use hard money to buy out a spouse on my primary home?
Not in this network. Collateral has to be non-owner-occupied residential property of one to four units, and the program is business-purpose only. Owner-occupied homes are not offered under it.
Does the buyout take my ex-spouse off the mortgage?
Only if the old mortgage is paid off or the spouse is formally released. A decree or deed alone does not do that. Confirm the payoff statement and release in the closing package.
What credit score do I need?
A 620 minimum, with added conditions below 660, and first-time investors qualify at the lower leverage tiers. Underwriting stays asset-based, so the property, the plan, and the exit also matter. Nothing here is a commitment to lend.
Where to Go From Here
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 arranging financing through select lenders in its wholesale network across 41 markets, including Washington, D.C.
About Lendmire
Lendmire (NMLS# 2371349), a non-QM mortgage broker serving investors in 41 markets including Washington, D.C., helps structure DSCR scenarios commonly evaluated around a property’s rental income rather than personal income paperwork, subject to lender guidelines. A Scotsman Guide Top Mortgage Workplace in 2025 and 2026, Lendmire places loans through wholesale investor lenders and is not a direct lender.
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References
1. Nav: hard money loans and 100% financing
2. CFPB Truth in Lending Act exam and law summary
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 Long Each Step of a DSCR Refinance Takes to Pay Off Hard Money · How Much a DSCR Cash-Out Releases for a W-2 Investor Near the Loan Cap · How to Make a DSCR Cash-Out Cover Your Hard Money Note and Rehab Cards
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.