The Quick Read: On a hard money purchase, your down payment is whatever gap remains between the price you pay and the smaller of the lender’s leverage caps, which are set against project cost, purchase price, and after-repair value, so there is no flat percentage that applies to every deal.
- Experienced flippers typically see leverage of 85% to 93% of project cost, always capped at 75% of after-repair value (ARV).
- A bridge purchase with no rehab typically reaches up to 80% of purchase price.
- Rehab money funds in draws, so it is not part of your closing-day loan.
- Cash to close runs above the down payment because fees, escrows, and reserves sit on top.
- There is no true 100% purchase program, and all figures vary by lender, property, and experience.
Why Lenders Want Cash From You
Hard money is asset-based lending. The lender is betting on the property, not on your traditional personal-income documentation. Corporate Finance Institute describes these loans as collateral-driven, with short terms and higher costs than bank loans.
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.
The logic is simple. If the deal goes bad, the lender has to sell the house. Your cash is the cushion that makes that sale survivable. The more of your money is in the property, the safer the loan looks.
How the Number Gets Built, Step by Step
No regulator publishes a hard money down payment. Each lender sets its own caps, and your cash requirement falls out of them. Here is how the math runs.
1. The lender picks its sizing basis. It may size against purchase price, against total cost (purchase plus rehab), or against ARV. Many programs use more than one.
2. It applies each cap. Each basis has its own maximum percentage.
3. It funds the lesser result. The loan is the smallest number the caps produce.
4. You cover the rest. The down payment is the purchase price minus the purchase-side loan.
5. Rehab dollars move separately. Funds for the work are held back and released in draws against completed work.
Loan-to-value (LTV) is the loan divided by the property’s value. Corporate Finance Institute’s explainer on loan-to-value shows the same logic: whatever the loan does not cover is the buyer’s equity. Hard money just changes which “value” sits in the denominator.
Which Basis Applies to Your Deal?
The basis depends on the deal type. Across the wholesale network Lendmire works with, the typical structures look like this. Every figure varies by lender, property, and experience.
| Deal type | Basis | Typical ceiling |
|---|---|---|
| Bridge purchase, no rehab | Purchase price | Up to 80% |
| Fix-and-flip, 5+ projects | Project cost | 93%, capped at 75% of ARV |
| Fix-and-flip, 2+ projects | Project cost | 90%, capped at 75% of ARV |
| Fix-and-flip, under 2 projects | Project cost | 85%, capped at 75% of ARV |
| Refinance (cash-out or rate/term) | Value | Up to 65% |
Two notes on that table. First, “project cost” means purchase plus rehab, so those percentages are loan-to-cost, not an LTV in the usual sense. Second, the top tier is reserved for investors with a documented track record of completed projects.
Credit matters too. A 620 score is the typical minimum, with added conditions below 660. First-time investors can qualify, but at the lower leverage tiers. The loan is still asset-based: the lender looks at the property, your plan, and your exit.
A Modeled Example: The “Lesser Of” Rule
Here is where flippers get surprised. Take a modeled flip where purchase plus rehab adds up to 100 units of cost, and the ARV is 110 units. Assume the borrower has two completed projects.
- The cost cap is 90% of project cost, which is 90 units.
- The ARV cap is 75% of 110, which is 82.5 units.
- The lender funds the smaller number: 82.5 units.
The borrower covers the remaining 17.5 units of cost, even though the experience tier said 90%. The ARV cap decided the outcome, not the headline percentage.
Now flip the picture. With the same cost and an ARV of 140 units, the ARV cap lands at 105 units. The cost cap of 90 units now binds, and the borrower’s share drops to 10. A stronger margin between cost and ARV shrinks your cash requirement.
This is why you cannot compare advertised percentages across lenders without knowing the basis. Two quotes that both say 90% can mean very different amounts of cash from you.
Down Payment Is Not Cash to Close
The down payment is only the biggest line item. Cash to close also includes closing costs, escrows, prepaid items, and your earnest money deposit. Lenders may also ask for verified liquidity beyond closing, which varies by lender and loan size.
Rehab is its own bucket. The program funds up to 100% of the rehab budget, but in draws against finished work. That is a rehab-budget figure, never a purchase LTV. Two practical consequences follow:
- The scope agreed at closing is the scope that gets funded. Costs above it are your cash.
- You need enough cash to start the work and wait for the draw. Some investors pay a contractor first and get reimbursed.
Think of cash needs as five buckets: down payment, closing costs and escrows, earnest money, reserves or liquidity, and rehab overruns. Your lender controls the first four on paper. The fifth is on you.
What Moves Your Required Down Payment
Several factors shift the number up or down. Here is what Lendmire sees across lender guidelines.
- Experience. Completed projects move you up the tiers. A first-timer sits at the lowest leverage tier, which means more cash in.
- Deal margin. A wide gap between total cost and ARV loosens the ARV cap, so the cost cap can govern.
- Credit. A 620 minimum is typical, with more conditions below 660.
- Property type. The collateral is non-owner-occupied residential, one to four units. Ground-up construction runs to 10 units and has its own tiers.
- Exit plan. Lenders look hard at how you get repaid, whether by a sale or a refinance.
To document experience, keep settlement statements from past deals, a simple project list, and proof of ownership. Lenders credit what they can verify.
Can You Buy With Nothing Down?
There is no true 100% purchase program. Some investors describe full funding, but what they usually mean is a cost-based structure where the lender funds a large share of purchase plus rehab. That works only when total cost sits well below the ARV cap and the borrower is strong. Even then, closing costs, escrows, and fees are still due in cash.
If you are a first-time investor, plan on meaningful cash in the deal. Leverage is highest for borrowers with the most completed projects. Investopedia’s overview of hard money for real estate investors frames the broader trade: you get flexibility, and you pay for it in cost and in cash.
Beware anyone promising zero cash in. Thin cash on a short-term, interest-only loan leaves no room for a delay or a budget miss. Loan terms run six to eighteen months with no prepayment penalty, and a stalled rehab burns through your cushion.
Where Does the Down Payment Come From?
Lenders want to see where your cash came from. Expect to provide recent bank statements to confirm funds for closing. Rules on how long funds must sit in an account vary by lender, and some require no seasoning at all. Large, recent deposits usually need an explanation, because lenders must rule out someone else’s money or undisclosed borrowing.
Ask about asset-sourcing rules before you apply, not after your contract is signed. A surprise request in the middle of a purchase is a bad time to learn your funds are in the wrong place.
Ways to Lower the Cash You Need
You have real options, and each has a tradeoff.
- Build a track record. Each completed project can move you to a higher tier. This is the most durable fix.
- Negotiate the price down. A lower price shrinks both cost and the cash gap. On a no-rehab bridge purchase the lender generally treats the contract price as the value, so a discount does not raise your loan.
- Trim the project cost. A tighter scope lowers the cost base the percentage applies to.
- Pick a deal with margin. Wide spreads between cost and ARV let the higher cost cap govern.
- Ask for seller credits. These can help with closing costs, subject to lender and contract terms.
Pricing trades also exist, but they are lender-specific, and Lendmire does not quote pricing in articles. Compare full terms, not just the percentage.
Hard Money Versus a Rental Loan: The Cash Contrast
A hard money purchase can put less of your cash in up front than a long-term rental loan does. On a DSCR purchase, most files land at 75% to 80% LTV on an investment property, and select high-leverage programs reach 85% with a score around 700 or higher. DSCR, or debt service coverage ratio, compares the property’s rent to its full monthly payment (principal, interest, taxes, insurance, and any HOA dues).
The two loans solve different problems. Hard money buys and fixes a property. A DSCR loan holds it. Clearing a DSCR ratio does not equal positive cash flow, because repairs, vacancy, and management sit outside the calculation.
Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. The paper trail you build during the rehab supports that exit. To understand the rental-loan side, the complete DSCR loans guide covers the mechanics.
Practitioner Note on Advertised Ranges
Across the wholesale network, down payment numbers on the same-looking deal differ because the sizing basis differs. One lender caps on purchase price, another on total cost, a third on ARV. Brokers see this daily. A quote that looks cheap on cash in can turn out to be sized on a basis that leaves a bigger gap once the ARV cap applies. Run your own numbers on all three bases before you compare offers.
Pre-Application Checklist
- Executed purchase contract and a clear rehab scope and budget
- Estimated ARV, with comparable sales to support it
- Settlement statements or a project list showing completed deals
- Recent bank statements for the source of your cash
- Cash for closing costs, escrows, earnest money, and a buffer for overruns
- A written exit plan: sale, or refinance into rental financing
Key Terms Defined
Loan-to-value (LTV): The loan amount divided by the property’s value.
Loan-to-cost (LTC): The loan amount divided by total project cost, meaning purchase plus rehab.
After-repair value (ARV): The estimated value of the property once the work is finished.
Draw: A payment of rehab funds released after a stage of work is completed.
Cash to close: All the money you bring to closing, including the down payment, fees, escrows, and prepaid items.
Seasoning: The waiting period a lender wants before it counts a deposit or a prior event.
Frequently Asked Questions
Is the down payment based on purchase price or after-repair value?
Both can matter. The lender applies each of its caps, funds the lowest result, and you cover the gap. On a no-rehab bridge purchase, the purchase price drives the loan, up to 80% of price. On a flip, project cost and the 75% ARV cap compete. All figures vary by lender, property, and experience.
Can I get a hard money purchase with 100% financing?
There is no true 100% purchase program. Investors with strong track records can see leverage near the top of the cost-based range, and rehab funds in full through draws. Closing costs and escrows remain your cash. A first-time investor should plan for a meaningfully larger contribution.
Does the down payment cover everything I need at closing?
No. Cash to close includes the down payment plus closing costs, escrows, prepaids, and earnest money. Lenders may also ask for verified liquidity. Budget for rehab overruns separately, since they fall outside the agreed budget and become your cash.
Does my experience change how much I put down?
Yes. Leverage steps up with documented completed projects: 85% of project cost with fewer than two, 90% with two or more, and 93% with five or more. Every tier is capped at 75% of ARV. These tiers vary by lender, property, and experience.
What happens when I need longer than a hard money term?
Terms run six to eighteen months, interest-only, and there are no multi-year options. Investors who need longer runway usually refinance into long-term rental financing once the property is stabilized.
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. Nothing here is a commitment to lend, and every file is underwritten individually.
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. Corporate Finance Institute: Hard Money Loan
2. Corporate Finance Institute: Loan to Value Ratio
3. Investopedia: Using Hard Money Loans for Real Estate Investments
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get an Interest-Only Hard Money Loan for a Fix and Flip? · Should a Rental Buyer Choose Hard Money or a Non-QM Loan? · Can a 1099 Contractor Get a Hard Money Loan to Flip a House?
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.