The Quick Read: A hard money lender cares less about your paycheck and more about three things: the property, the title, and how you will repay the loan. On a land contract buyout, the deciding factor is whether the seller can hand over a clean deed at closing. If the numbers work after costs, the loan can pay the seller off and put you on title.
- Title decides it. You hold equitable title; the seller holds legal title. A lender needs a first lien, so the seller must deliver a deed.
- Classification sets leverage. A bridge purchase with no rehab may be sized up to 80% of purchase price, while a refinance is generally capped at 65% of value. Which one applies depends on how the lender classifies your payoff.
- Credit matters, but it is not the gate. A 620 score is the typical floor, with extra conditions below 660.
- The exit must be planned before you close. Terms are short, typically 6-18 months, and interest-only, so you need a funded way out.
Every figure here varies by lender, property, and experience. Nothing is a commitment to lend.
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 a Land Contract Buyout Actually Is
A land contract buyout means retiring the seller’s contract with new money so the property is deeded to you. It is not a raw-land loan, which is a different product for buying vacant lots.
Under a land contract, the buyer takes possession and builds equity while the seller keeps legal title. Michigan Legal Help explains that the buyer gets legal title only once the full purchase price is paid. Wisconsin Legal Help adds that many contracts end in a balloon payment, and the buyer must then get a mortgage to cover it. It also notes contract terms commonly run 5 to 10 years.
So a buyout is a payoff. New funds go to the seller, the seller signs a deed, and the new lender records its lien in first position. Hard money is one tool for that payoff. It suits investors who need a short bridge, as long as a longer-term loan can take over.
Lendmire is a mortgage broker arranging financing through select lenders in its wholesale network, across 41 markets including Washington, D.C. Hard money loans are for non-owner-occupied investment properties only. Because they are business-purpose loans, they are reviewed differently from a standard owner-occupied mortgage.
Key Terms Defined
Equitable title: your right to the property while you pay under the contract, before you hold the deed.
Legal title: formal ownership on the public record, held by the seller until the contract is paid.
Payoff statement: a written balance from the seller showing exactly what retires the contract.
First lien: the lender’s claim on the property that gets paid ahead of all others. Hard money lenders require it.
Balloon payment: a large lump sum due at the end of the contract term.
Seasoning: how long you have held title or a loan before a lender treats it a certain way.
Exit strategy: the plan for repaying the bridge loan, usually a long-term refinance or a sale.
Loan-to-cost and loan-to-value: the loan as a share of what you paid, or of what the property appraises for.
How Lenders Underwrite a Buyout
Hard money underwriting is asset-first. The lender looks at what the property is worth, who holds title, and how the loan gets repaid. Your income and credit still get reviewed, just with less weight than at a bank.
| Factor | Hard Money | Conventional |
|---|---|---|
| Main focus | Property, title, exit | Borrower income and DTI |
| Credit | 620 typical floor | Higher scores common |
| Term | 6-18 months, interest-only | Long amortizing term |
| Prepayment penalty | None on this program | Varies |
| Use | Business-purpose bridge | Often owner-occupied |
The core steps run in this order:
1. Read the contract. The lender checks the payoff clause, balloon date, prepayment terms, and any limits on assignment.
2. Get the seller’s payoff statement. That sets the exact amount to retire.
3. Order a title search. The question is whether the seller can deliver clear legal title.
4. Appraise the property. Value is measured against the payoff.
5. Close and record. Funds go to the seller and to any seller lien. The deed records to you or your entity, and the lender’s lien records behind it.
6. Confirm the exit. The underwriter wants to see how the bridge gets repaid.
Equity and Leverage: Is This a Purchase or a Refinance?
Classification drives the math. On a bridge purchase with no rehab, hard money programs typically fund up to 80% of purchase price. On a refinance, they typically fund up to 65% of value. Those are separate ceilings, and the lender picks which one fits your file. The higher cost-based tiers belong to fix-and-flip files with a rehab budget, not to a payoff-only buyout.
Here is why it matters. Say your payoff statement equals 70% of the appraised value. Treated as a refinance at the 65% ceiling, you would bring the gap, about 5% of value, plus closing costs. Treated as a purchase at up to 80% of purchase price, the same payoff may fit within the loan. The classification can change the cash you need.
How lenders classify a land contract payoff is set by policy, not by law. For contrast only, Freddie Mac’s selling guide treats a payoff as a purchase when the contract is under 12 months old, and as a no cash-out refinance at 12 months or more. It also requires a copy of the executed contract. Hard money and DSCR programs do not follow agency rules.
Years of contract payments may or may not count toward your equity or seasoning. Some programs count from the deed date rather than the contract date. Ask before you assume.
Credit, Reserves, and Experience
Credit works as a tiered filter. A 620 score is the typical minimum, with additional conditions below 660. First-time investors can qualify at the lower leverage tiers. The top leverage tiers are reserved for experienced investors with documented completed projects. Past credit trouble does not always end a file, but it can lower your leverage. Underwriting stays asset-based, meaning the property, the plan, and the exit.
Reserves are cash left over after closing. Lenders want to see that you can carry interest-only payments, insurance, and repairs through the term. How much varies by lender, loan size, and experience. Plan on showing liquid funds beyond your cash to close.
Experience helps with leverage rather than eligibility. A buyout with no rehab is simpler than a flip, so the track-record question often matters less here than it does on construction files.
Entity, Property Type, and Occupancy
Collateral must be non-owner-occupied residential property of 1-4 units. Commercial, land and lots, hospitality, and owner-occupied homes are not on the program. If your contract covers a duplex rented to tenants, you are in range. If you live in it, this is not the right product.
If an LLC will take title, the seller’s deed has to name the entity. Whether an LLC borrower fits depends on the program’s vesting rules, subject to program terms. Settle this before closing, because fixing a deed after recording costs more than naming the right party at the start.
Loans run up to $5,000,000, with larger by exception and smaller balances varying by lender.
Title and Deed Requirements
The lender cannot take a lien on a property you do not legally own. So the buyout only works if the seller can deliver a deed and clear title at the same closing.
Recording a memorandum of the contract does not change this. Vanguard Title explains that a Memorandum of Land Contract records public notice of your equitable interest. It makes your claim visible, but it does not make you the legal owner.
Common title problems:
- A lien the seller added during the contract. It must be paid off from the same closing.
- The seller’s own mortgage. A land contract does not erase it, and its due-on-sale clause may still apply. The payoff must clear it so the new lender gets first position.
- An unrecorded contract. Your priority is weaker, and title may need to resolve it.
- A wraparound structure. Bankrate describes this variant: the buyer receives a warranty deed immediately, the seller keeps paying their mortgage, and the seller’s lender must approve.
Document Checklist
| Document | Who Supplies It | Why It Matters |
|---|---|---|
| Land contract and any memorandum | You | Shows terms, balloon, payoff rights |
| Seller payoff statement | Seller | Sets exact balance |
| Payment history | You | Documents equity built |
| Title search | Title company | Confirms clean deed delivery |
| Seller’s deed and authority | Seller | Transfers legal title |
| Entity documents and ID | You | Confirms vesting and borrower |
| Bank statements | You | Shows reserves and cash to close |
What Can Go Wrong
| Problem | Why It Happens | First Fix |
|---|---|---|
| Seller will not cooperate | You cannot pledge title you do not hold | Review contract payoff rights; consider legal counsel |
| Seller owes more than the payoff | Their mortgage exceeds the new loan | Bring cash or renegotiate |
| Low appraisal | Value falls short of payoff | Re-size the loan or add equity |
| Balloon date arrives early | Title cure takes longer than planned | Open talks with seller early |
| Contract limits transfer | Assignment clauses block a new lender | Seek seller consent |
Seller cooperation is the biggest execution risk.
Plan the Exit Before You Close
Hard money is a bridge with a deadline: 6-18 months, interest-only. Many investors then refinance into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. A DSCR loan qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
Check the exit loan’s tests now, using the ranges across the wholesale network:
- Leverage: most files land at 75%-80% LTV on an investment-property purchase. A cash-out refinance on an investment property tops out around 75% LTV, with about 6 months of seasoning as the common expectation.
- Coverage: 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted.
- Credit: most programs want around 660, and 700+ unlocks the strongest leverage tiers.
- Reserves: commonly around 6 months of PITIA, varying by lender, leverage, and loan size.
Clearing 1.00 is not the same as positive cash flow. Repairs, vacancy, management, and utilities sit outside the calculation. The test compares rent to the full housing payment only.
Notice the gap: the hard money refinance ceiling of 65% of value is lower than the DSCR cash-out ceiling of around 75%. If the bridge was sized tightly, the exit may still fit. If it was sized to the maximum, test the exit first. Cash-out on top of a payoff is underwritten differently from payoff-only. Tax treatment varies; consult a qualified professional.
For the full picture of exit-loan terms, see Lendmire’s complete DSCR loans guide.
Is Hard Money the Right Tool?
Hard money fits when the title is clean, the balloon is close, and a defined exit exists. It is the wrong tool if you cannot show a funded way out, or if the seller will not cooperate. In those cases the better move may be negotiating an extension with the seller or arranging longer-term financing first.
Frequently Asked Questions
Can hard money pay off a land contract if I have a recorded contract?
Possibly, but recording gives notice only. The seller still holds legal title, so the seller must deliver a deed at closing. If they will, a lender can place a first lien and fund the payoff, subject to lender guidelines and property review.
Do I need a down payment?
It depends on classification. A bridge purchase with no rehab may be funded up to 80% of purchase price, while a refinance may reach up to 65% of value. The gap between the payoff and the loan is yours to cover, along with costs. Leverage varies by lender, property, and experience.
Does my credit score need to be high?
A 620 score is the typical minimum, with extra conditions below 660. First-time investors qualify at lower leverage tiers. Underwriting stays asset-based, so the property and exit carry the file.
What happens if the seller has a mortgage on the property?
That mortgage must be paid off at the same closing so the new lender gets first position. If the seller owes more than the loan can fund, you would need to bring cash or the deal stalls.
Can I take cash out on top of the payoff?
Some programs allow it, but it is underwritten differently from a payoff-only loan. Refinance leverage on this program tops out at up to 65% of value, so any extra cash reduces what the loan can fund against the payoff.
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. Reach the team at 828-256-2183.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage built around DSCR investor lending, with programs available in 41 markets, including Washington, D.C. DSCR lenders commonly evaluate rental-income coverage instead of personal income paperwork — a practical fit for LLC-owned and multi-property investors. Terms vary by lender, property, leverage, and program. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Michigan Legal Help, Overview of Land Contracts
2. Wisconsin Legal Help, Land Contracts
4. Vanguard Title, Land Contracts
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 a Lender Reads a Seller-Carried Note on a Hard Money Loan · Can You Use a Hard Money Loan to Buy Out Siblings or a Partner? · Hard Money Loan Conditions for Renting to a Family Member
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.