The Quick Read: Hard money is built to fund the flip, and DSCR financing is built to hold the finished rental. A top-tier flipper uses them as two stages of one deal, not as rivals, because each measures leverage against a different number and each is reviewed on a different test.
- Hard money leverage is measured against project cost, then capped against after-repair value (ARV). On the network’s current program, the top tier is 93% of project cost at 5+ completed projects, with a 75% of ARV cap, subject to lender guidelines.
- DSCR leverage is measured against value, and the property has to be rentable. Purchases typically run 75%-80% LTV, and cash-out tops out around 75% LTV.
- Hard money funds rehab in draws. DSCR does not fund renovation.
- Clearing a DSCR ratio is not the same as positive cash flow.
- Many flippers use hard money for acquisition and rehab, then refinance a keeper into long-term rental financing.
Here is the honest answer on who each option is for. Hard money fits an experienced investor who is buying a property that needs work and plans to sell or refinance within months. DSCR fits an investor who owns, or is buying, a property that already produces rent. If you are flipping for resale, DSCR is the wrong tool. If you are keeping the property, hard money is the bridge, not the destination.
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.
Lendmire is a broker. Its wholesale network places both products, and nothing here is a commitment to lend. Every file is reviewed individually, and program details vary by lender, property, and experience.
Side-by-Side
The hard money column reflects Lendmire’s wholesale network parameters for hard money. The DSCR column reflects typical network guidelines. Neither is a promise of terms.
| Factor | Hard Money (flip) | DSCR (rental) |
|---|---|---|
| Review basis | Property, plan, exit | Rent versus the full housing payment |
| Leverage measured against | Project cost, capped at 75% of ARV | Purchase price or appraised value |
| Top-tier leverage | 93% of project cost at 5+ projects | 75%-80% LTV on purchase; select programs reach 85% |
| Rehab funding | Up to 100% of rehab budget, released in draws | None; property must already produce rent |
| Documentation | Experience, scope of work, ARV support | Lease or rent schedule, appraisal, entity papers |
| Property types | Non-owner-occupied 1-4 units | Rentals, with some property types not offered |
| Entity vesting | Commonly an LLC | Commonly an LLC |
| Reserves | Cash for down payment, draws, and carry | Commonly around 6 months PITIA; varies |
| Term shape | 6-18 months, interest-only | 30-year fixed spine; extended terms via select lenders |
| Prepayment | No prepayment penalty | Often carries a prepayment structure |
What “Leverage” Actually Means Here
The two products use different denominators, so the percentages cannot be compared directly.
Hard money leverage is a loan-to-cost figure. The 93% tier applies to total project cost, meaning purchase plus rehab, and it is held under 75% of the after-repair value. The ARV cap is usually the binding limit on a tight deal. A flipper who pays up for the property can hit the ARV ceiling before the cost tier.
DSCR leverage is a loan-to-value figure on what the property is worth as a rental. Most purchase files land at 75%-80% LTV. Select high-leverage programs reach 85% LTV with roughly a 700+ score. Cash-out refinance tops out around 75% LTV across most of the network. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
One more distinction matters. The “up to 100% of rehab” language on the hard money side is a rehab-budget figure. It is not a purchase LTV. There is no true 100% purchase program, and a loan that reads as 100% on rehab still needs the flipper’s cash for the acquisition side, reserves, and contractor costs paid ahead of reimbursement.
How Each Side Reviews an Experienced Flipper
Hard money review centers on the asset and the plan. Corporate Finance Institute describes hard money as short-term lending secured by the property. On the network’s program, the top leverage tier is reserved for experienced investors with documented completed projects: 93% of project cost at 5+ projects, 90% at 2+, and 85% below that, each capped at 75% of ARV. Credit still counts. A 620 minimum applies, with extra conditions below 660. Underwriting stays asset-based, but it is not a no-documentation product.
Think of the file as a project binder. The lender wants the settlement statements from prior flips, the scope of work, the budget, and comps supporting the ARV. A flipper with a clean track record and a tight scope usually moves through review with fewer open questions.
DSCR review centers on rent. The ratio compares monthly rent to PITIA: principal, interest, taxes, insurance, and any HOA dues. Qualification runs primarily on property-level rental income covering the payment, subject to lender guidelines, rather than on personal income documents. The appraisal typically includes a rent schedule, and multi-unit properties use an operating income statement. For the deeper mechanics, see Lendmire’s complete DSCR loans guide.
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.
When Hard Money Is the Better Fit
Hard money wins whenever the property cannot yet earn rent or the plan is to sell.
- The property is a true rehab. Gutted kitchens, open permits, or a vacant shell cannot produce a rent schedule. DSCR has nothing to measure.
- The exit is a sale. A 6-18 month interest-only term with no prepayment penalty matches a flip timeline. A DSCR note with prepayment protection works against a quick sale.
- Rehab dollars are the constraint. Draws against completed work let a flipper fund renovation without tying up all the cash up front.
- Volume matters. An experienced investor running several flips can recycle cash into the next acquisition at the top cost tier.
The catch is carry and exit risk. The term is short, the loan is interest-only, and the property has to sell or refinance on schedule. If the appraisal on the exit comes in under the ARV used to size the loan, there is a gap to fill. Experienced flippers size the bridge with the exit in mind, not just the purchase.
Many investors refinance out of hard money into long-term DSCR financing once a property is stabilized, and Lendmire brokers that path. Lendmire has covered the topic from the other direction in its piece Can a Top-Tier Flipper Pay Off Hard Money With a DSCR Cash-Out?.
When DSCR Is the Better Fit
DSCR wins when the property is finished, leased, and staying in the portfolio.
- The rental is stabilized. Rent coverage decides the file, not the borrower’s traditional personal-income documentation. That helps flippers whose returns show heavy write-offs.
- The hold is long. A 30-year fixed spine suits a property kept for years. Extended terms (40-year) and interest-only periods are available through select lenders, and ARM structures exist for investors who want them.
- The loan is larger. Standard loan sizes run up to $3,000,000 on standard programs (smaller balances available through select lenders). Above $2,500,000 the network generally holds to 30-year fixed structures.
- The goal is pulling cash from a keeper. Cash-out tops out around 75% LTV, and about 6 months of seasoning is the common expectation.
Several constraints apply. Credit typically needs to be around 660 for most programs, with a 620 floor in parts of the network and 700+ unlocking the strongest leverage tiers. Coverage of 1.00 is where select programs start, and stronger ratios open better leverage and terms. A separate select-lender path takes coverage below 1.00 with leverage and terms adjusted. Reserves vary by lender, leverage, loan size, and transaction type. Around 6 months of PITIA is common, conservative rate-term files at modest leverage under $1,500,000 can see reserves waived, and larger loans typically step up to about 9 months.
Some property types are not offered at all: manufactured homes, log homes, and barndominiums.
A bigger down payment helps, since it lowers the payment and can lift the ratio. It does not erase leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
Coverage Is Not Cash Flow
A DSCR ratio compares rent to PITIA only. Repairs, vacancy, management, utilities, and capex all sit outside it. A property can clear 1.00 and still lose money in a bad year. Flippers who convert a project into a rental should run their own operating budget before treating coverage as profit. Formulas also differ across the industry, and some references use net operating income over debt service, so methodology varies by lender.
One Flip, Both Loans
Picture an experienced flipper with more than five completed projects buying a distressed duplex. The hard money loan is sized on total project cost at the top tier, capped at 75% of ARV. The rehab portion releases in draws as work is inspected and invoices are submitted. The flipper still funds the down payment, reserves, and the contractor costs that get reimbursed later.
Now the exit splits. If the duplex sells, the bridge pays off and the project is done. If the flipper keeps it, the property needs a lease in place and an appraisal with a rent schedule. A DSCR cash-out or rate-term refinance replaces the bridge. At around 75% LTV on a cash-out, the new loan has to fit the appraised value, and seasoning (about 6 months is common) can affect how the lender values a recent purchase. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Run it with a short appraisal in mind. If the value lands below the ARV used on the bridge, the refinance may not retire the full balance. That gap comes out of the flipper’s pocket. This is why tight bridge sizing against a thin ARV is the real risk, and why leasing the property and documenting rent before the exit matters.
When the Rehab Is Paid in Cash
If the flipper self-funds the repairs, hard money’s main advantage shrinks. The draw structure matters less, and the comparison turns on how much cash is tied up and for how long. A lightly renovated property that already rents may qualify for DSCR on its own, skipping the bridge. A heavier job still points to hard money first.
Common Misreadings
“Hard money is no documentation.” It is lighter, not absent. Lenders review experience, the scope of work, the ARV support, and credit.
“100% financing means no cash needed.” The 100% applies to the rehab budget in draws. The purchase side, reserves, and carry still need capital.
“DSCR can fund a flip.” DSCR underwrites an income-producing property. It does not fund renovation.
“DSCR means no underwriting.” Credit, equity, reserves, appraisal, and entity documents all still apply. Business-purpose investor loans are generally treated differently from consumer mortgages under federal rules; see the Federal Reserve’s Regulation Z summary, which treats credit to acquire or improve non-owner-occupied rental property as business-purpose credit.
The Verdict
Use hard money when the property needs work and the exit is a sale or a refinance. Use DSCR when the property is rented and staying. A top-tier flipper gets the most from the sequence: bridge the acquisition and rehab at the top cost tier, then move the keepers into long-term rental financing. Lendmire’s rehabber leverage comparison covers the same fork from the rehab side.
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.
Frequently Asked Questions
Does experience change hard money leverage?
Yes. On the network’s program, leverage steps from 85% of project cost with fewer than 2 completed projects to 90% at 2+ and 93% at 5+. Each tier is capped at 75% of ARV. Terms vary by lender, property, and experience.
Can a DSCR loan pay for the rehab?
No. DSCR is structured around a property that already produces rent. Rehab funding belongs to the hard money side, where up to 100% of the rehab budget releases in draws against completed work.
Do I need personal income documents for either one?
Hard money is reviewed on the property, plan, and exit, with credit still checked. DSCR qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Credit, reserves, and entity documents apply to both.
Is a DSCR ratio above 1.00 the same as profit?
No. The ratio compares rent to PITIA only. Vacancy, repairs, management, utilities, and capex are outside it, so a property can clear coverage and still run thin.
Can I refinance out of hard money into a DSCR loan?
Many investors do once the property is rented and stabilized. Cash-out tops out around 75% LTV on most of the network, and about 6 months of seasoning is the common expectation. The appraisal has to support the payoff.
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.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Corporate Finance Institute – Hard Money Loan
2. Federal Reserve – Regulation Z 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: Can You Exit a Hard Money Loan by Refinancing Into a DSCR Loan? · Should You Pay Down Hard Money Principal Before a DSCR Refinance? · Can You Refinance Into a DSCR Loan Right After a Hard Money Purchase?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.