The Quick Read: A hard money bridge loan lends a fixed percentage of the property’s value, not a percentage of your equity, so more equity does not produce a bigger loan. The lender applies a ceiling to value, and any equity above that ceiling stays with you as the lender’s cushion. On the hard money programs Lendmire brokers, that ceiling depends on the transaction, and it varies by lender, property, and experience.
- A bridge purchase without rehab is typically sized at up to 80% of purchase price.
- A cash-out or rate/term refinance is typically sized at up to 65% of value.
- Fix-and-flip files are sized on loan-to-cost, tiered by completed projects, and capped at 75% of after-repair value.
- There is no true 100% purchase program. Substantial equity lowers your loan-to-value; it does not raise the loan.
- Terms run 6 to 18 months, interest-only, so the exit plan matters as much as the equity.
Substantial equity is the strongest card a borrower holds on a bridge file. It is also the most misread one. Owners with 50% or 60% equity assume the loan scales with it. It doesn’t. This article walks through how the number is built, how the structures differ, where the general rule breaks, and what the decision looks like in practice.
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 Hard Money Bridge Loan Is
A hard money bridge loan is short-term financing secured by the property itself. Underwriting looks at the collateral, the plan, and the exit, not at personal income.
Two words get mashed together here. “Hard money” describes the funding source. “Bridge” describes the job: spanning the gap between one financing event and the next. A loan can be both. On the files Lendmire brokers, these loans are for non-owner-occupied 1-4 unit residential property, business-purpose only.
Lendmire is a broker. It arranges these loans through select lenders in its wholesale network across 41 markets, including Washington, D.C. Lenders review and approve; nothing here is a commitment to lend.
Key Terms Defined
Loan-to-value (LTV): The loan amount divided by the property’s value, which tells you how much the lender funds and how much you fund.
Loan-to-cost (LTC): The loan amount divided by the total project cost, meaning purchase price plus the rehab budget.
After-repair value (ARV): The estimated value after renovation, built from comparable sales of finished properties.
Usable equity: Value times the lender’s ceiling, minus any existing liens. This is what you can actually draw on.
Exit: The event that repays the bridge: a sale or a refinance into long-term financing.
The Sizing Formula, Step by Step
The formula is short. Start with value, apply the ceiling, subtract what is already owed, and then account for costs.
1. Establish value. On a purchase it is the price or as-is value. On a refinance it is the lender’s valuation, usually an appraisal or a lender-ordered opinion. The lender’s value is not the owner’s value, and the gap between them is where many files shrink.
2. Apply the ceiling for the transaction type. Purchase bridge without rehab: up to 80% of purchase price. Cash-out and rate/term refinance: up to 65% of value. These are network-typical figures that vary by lender, property, and experience.
3. Subtract existing liens. On a refinance, the new loan pays off the old one first. What remains after the payoff is your cash. Owners are often surprised here: big equity on paper, modest cash after the payoff.
4. Account for costs and holdbacks. Fees, interest reserves where required, and rehab money held back for draws all reduce what lands in your account at funding. Investing.university gives a total-cost formula for bridge financing that adds interest, upfront fees, exit fees, transaction costs, and any extension costs. Use it instead of judging a bridge by one headline number.
5. Check the exit. The loan has to be repaid in 6 to 18 months. A lender sizing a file asks how that happens, and a thin exit can trim the number.
Think of it as a chain. Value sets the top, the ceiling sets the loan, the payoff sets the cash, and the costs set the net.
Why Substantial Equity Doesn’t Raise the Loan
The ceiling applies to value. It does not apply to equity. Picture an owner whose property is worth a given amount with a very small mortgage left. On a cash-out refinance at the 65%-of-value ceiling, the loan is 65% of value no matter whether the owner holds 70% equity or 90%. The extra equity is not lent against.
What substantial equity does do is lower your loan-to-value, and that helps in three ways.
- The file is easier to place. The lender’s downside shrinks. If the exit fails and the property is sold, the sale price has a wide margin before the loan is at risk. A lower LTV is a lower-risk file, which is why the Consumer Financial Protection Bureau ties the ratio to both borrowing limits and risk.
- You can borrow less than the cap. A borrower who needs only part of the ceiling carries less cost and a lighter payoff burden at exit.
- Valuation misses hurt less. If the appraisal comes in under your number, a low-leverage file can absorb it. A file at the cap cannot.
This is the part most owners get backwards. Equity is the cushion, not the credit line.
How the Structure Changes by Transaction Type
The same property supports different loan amounts depending on what you are doing with it.
| Transaction | Sized against | Typical network ceiling |
|---|---|---|
| Bridge purchase, no rehab | Purchase price | Up to 80% of purchase price |
| Fix-and-flip | Project cost, capped by ARV | 85%-93% of project cost, max 75% of ARV |
| Cash-out refinance | Lender’s value | Up to 65% of value |
| Rate/term refinance | Lender’s value | Up to 65% of value |
| Ground-up construction | Cost and completed value | Up to 90% of cost, 75% of completed value |
These are typical figures from select lenders in the network. Each varies by lender, property, and experience, and none is a commitment to lend.
Two points deserve plain words.
First, the fix-and-flip tiers follow documented completed projects: 93% of project cost at 5 or more completed projects, 90% at 2 or more, and 85% with fewer than 2. Every tier sits under the 75%-of-ARV cap. The top tier is reserved for experienced investors.
Second, up to 100% of the rehab budget can fund in draws against completed work. That is a rehab-budget figure, not a purchase LTV. It is the source of most “100% financing” confusion.
The Binding Constraint: Cost, ARV, or Value
On a rehab file, the lender runs more than one test and takes the lower result. ARV comes from comparable sales of finished properties, and the common 70% rule is a deal screen for what to pay, not a lending rule. Keep those two ideas apart.
The 70% screen is an investor’s tool: ARV times 70%, minus repairs, gives a rough purchase ceiling. The lender’s cap is a separate number on the loan. A borrower who mixes them up can plan a deal around a loan size no lender offered.
Run the logic with a modeled case. Say a flip costs a given amount all-in and the lender’s loan-to-cost tier would fund 90% of it. The ARV cap of 75% is then tested against the projected finished value. If the project is cheap relative to value, the cost test binds. If the borrower paid near full value and the repair budget is heavy, the ARV cap binds, and the loan comes in lower than the cost test alone would suggest. Whichever result is lower wins.
This is why a bargain purchase with large built-in equity tends to be limited by the loan-to-cost test, and why an expensive purchase with a heavy repair budget tends to hit the ARV cap first. The lower number controls.
What Moves Your Number Up or Down
The ceiling is a ceiling. Where you land beneath it depends on the file.
- Experience. Completed projects drive the fix-and-flip tiers directly. First-time investors can qualify at the lower leverage tiers.
- Credit. Across the programs, a 620 minimum score applies, with additional conditions below 660. Underwriting stays asset-based, so credit is a gate and a pricing input, not the sizing base.
- Property type. Eligible collateral is non-owner-occupied residential, 1-4 units, with ground-up construction up to 10 units. Commercial, industrial, land or lots, hospitality, and owner-occupied property are not on the sheet.
- Loan size. Amounts run up to $5,000,000, larger by exception. Smaller balances vary by lender.
- Exit credibility. A defined exit, whether a sale or a refinance, supports a stronger file. A vague one invites a lower number.
Every one of these varies by lender, property, and experience.
Net Funds: What Actually Reaches You
The sized loan and the cash you receive are not the same number. On a cash-out refinance, the payoff of the existing lien comes out first. Fees and any required reserves come out next. On a rehab file, the rehab portion is held back and released in draws as work is completed.
Practitioners see this friction constantly. An owner plans around the headline ceiling, then the payoff, holdback, and fees land and the cash at closing is a fraction of what was assumed. The fix is simple: build the net-funds chain on paper before you commit to a project budget. Start at value, apply the ceiling, subtract the payoff, subtract costs, and see what is left.
Settlement reconciliation catches the rest. The final statement should match your sheet line for line, and any gap is worth a question before funds move.
Where the General Rule Breaks
The “ceiling times value” rule holds in most cases. These are the edges.
“100% financing” is not 100% LTV. It means full coverage of a rehab budget or a cost basis, always under an ARV ceiling. There is no true 100% purchase program. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Owner-occupant bridge loans are a different product. The buy-before-you-sell home bridge sizes against combined home value and weighs credit and DTI. This article covers business-purpose investor loans on non-owner-occupied property, which are asset-based and do not follow those rules.
Cross-collateral structures. Some borrowers pledge a second property to stretch a loan. That structure exists in the broader market, mostly on the residential buy-before-you-sell side, and it is not a standard feature of the programs described here. If the second property carries its own lien, the combined math gets more complicated, not simpler.
Valuation gaps. A lender’s valuation can come in below the owner’s number. Appraisal reconsideration, with recent comparable sales and condition evidence, is a normal request. It is not a guarantee.
Entry and exit are valued separately. The bridge sizes on one value. The long-term exit loan is appraised on its own, and a projected ARV does not promise the later appraisal.
The Exit: Where Bridge Files Succeed or Stall
The loan is interest-only for 6 to 18 months with no prepayment penalty. There are no multi-year options on the current program. An investor who needs longer runway refinances into long-term rental financing.
Many investors do exactly that, refinancing out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. Know the two tests that second loan has to pass. First, enough equity under its leverage cap. Second, enough rental coverage, since DSCR compares rent to the full monthly obligation of principal, interest, taxes, insurance, and any association dues. Select programs start at a 1.00 floor, and a separate select-lender path goes below 1.00 with leverage and terms adjusted. A bigger down payment can lift the ratio but never erases leverage caps, credit floors, or reserve rules. Clearing 1.00 also isn’t the same as positive cash flow, since repairs, vacancy, and management sit outside the calculation.
For the full mechanics, Lendmire’s complete DSCR loans guide covers qualification from the long-term side. Lendmire’s piece Should an Owner With Substantial Equity Use a Hard Money Bridge Loan? takes up the decision question this article leaves open.
Self-Check: Do You Have Enough Equity?
Run these before you apply.
- Multiply value by the transaction’s ceiling. Is that number enough after the existing lien is paid off?
- If the valuation comes in lower, does the file still work?
- Do you know which test binds: cost, ARV, or value?
- Can you name the exit and the second loan’s two tests?
- Does your net-funds sheet include fees and holdbacks?
If any answer is no, fix that before the file goes in. Short terms leave little room to repair a plan after the fact.
The Investor Decision in Practice
Consider an investor with a long-held rental and very little debt. The goal is cash to buy another property. The bridge ceiling is 65% of value on a cash-out refinance. Equity far beyond that stays untouched. The decision is not “how much equity do I have” but “does 65% of value, less costs, fund the next deal, and can I refinance or sell inside 18 months?”
Now consider a second investor buying a distressed property to renovate. The purchase portion may reach up to 80% of purchase price on a bridge purchase, or the project may be sized on loan-to-cost under the 75%-of-ARV cap. Here the borrower’s track record sets the tier. The first investor is sized on value; the second is sized on cost and plan.
Both should price the whole run, including carry through the term, using the total-cost approach above. Both should map the exit before they sign. 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 or through the quote page. An illustrative calculator on the site can also give a rough estimate, not a quote.
Frequently Asked Questions
How much can I borrow against my equity on a hard money bridge loan?
It is a percentage of value, not of equity. On the programs Lendmire brokers, a bridge purchase without rehab is typically up to 80% of purchase price, and a cash-out or rate/term refinance is typically up to 65% of value. These figures vary by lender, property, and experience.
Is there a loan size cap?
Loan amounts typically run up to $5,000,000, with larger loans by exception, and smaller balances vary by lender. Advertised “up to” amounts describe the ceiling, and individual files land below it depending on value, experience, and exit.
Can I borrow 100% of the purchase price?
No. There is no true 100% purchase program. Up to 100% of the rehab budget can fund in draws against completed work, but that is a rehab-budget figure and sits under an ARV ceiling.
Does credit matter if the loan is asset-based?
Yes, as a gate. A 620 minimum score applies, with additional conditions below 660, and first-time investors qualify at the lower leverage tiers. Sizing still runs on the property, the plan, and the exit.
Will my existing mortgage be paid off?
On a refinance, the existing lien is paid from the new loan’s proceeds first, and your cash is what remains after payoff and costs. That is why large paper equity can produce modest cash. Subject to lender guidelines.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage brokerage specializing in DSCR investor loans, helping arrange financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. The model centers on property-level rental income reviewed by the lender rather than W-2 documentation, subject to lender guidelines, suiting entity-owned and multi-property investors. Lendmire holds Scotsman Guide Top Mortgage Workplace recognition for 2025 and 2026.
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References
1. investing.university: Bridge Financing
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: HELOC vs Home Equity Loan for a Borrower With Limited Income · Hard Money Documentation for a Flip Exiting Into a DSCR Loan · HELOCs for Primary Homeowners: How to Get an Equity Loan
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.