The Quick Read: Hard money lenders judge the deal first and the borrower second, so meeting the requirements means proving the property, the rehab plan, and your cash, in that order. On most first flips the lender wants a believable after-repair value, a line-item budget backed by contractor bids, documented cash for the down payment and reserves, and a written exit. Experience mostly changes leverage and terms, not whether you can apply.
- Leverage for a first flip typically sits at the lowest tier: about 85% of project cost with fewer than two completed projects, capped at 75% of after-repair value.
- Credit minimums start around 620, with added conditions below 660.
- Rehab money is released in draws after work is done, so you need working cash.
- Terms run 6-18 months, interest-only, so the exit plan is part of the application.
- Every figure here varies by lender, property, and experience, and none is a commitment to lend.
What “Meeting the Requirements” Actually Means
Hard money is short-term, asset-based business-purpose credit. The collateral is the house, and the lender’s question is whether the finished house sells or refinances for enough to repay the loan. That is why the file is built around the property and the plan, with the borrower’s credit and cash as supporting tests.
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.
Brokering these loans through a wholesale network, Lendmire sees the same pattern on first flips. Files stall on thin documentation, not on a missing résumé. A budget with no bids, comps that don’t match the finished product, or cash that can’t be sourced will hold up a file longer than a first-time label ever does.
The Requirements at a Glance
| Requirement | What the lender checks | How a first-timer shows it |
|---|---|---|
| Down payment | Skin in the game | Bank statements, sourced funds |
| Credit | Payment history, score | Credit report, explanations |
| Reserves | Interest carry, overruns | Statements covering the cushion |
| ARV and comps | Resale value | Closed sales in finished condition |
| Scope and budget | Plan is realistic | Line items and contractor bids |
| Exit | Sale or refinance | Written plan with timeline |
| Entity and insurance | Clean ownership, coverage | Entity documents, binder |
How Underwriting Treats a First Flip, Step by Step
The sequence below is the order a clean file usually moves through. Skipping ahead is where first-timers lose time to rework.
1. Underwrite the deal before you make an offer. Pull closed comps in finished condition, not listings. Build the rehab budget from contractor bids, not guesses. Run the deal against the 70% rule as a sanity check, then expect the lender to size the loan on the lower of a cost-based limit and an after-repair-value cap.
2. Get pre-approved on terms. The lender reviews the purchase price, rehab budget, and projected ARV. This is where a weak scope or soft comps get flagged, while you can still renegotiate the price.
3. Document liquidity. Hard money underwriting generally skips traditional personal-income documentation and debt-to-income math, but it verifies cash. Expect to show the down payment, interest reserves, and money for the first stage of work.
4. Close on the purchase. The rehab money is held back in escrow. This holdback is separate from your down payment.
5. Work the draws. Rehab funds release in arrears, after work is completed and inspected. A first-timer needs enough cash to pay contractors up front and wait for reimbursement.
6. Execute the exit. Sell or refinance before the 6-18 month term ends. The loan is interest-only, so every extra month is carry.
Down Payment and Leverage: What a First-Timer Should Expect
Fix-and-flip leverage is sized on loan-to-cost, tiered by documented completed projects. Across the network, the top tier is 93% of project cost at five or more completed projects, 90% at two or more, and 85% with fewer than two. Every tier is capped at 75% of after-repair value. Up to 100% of the rehab budget can fund in draws against completed work, but that is a rehab-budget figure, not a purchase LTV. All of this varies by lender, property, and experience.
There is no true 100% purchase program. When a marketing page implies one, the real structure is a purchase tier plus a rehab holdback, with cross-collateral or cash filling the gap. A first flip lands at the lowest tier, so plan on putting in meaningful cash of your own.
The cap that bites first is usually the ARV cap, not the cost tier. Picture a flip where the purchase price and rehab together run close to the finished value. The cost tier might allow more, but the 75% ARV cap cuts the loan back, and the gap becomes more cash from you. That is why a thin deal can fail a lender test even when your credit is strong.
Not every deal is a rehab. Bridge purchases without a rehab go up to 80% of purchase price, and cash-out and rate/term refinances go up to 65% of value. Loan amounts run up to $5,000,000, with smaller balances varying by lender.
Credit, Reserves, and the Cash You Actually Need
Credit starts around 620 in the network, with additional conditions below 660. First-time investors qualify at the lower leverage tiers. Underwriting stays asset-based, so a strong property doesn’t erase a weak credit file, and a strong score doesn’t rescue a weak deal.
Reserves matter on a first file, so plan the full cash picture, not just the down payment:
- Down payment at your leverage tier.
- Closing costs.
- Interest carry through the whole project, since the loan is interest-only.
- A cushion for rehab overruns.
- Working cash for the first draw, because reimbursement comes after inspection.
Lenders verify this cash, usually through recent bank statements. Funds that appear suddenly raise sourcing questions. Move money early and keep a paper trail.
Experience: What Changes and What Doesn’t
Experience changes leverage, pricing, and scope limits. It doesn’t usually decide whether you can apply. Some institutional funds do require a track record, while many private lenders just adjust terms. In this network the tiers are tied directly to completed projects, which is why a first flip sits at 85% of project cost and why the top tier is reserved for experienced investors.
A first-timer can offset a thin résumé in a few ways:
- Bring in an experienced partner or a licensed contractor.
- Choose a cosmetic scope over a structural one.
- Put in more cash than the minimum.
- Keep the file clean on credit and documents.
Lenders willing to take a newcomer generally won’t let a first-timer act as their own general contractor unless the rehab is light and cosmetic. Policies differ by lender, so ask early.
Build the Credibility Package
The strongest first-time files are boring. They show a scope, a budget, bids, comps, and an exit that all agree with each other.
Comps. Use closed sales of finished homes similar in size, age, and location. Optimistic ARV is the fastest way to lose a lender’s trust. If your comps are the best case, the lender will find the median case.
Scope and budget. Break the rehab into line items and attach bids. A specific plan with binding quotes reads as a plan. A round-number budget reads as a guess.
Timeline. Tight timelines are easier to approve. Cosmetic flips are usually planned in months, major rehabs take longer, and longer timelines call for more conservative leverage.
Exit. Write down the sale price you expect, the days on market you assume, and the fallback if it doesn’t sell. Many investors refinance out of hard money into long-term DSCR financing once a property is stabilized, and Lendmire brokers that path. The complete DSCR loans guide explains how that long-term step works.
Entity and insurance. Lenders typically want the property held in an LLC, subject to lender program eligibility, plus hazard and liability coverage and a clean title. Set the entity up before you go under contract so the documents are consistent from day one.
Run the Numbers Before the Lender Does
Margins on flips are narrowing, which makes your cost discipline matter more. ATTOM’s quarterly flipping report put the typical flip margin at 21.5%, down from 25.7% the quarter before and 27.6% a year earlier. Those are gross figures. WRE News’ coverage of the same report notes that experienced flippers estimate rehab, financing, taxes, insurance, transaction costs, and carry often equal 20% to 33% of ARV.
Here is how that plays out on a modeled deal, using assumptions rather than market data. Say you buy a house, plan a cosmetic rehab, and project a resale price from three close comps. Subtract the purchase, the full rehab with a cushion, interest carry for the whole term, and selling costs. If the remainder is thin, a ten percent overrun or a slow sale erases it. Stress the numbers with a longer hold and a lower sale price. If the deal only works in the best case, don’t submit it.
Low-priced homes are a particular trap. Fairs Online’s repost of ATTOM’s data shows homes bought for $50,000 or less produced a typical loss of $15,000 in the latest quarter. Thin deals like that can also fail lender and ARV tests.
Where the General Rule Breaks
A few edge cases change the answer.
Large or out-of-state rehabs. A first-timer taking on a big scope far from home draws more scrutiny. A first project often has to sit within a reasonable distance of where you live. That varies by lender.
Not on the sheet. The network’s flip program covers non-owner-occupied residential property of one to four units, with ground-up construction up to 10 units. Commercial, industrial, land, hospitality, and owner-occupied properties are not offered.
Credit under 660. The 620 floor exists, but conditions are added below 660. Expect tighter terms or more cash.
Longer runway. Terms are 6-18 months with no multi-year options. If the project needs more time, the answer is a refinance into long-term rental financing, not an extension of the flip loan.
Market availability. The program is offered in 41 markets, including Washington, D.C., and is not available in Louisiana, Minnesota, North Dakota, South Dakota, or in Baltimore, Chicago, or Detroit.
If You Fall Short on One Requirement
- Short on cash: pick a smaller or cheaper first project, or bring in a partner who adds capital. Don’t count on a lower tier to fix a cash gap, because it only reduces what the lender funds.
- Short on credit: work the report before you apply, and expect extra conditions under 660.
- Short on experience: add a licensed contractor or an experienced partner, and keep the scope cosmetic.
- Weak numbers: renegotiate the purchase price or cut scope. A lender’s ARV cap won’t move for you.
Common First-Flip Mistakes
- Using listing prices as comps instead of closed sales.
- Submitting a budget with no bids.
- Forgetting that draws reimburse after the work, so the first stage comes out of your pocket.
- Treating gross flip profit as net.
- Moving cash into your account days before applying.
- Assuming the lowest leverage tier is a floor you can negotiate down.
- Choosing a scope that exceeds your experience.
Many borrowers also over-focus on cost of capital. Because terms are short, leverage and how much cash you must bring are usually the bigger issue.
Key Terms Defined
After-repair value (ARV): the expected resale price once the rehab is finished.
Loan-to-cost: the loan as a percentage of purchase price plus rehab, rather than of value.
Holdback: rehab money held in escrow and released as work is completed.
Draw: a release of holdback funds after an inspection confirms completed work.
Interest reserves: cash set aside to cover interest while the project runs.
Exit strategy: the plan to repay the loan, by sale or by refinance.
Frequently Asked Questions
Can a first-timer qualify for hard money?
Usually yes. Lenders mostly adjust leverage, pricing, and scope limits for a first flip rather than refusing it. In this network, a first flip sits at the 85% of project cost tier, capped at 75% of ARV, subject to lender guidelines. Some institutional funds do require a track record.
Do I need an LLC?
Lenders typically want the property held in an entity, subject to lender program eligibility. Set it up before you go under contract so the title, insurance, and loan documents match.
Is income verified?
Generally no tax-return or debt-to-income review on these loans. Qualification is asset-based, focused on the property, the plan, and the exit. Credit and verified cash still matter.
Does credit matter if the deal is strong?
Yes. A 620 minimum exists, with extra conditions below 660. A strong property doesn’t replace a weak credit file.
How much cash do I need beyond the down payment?
Plan for closing costs, interest carry, a rehab overrun cushion, and working cash for the first draw. Draws reimburse after inspection, so the first stage of work is funded by you.
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. Call 828-256-2183 or request a quote.
For current guidelines and terms, see Lendmire’s hard money loan programs page.
About Lendmire
Lendmire — NMLS# 2371349 — is a DSCR and non-QM mortgage brokerage with investor loan programs in 41 markets, including Washington, D.C. DSCR eligibility is commonly reviewed by the lender around property-level rent rather than personal income documentation, subject to lender guidelines, and the brokerage helps arrange financing for LLC-owned portfolios beyond conventional financed-property limits. Recognized by Scotsman Guide as a Top Mortgage Workplace in 2025 and 2026.
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References
1. ATTOM: Home Flipping Profits Continue Gradual Two-Year Decline
2. WRE News on ATTOM Home Flipping Returns
3. Fairs Online on ATTOM Home Flipping Profits
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Hard Money Application Fee Rules for a Fix-and-Flip Purchase · How to Replace Seller Financing With a Hard Money Loan on a First Flip · How a Hard Money Lender Counts Days to Close a Fix and Flip Loan
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.