The Quick Read: Rarely, and only when the deal leaves room under the lender’s leverage cap: a few lenders will include closing costs in the loan or net them from proceeds, but most expect the borrower to bring that cash, and any cost the lender fronts is still repaid in full at payoff. The deciding factor is the leverage cap, not the fee type, because every dollar added to the loan counts against the lower of the cost-based limit and the value-based limit.
- Across the wholesale network Lendmire places files with, fix-and-flip leverage runs 85%, 90%, or 93% of project cost depending on documented completed projects. Every tier is capped at 75% of after-repair value (ARV). Terms vary by lender, property, and experience.
- Up to 100% of the rehab budget funds in draws against completed work. That is a rehab figure, not a pool of closing money.
- Lender fees are more often deducted from loan proceeds than financed on top. Netting lowers the cash you receive, not the amount you owe.
- Any cost that does get financed raises your payoff, your interest carry, and the appraisal you need at exit.
What Does “Rolling In” Mean on a Flip?
Rolling in means the lender sizes the loan large enough to cover a closing cost, so you bring less cash to the table. That is different from netting, where the lender subtracts the cost from your proceeds. Four mechanisms get lumped together under one label, and they behave very differently.
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.
| Mechanism | How it works | Cash saved at closing | Main catch |
|---|---|---|---|
| Financed on top | Loan size grows to cover the cost | Yes | Bigger balance, more interest |
| Netted from proceeds | Fee subtracted at funding | No, you receive less | You owe the full face amount |
| Deferred to payoff | Fee collected when you sell or refinance | Yes | Raises the payoff |
| Paid in cash | You write the check at closing | None | Needs liquidity |
Netting is the most common treatment of lender fees. Picture a borrower who sees a loan amount on the term sheet and assumes the whole figure lands in the bank. The lender’s origination fee, often called points, comes out of that figure at funding. The borrower owes the full amount at payoff but holds less cash on day one. That is why a flip with no financed costs can still demand real cash at the table.
“100% financing” is the marketing phrase that causes most of the confusion. There is no true 100% purchase program on the network Lendmire works with. The phrase usually describes purchase plus rehab, up to the ARV cap, with closing costs and reserves still due in cash.
Why the Leverage Cap Decides Everything
Hard money flip loans are sized two ways at once, and the lower result governs. The first test is loan-to-cost. Across most programs in the network, the tier depends on documented completed projects: 93% of project cost at five or more, 90% at two or more, and 85% with fewer than two. The second test is a hard ceiling of 75% of ARV on every tier. Bridge purchases without rehab run up to 80% of purchase price. Lenders vary on all of this, and the top tier is reserved for experienced investors.
Financed closing costs sit inside those same limits. Whether a lender counts them as project cost, or lets them ride on top of the tier, is a lender-by-lender call. Either way, they only fit if the loan has room before it hits 75% of ARV.
Here is a modeled example, not market data. Treat ARV as 100.
- Flip A: project cost is 68% of ARV. At the 90% tier the loan is about 61% of ARV, leaving roughly 14 points of headroom under the cap. Assume fees total 4% of project cost, a small slice of ARV. A lender willing to finance them lands near 64% of ARV, still comfortably under the ceiling.
- Flip B: project cost is 85% of ARV. At the 90% tier the math points to 76.5% of ARV, which already breaks the cap. The loan trims to 75%, and there is zero room for anything else. Closing costs come out of the borrower’s pocket.
Flip B is the lopsided deal: big rehab, thin spread, little cushion. The cap binds before the fee question even comes up. A lender that rolls costs in for Flip A may refuse for Flip B, and the reason has nothing to do with the borrower.
Experience matters here too. A first-time flipper sits at the lowest leverage tier, and lenders tend to be least flexible on fees for that profile. Lendmire’s piece Can a First-Time Flipper Roll Closing Costs Into a Hard Money Loan? covers that profile in detail.
Which Closing Costs Can Move, and Which Can’t
Some line items travel more easily than others. This table reflects how files typically behave across lenders in the network. Treatment varies by lender, property, and experience.
| Item | When due | Financed or rolled in? |
|---|---|---|
| Origination fee (points) | At funding | Usually netted, sometimes financed |
| Underwriting and processing | At funding | Sometimes netted |
| Appraisal or broker price opinion | Up front | Rarely |
| Title, escrow, recording | At closing | Rarely |
| Insurance (builder’s risk, hazard) | Before funding | Rarely |
| Legal and entity documents | At closing | Rarely |
| Interest on drawn funds | Monthly or at payoff | Accrues, often paid at payoff |
The pattern is simple. Fees paid to the lender have the most flexibility because the lender controls them. Fees paid to third parties, such as the appraiser, title company, and insurer, are due when the work is done. They rarely move into the loan.
Holdback Money Isn’t Closing Money
Rehab funds are tied to the scope of work. The lender holds the budget back and releases it in draws as completed work is verified, and interest accrues on the drawn balance rather than the full commitment. Up to 100% of the rehab budget can fund this way. That is a rehab-budget figure, never a purchase loan-to-value number.
The practical result: you generally cannot redirect holdback dollars to pay a title bill. If closing costs grow late in the deal and the budget doesn’t change, the cash gap lands on you. Plan the cash-to-close number before you sign, not at the settlement table.
A quick way to size it yourself: take the purchase price plus every closing cost, then subtract the amount the lender advances at closing. The remainder is what you bring. The cost rolled in, if any, shrinks that remainder. The cap decides whether it can.
Cash Versus Rolled In: One Flip Run Both Ways
Take Flip A from above and follow it to the exit. These figures are modeled assumptions.
- Pay cash: the loan sits near 61% of ARV. You bring the fees at closing.
- Roll in: the loan sits near 64% of ARV. You bring less at closing, but the balance is about 4% larger for the whole hold.
On a six-to-eighteen-month interest-only loan, that extra balance carries interest every month until payoff. The cost is smaller than the same step on a 30-year mortgage, because the hold is short. It is still not free. Delays make it worse, since each extra month stacks interest on the larger balance. If the flip sells below plan, the larger payoff comes out of a smaller check.
The cleaner way to compare is by margin. If the profit on the flip is fat, a few points of extra balance barely registers. If the spread is skinny, financed fees and extra interest can erase a meaningful share of it. That is the flip-economics test: run your resale price, your holding months, and your payoff with and without the roll-in before you decide.
When Rolling In Makes Sense (and When It Doesn’t)
Rolling costs in tends to make sense when:
- The deal has real equity, meaning cost sits well under 75% of ARV
- Preserving cash lets you start the next project sooner or cover a rehab overrun
- The lender’s treatment is disclosed on the term sheet, not discovered at the table
- Your margin survives the added payoff and interest on a slower-than-planned sale
It tends not to make sense when:
- Cost already presses against the ARV cap, as in Flip B
- The spread is thin and any delay turns the profit negative
- You are using it to fund a deal you could not otherwise close, which is a signal to re-examine the deal, not the loan structure
- You plan to refinance into a rental and need every point of payoff cushion
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
On the exit point: many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. The payoff has to fit the new loan. The minimum appraisal needed equals your payoff plus exit costs, divided by the leverage cap on the refinance. On a cash-out, most of the network tops out around 75% LTV. Every financed closing cost raises the payoff, which raises the appraisal you need. Lendmire’s complete DSCR loans guide walks through how that refinance is sized. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Terms on the Term Sheet
Hard money lending is also called private lending, bridge lending, or transitional lending. Wikipedia’s entry on commercial hard money notes that a lending trade group encouraged the industry to use those softer labels in place of hard money, so expect any of them on a term sheet.
These are business-purpose loans on non-owner-occupied investment property. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. The CFPB’s Truth in Lending summary describes how credit extended primarily for business purposes is treated. For a flipper, the takeaway is practical: fee treatment is set lender by lender, so the term sheet is your rulebook.
If the Lender Says No
A refusal on rolled-in costs is not the end of the deal. Options worth testing:
- Negotiate the fee itself. Lender-controlled fees have more give than third-party bills, and repeat borrowers often have more room.
- Ask for seller credits. A seller contribution can offset cash due at closing, and it does not touch the loan balance.
- Bring a partner or private capital for the cash gap. This keeps the loan inside its cap.
- Reduce the project size. If the cap binds because the rehab is oversized, a leaner scope may work better than more financing.
Skip the idea of stretching the rehab budget to cover closing costs. It gets caught in draw inspections and can sour the lender relationship.
How to Ask Your Lender
Before you commit, get clear answers to these:
1. Are any closing costs financed, or are they all netted from proceeds or paid in cash?
2. Do financed costs count inside the cost-based tier and the 75% ARV cap?
3. Which fees are lender-controlled and negotiable?
4. How does the draw schedule affect interest on the drawn balance?
5. What does the payoff statement look like after fees, interest, and draw fees?
6. What changes at an extension, if you need one?
Then read the settlement statement line by line. Look for costs already netted out. They cut your proceeds even when the loan amount looks generous.
Key Terms Defined
Loan-to-cost (LTC): the loan amount as a percentage of purchase price plus rehab budget.
After-repair value (ARV): the estimated value of the property once the renovation is complete.
Draw: a release of rehab funds after the lender verifies completed work.
Netting from proceeds: the lender subtracts a fee from the loan at funding, so you receive less cash.
Rolled in: the lender sizes the loan large enough to cover a cost, so the balance grows.
Payoff: the full amount owed when the loan ends, including principal, accrued interest, and any fees due then.
Frequently Asked Questions
Can origination points be rolled into a flip loan?
Sometimes, but netting from proceeds is far more common than financing on top. When a lender does finance them, the deal usually has strong equity and the borrower has track record. Either way, you owe the full amount at payoff.
Does 100% financing mean I bring no cash?
No. It describes purchase plus rehab, up to the ARV cap, not closing costs or reserves. Plan to cover title, insurance, valuation, and fees in cash.
Can rehab funds pay my closing costs?
Generally no. Rehab money is held back and released in draws against completed work. It follows the scope of work, not the settlement statement.
Does rolling costs in make the loan more expensive?
Yes, in two ways. A bigger balance carries more interest every month of the hold, and it raises the payoff you owe at sale or refinance. On a short interest-only loan the added cost is modest, but it still reduces margin.
What if I’m a first-time flipper?
Expect the lowest leverage tier and the least flexibility on fees. Credit generally needs to start around 620, with added conditions below 660, and underwriting still looks at the property, the plan, and the exit. Everything varies by lender, property, and experience.
Next Steps
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. A few states and cities are excluded, so confirm your property location first. Nothing here is a commitment to lend, and every file is underwritten individually.
The investors who handle closing costs best treat them as part of the deal model from day one, not as a surprise at the table.
For current guidelines and terms, see Lendmire’s DSCR loan programs page.
About Lendmire
A non-QM mortgage broker (NMLS# 2371349), Lendmire arranges DSCR financing for real estate investors in 41 markets — 40 states plus Washington, D.C. Because deals are underwritten primarily on property cash flow rather than personal income documentation, the structure suits self-employed buyers and entity-owned portfolios. Lendmire places loans through wholesale investor lenders; it is not a direct lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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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. Wikipedia: Commercial hard money
2. CFPB: Truth in Lending Act 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: Does a Hard Money Fix-and-Flip Loan Need a Minimum Credit Score? · Can You Use Hard Money to Flip a Triplex or Fourplex? · Should You Choose a Hard Money Lender for a Flip on Cost Alone?
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.