The Quick Read: Sizing at the top tier means taking the lower of 93% of project cost and 75% of after-repair value, then testing that bridge balance backward against what a DSCR cash-out or rate-and-term loan can repay, using the exit appraisal, rent coverage, and seasoning, because the highest leverage leaves the thinnest cushion at the exit.
- The top hard money tier funds 93% of project cost at five or more completed projects, and every tier is capped at 75% of after-repair value (varies by lender, property, and experience).
- The cap on value, not your experience tier, usually decides the real loan amount.
- The payoff grows every month through interest, extension fees, and exit costs.
- The DSCR exit lender uses its own appraisal and its own rent figure, not your projected ARV.
- Back-solve before you buy: conservative ARV, times the exit LTV, minus exit costs, equals the most payoff you can carry.
Most investors size the bridge first and hope the exit works. At the top tier that order gets expensive. The hard money loan and the DSCR loan that repays it are underwritten on different bases, so the bridge has to be built backward from the exit. This article walks through that process in order.
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Key Terms Defined
Loan-to-cost (LTC): The share of total project cost, purchase plus rehab, that the hard money lender funds.
After-repair value (ARV): The estimated value of the property once the work is done, which caps the hard money loan.
Top experience tier: The highest hard money leverage band, reserved for investors with five or more documented completed projects.
Seasoning: The ownership period a DSCR cash-out lender wants before it sizes the loan on appraised value, typically about 6 months from the recorded deed.
Payoff-only (rate-and-term) exit: A DSCR refinance that repays the bridge and returns no cash at closing.
Break-even appraisal: The lowest exit appraisal at which the new loan still repays the bridge and exit costs.
PITIA: The monthly principal, interest, taxes, insurance, and any association dues that rent is measured against.
What Does the Top Experience Tier Change?
It changes leverage, not eligibility. Across the lenders in the wholesale network Lendmire works with, hard money tiers are tied to documented completed projects. On the verified program sheet, fix-and-flip loans fund 93% of project cost at five or more completed projects, 90% at two or more, and 85% below that. Terms run 6 to 18 months, interest-only. These figures vary by lender, property, and experience, and nothing here is a commitment to lend.
Experience is counted in completed projects you can document. Projects renovated for other owners, or ones that never reached completion, generally do not count the way a closed-and-sold flip does. Lenders look for settlement statements, and the strongest files show that past projected values landed near realized ones.
The part that surprises people is the second limit. Every tier carries a cap of 75% of after-repair value. The lender funds the lower of the two numbers. At the top tier, 93% of cost only binds when the property is worth enough.
Here is the author’s own arithmetic, in index units. If cost is 100, the 93% tier gives a 93 bridge. For the 75% value cap to leave that 93 untouched, ARV must be at least 93 ÷ 0.75, or about 124. Put another way, once your all-in cost climbs above roughly 80.6% of ARV, the value cap sets the loan and the tier stops mattering.
The BiggerPockets beginner’s guide to BRRRR describes the 70% rule, a purchase screen that says to buy at about 70% of after-repair value minus rehab costs. It also flags rehab overruns and the risk that a lender re-appraises. A deal that passes that screen can still be a top-tier deal with a comfortable exit. A deal that barely clears 80% of ARV at cost has little room.
Sizing the Bridge, Step by Step
Start with the exit lender, not the bridge. The bridge term, the seasoning clock, and the exit leverage cap all have to fit together, so choose the DSCR path before the hard money closes.
1. Pick the exit. Decide whether you want a DSCR cash-out refinance or a payoff-only DSCR refinance, and confirm the property type is eligible. The DSCR network does not offer manufactured homes, log homes, or barndominiums.
2. Calculate the bridge on the cost tier. At the top tier, take 93% of project cost. Rehab dollars up to 100% of the rehab budget fund in draws against completed work, so the draw schedule affects how much interest accrues.
3. Apply the 75% value cap. Test your conservative ARV against the lower-of-two rule above. Use sold comps, not listings.
4. Project the payoff. Payoff equals principal drawn, plus accrued interest, extension fees, and any exit fee. It rises each month the bridge stays open, and a rehab that runs long makes it larger.
Each step feeds the next. A slower rehab increases interest, which increases payoff, which raises the appraisal you need at the exit.
How a DSCR Exit Underwrites the Payoff
A DSCR exit tests value and rent separately, and the lower result governs. Most DSCR lenders in the network want a stabilized rental, a clean appraisal, and a payoff statement from the bridge lender. Here is what each test looks at.
The value test. The exit lender sizes from its own appraisal, so your projected ARV counts for nothing until an appraiser’s closed comps support it. On a standard rental, the DSCR cash-out refinance tops out at 75% LTV. On short-term rental collateral, the DSCR cash-out ceiling drops to 70%. A DSCR rate-and-term loan that returns no cash can go up to 85% LTV on the programs that allow it. The ceiling is a maximum. It is never the amount you receive. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
The rent test. DSCR compares the property’s rent to PITIA, and the new payment is larger than the bridge’s interest-only carry. The rent figure comes from the appraiser’s market rent. For agency-style appraisals, a one-unit rent schedule is Fannie Mae Form 1007, and two-to-four-unit properties use a small income form, Form 1025. Those are only form names, and DSCR programs may use their own equivalents. Clearing 1.00 is where many select programs start, and a separate select-lender path takes coverage below 1.00 with leverage and terms adjusted. Clearing the ratio does not mean the property makes money. Repairs, vacancy, management, utilities, and capex all sit outside the calculation.
The seasoning test. The clock starts at the recorded title, not at rehab completion or lease signing. Inside the window, a DSCR loan is sized on the lower of cost or appraised value, which traps the equity your rehab created. After about 6 months, the DSCR cash-out sizes on appraised value. For context, market sources describe conventional seasoning as 6 to 12 months, and PropertyReach’s BRRRR guide reports 70–75% of appraised value as typical cash-out. The DSCR loan figures here are the network’s own, and they run in that same neighborhood.
The credit and reserve test. The DSCR loan also checks credit and reserves. Scores of 620 exist in parts of the network, most programs want about 660, and 700 or above opens the strongest tiers. Reserves commonly run about 6 months of PITIA, stepping up to about 9 months on loans above $1,500,000. All of this varies by lender, leverage, and loan size.
| Factor | Hard Money Bridge | DSCR Exit Loan |
|---|---|---|
| Sizing basis | Project cost, capped by ARV | Appraised value and rent |
| Whose value | Lender’s ARV estimate | Exit appraiser’s closed comps |
| Top figure | 93% of cost, 75% of ARV | 75% LTV cash-out, 85% payoff-only |
| What shrinks it | Cost overruns, ARV cap | Low appraisal, thin rent, seasoning |
| Rent matters? | No | Yes, rent over PITIA |
The Back-Solve: Break-Even Appraisal and a Sensitivity Check
Break-even appraisal equals (payoff plus exit costs) ÷ exit LTV cap. This is the single most useful calculation in the whole process.
Run the numbers on a modeled top-tier file in index units. These are assumptions, not market data. Cost is 100, the bridge principal is 93, and by the time the DSCR cash-out closes, payoff plus exit costs total 99 after interest, fees, and closing costs. At a 75% DSCR cash-out LTV, break-even is 99 ÷ 0.75, or 132. The plan assumes an ARV of 135.
| Exit appraisal | Max DSCR cash-out loan at 75% | Versus payoff plus costs (99) |
|---|---|---|
| 135 (plan) | 101.25 | About 2 left over |
| 132 | 99.0 | Zero cash back |
| 128 (about 5% low) | 96.0 | About 3 short |
| 124 | 93.0 | About 6 short |
Notice how little room there is. A 5% appraisal miss, small by any normal standard, turns a clean payoff into cash to close. The loan shrinks by the LTV cap times the miss, while the payoff stays fixed. Cash back disappears first, then the loan falls short of the payoff.
A DSCR rate-and-term exit changes the math. At 85% LTV on programs that allow it, the same 99 payoff needs an appraisal of only about 116.5. The tradeoff is that no cash comes back at closing. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Top Tier or One Tier Down?
Taking less than the top tier is a legitimate choice, and sometimes the better one. Hard money lenders fund up to the tier, and you can borrow a smaller percentage of cost.
| Bridge as % of cost | Bridge on cost of 100 | Min. ARV to retire principal at 75% LTV |
|---|---|---|
| 93% | 93 | About 124 |
| 90% | 90 | 120 |
| 85% | 85 | About 113.3 |
These are the author’s arithmetic, before interest, fees, and closing costs. They show that each step down in leverage lowers the appraisal you need by several index points.
Stay at the top tier when the spread between cost and conservative ARV is wide, the rehab is tight and predictable, and the DSCR exit is a payoff-only refinance. Step down when the margin is thin, the scope is large, the comps are mixed, or you want cash back at the exit. If your all-in cost sits above roughly 80% of conservative ARV, the value cap is already doing the sizing, and the tier is just a label.
Lendmire’s piece Top-Leverage Hard Money Payoff Options at the DSCR Cash-Out Ceiling covers the payoff side of this decision in more depth.
DSCR vs. conventional financing
There are two common ways to finance an investment property, and they qualify you differently — here’s how investors weigh them.
Why investors choose it
- Qualifies on the property’s rental income — no personal tax returns, W-2s, or pay stubs needed to document income.
- No personal debt-to-income ceiling to clear, so existing mortgages and obligations don’t cap your borrowing the same way.
- Can be closed in an LLC, keeping the property inside a business entity.
- Built for scaling — not held to the limit on number of financed properties that conventional financing applies.
- Underwriting centers on the deal: generally qualifies when the rent covers the payment, a 1.00x coverage ratio being a common baseline (confirmed in underwriting).
- Designed specifically for investment property, including long-term and, where the program allows, short-term rentals.
Where it’s strong
- Often the lowest ongoing financing cost for a buyer who fully qualifies on personal income — a fit for a first property or a cost-first purchase.
Trade-offs for investors
- Requires full personal income documentation and must fit within a debt-to-income limit — salary, existing debts, and other mortgages all count.
- Typically held in your personal name rather than a business entity.
- Caps how many financed properties you can carry, which can become a ceiling as a portfolio grows.
- Evaluates you as a borrower as much as the property, which usually means more paperwork.
How investors usually choose: a first or single property often optimizes for the lowest financing cost; portfolio builders often optimize for leverage, vesting in an LLC, and scaling past conventional caps. The right answer depends on your goals, the property, and current guidelines — both paths run through select lenders in Lendmire’s wholesale network, with eligibility and terms confirmed in underwriting.
Structures and Variations
Payoff-only exit. It returns no cash and runs at higher leverage on select DSCR programs. It is the usual fallback when the bridge is maturing or the appraisal looks uncertain. Confirm seasoning treatment per program.
Cash-out exit. It can return equity, but only after seasoning and only if the 75% ceiling, rent coverage, and reserves all clear. Equity available depends on all of them. It is never a guaranteed figure.
Term structures. The DSCR spine is the 30-year fixed. Extended terms, including 40-year, and interest-only periods are available through select lenders in the network, and ARM structures exist for investors who want them. Above $2,500,000, the network generally holds to 30-year fixed.
Bridge term. Hard money runs 6 to 18 months, so choose a term that outlasts the seasoning window with room to spare. Do not pick one that barely matches the construction schedule. If seasoning clears after the bridge matures, you pay for an extension.
Many investors refinance out of hard money into long-term DSCR financing once the property stabilizes, and Lendmire arranges that path through its hard money exit refinance program. The complete DSCR loans guide explains the long-term loan side of that move.
Where the General Rule Breaks
Delayed financing. Cash buyers sometimes use a delayed-financing path that waives the waiting period. It waives only the waiting period, not coverage, leverage, credit, or reserve tests. It also recovers documented cost, not ARV, and a hard money or bridge-financed purchase generally disqualifies it.
Early refinance inside the window. A DSCR loan closed before seasoning clears is sized on cost basis. The equity from the rehab stays trapped, which defeats the purpose of the exit.
Forced appreciation. Even after the window, a lender may not recognize rehab-created value without its own appraisal support. An improvement may support a higher appraised value, depending on comps and underwriter review, but it never adds a fixed percentage.
Short-term rental collateral. The DSCR cash-out ceiling is lower at 70% on short-term rentals. Those programs also want about 12 months of hosting history and a 640+ score. Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income.
Rent as the second ceiling. On a thinly rented property, coverage can cap the loan before LTV does. The new payment is larger than the old interest-only carry, so a bridge that exits cleanly on value can still miss on rent.
Rehab overruns. Overruns raise your all-in cost, and the appraisal does not rise to match. At the top tier, that eats the cushion directly.
Low appraisal. A reconsideration request supported by closed comps is the standard response. The fallbacks, in order of preference, are:
1. Bring cash to close.
2. Extend the bridge and reapply after more comps close.
3. Switch to a payoff-only DSCR structure at a smaller loan.
4. Sell or hold until the numbers improve.
Common Sizing Mistakes
- Treating your own ARV as the DSCR loan’s value. The exit appraiser’s comps decide that.
- Treating the 70% purchase screen as a guarantee of a clean exit. It is a rule of thumb, and the other 30% has to absorb holding costs, closing costs, and profit.
- Starting the seasoning clock at rehab completion or at lease signing.
- Reading a leverage ceiling as the amount you will receive.
- Ignoring that payoff drifts upward every month of delay.
- Assuming a ratio above 1.00 means the property makes money.
- Choosing a bridge term that matches the schedule instead of the seasoning window.
Tax treatment varies; consult a qualified professional.
Frequently Asked Questions
Does the top experience tier make me eligible for more than other borrowers?
It raises leverage, not eligibility. The top tier funds 93% of project cost against 85% for borrowers with fewer than two completed projects, and the 75% ARV cap still applies to every tier. Terms vary by lender, property, and experience.
Does 100% financing exist at the top tier?
No true 100% purchase program exists. 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. The purchase side stays at the cost tier, capped by value.
Should I size the bridge at the cap?
Only when the margin supports it. If conservative ARV sits well above 124% of cost, the top tier can work. If cost is above roughly 80% of ARV, the value cap is the binding limit, and sizing at the cap leaves no room for a low appraisal.
Which DSCR exit fits a bridge funded near its cap?
A payoff-only DSCR refinance fits best, because it allows up to 85% LTV on programs that offer it. A DSCR cash-out refinance at up to 75% LTV works only when the appraisal comes in strong. Coverage must also clear on the new payment, subject to lender guidelines.
How do I document experience for the top tier?
Collect settlement statements for each completed project, with purchase, rehab, and sale or hold details. Show that the projects were yours, not renovations for others. Lenders also look at how close past projected values came to realized ones.
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. The investors who protect themselves best at the top tier are the ones who start with the exit appraisal and work backward to the bridge.
About Lendmire
As a DSCR and non-QM mortgage broker, Lendmire — NMLS# 2371349 — connects investors with wholesale lending channels across 41 markets, including Washington, D.C. The property’s rental income, not the borrower’s traditional personal-income documentation, is central to lender review, which works for self-employed operators and portfolios beyond four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. BiggerPockets – Beginner’s Guide to BRRRR
2. Fannie Mae – Selling & Servicing Guide Forms
3. PropertyReach’s BRRRR guide
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Short-Term Rental DSCR Documents for a First-Time Hard Money Exit · DSCR Refinance Seasoning Rules After a Hard Money Purchase · Longer-Term DSCR Loan Requirements to Exit Hard Money
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.