Guide
ARV, LTV & draws, explained.
The three numbers that decide how much you can borrow — and how the money reaches you — on a hard money loan.
Hard money lending runs on a few key numbers. Understand ARV, LTV, and draws and you'll understand exactly how your loan is sized and funded. Here's each one in plain English.
ARV — After-Repair Value
ARV is what the property will be worth after your renovations are complete. It's the single most important number in a fix & flip, because your loan and your profit both key off it. ARV is determined by recent comparable sales ("comps") — similar renovated properties that have sold nearby.
Example: you buy a rowhome for $150,000, put $50,000 into it, and comparable renovated homes on the block sell for $280,000. Your ARV is $280,000.
LTV — Loan-to-Value
LTV is the loan amount as a percentage of value. Hard money lenders cap the loan at a percentage of the ARV to keep the deal safe for everyone. We typically lend up to 75% of the ARV.
Continuing the example: 75% of a $280,000 ARV is $210,000. Your all-in cost (purchase + rehab) is $200,000 — which is below the $210,000 cap, so the deal works, and we can finance up to 100% of your purchase and rehab.
This is why ARV matters so much: a higher, well-supported ARV gives you more borrowing room. An inflated ARV that the comps don't support will shrink your loan — or sink the deal.
Draws — how rehab money is released
You don't receive the entire rehab budget at closing. Instead, it's held and released in stages called draws, as you complete portions of the work. The process is simple:
- You complete a phase of the renovation.
- You request a draw and submit photos, video, or an inspection.
- We review and approve the completed work.
- Funds are released to you or your contractor — we do this in 24–48 hours.
Draws protect you from overpaying a contractor up front, and they keep the project on a healthy schedule. Fast draw funding — like our 24–48 hour turnaround — is one of the most important things to look for in a lender, because slow draws stall your project and cost you money.
Putting it together
ARV sets the ceiling, LTV sets how much of that ceiling you can borrow, and draws control how the rehab money reaches you. Get the ARV right and the rest follows. When you send us a deal, these are exactly the numbers we work through with you — and we'll tell you honestly if they add up.