Fix & Flip
Financing to buy it, renovate it, and sell it
A fix and flip loan funds the purchase and the renovation together, for the months you own the property. It is judged on the deal — what you are paying, what the work costs, and what it should be worth when the work is done — far more than on your tax returns.
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How a fix & flip loan works
Two numbers drive everything: your total cost (the purchase price plus the renovation budget) and the after-repair value — what the finished property should sell for. Lenders cap the loan against both, and whichever cap is lower is the one that decides your loan.
The renovation money is almost never handed over at closing. It is held back and released in draws as the work is inspected and completed, which protects the lender and keeps the budget honest. You fund each stage and get reimbursed.
These are short-term loans, usually interest-only, meant to be repaid when you sell or refinance into a longer loan. The exit is part of the underwriting: a lender wants to know how their money comes back before they lend it.
What lenders actually look at
After-repair value
Supported by sold comparables, not by an asking price. A soft ARV is the single most common reason a flip is cut back or declined.
Total project cost
Purchase plus renovation. Leverage is set against this and against the ARV, and each lender publishes its own maximums.
Experience
Completed projects in the last few years. First-timers do get funded, generally at lower leverage and a higher rate than an experienced investor.
Credit
Most programmes publish a minimum score. It affects pricing and leverage more often than it decides yes or no outright.
Cash to close
The gap between the loan and the total cost, plus points, closing costs and a reserve for the carry while you hold it.
The scope of work
A line-item budget. A lender releasing draws needs to know what each one pays for.
Questions we get asked
How much of the purchase and renovation can be financed?
It varies by lender and by deal. Every lender sets its own maximum as a share of total cost and a share of after-repair value, and the lower of the two governs. Tell us your numbers and we will show you what the lenders on our desk actually publish.
Do I need experience?
Not always. Several lenders write first-time investors, generally at lower leverage and higher pricing than someone with completed projects. Experience is a factor in the terms far more often than a hard gate.
How fast can it close?
That depends on the lender, the appraisal, title and how complete your file is. We will tell you what the specific lender we are placing with says about their own timelines rather than quoting an average.
Is the renovation money paid upfront?
Usually no. Renovation funds are typically held and released in draws as work is completed and inspected. The draw schedule is set by the lender.
What if the property will not appraise at my ARV?
The loan gets sized down to what the appraisal supports, which means more cash from you. This is why we would rather look at your comps before you are under contract than after.
Do you charge to look at a deal?
No. Send the numbers and we will tell you honestly whether it is placeable.
How much can be financed
The highest figures published by the 5 cited lenders on our desk for this product. Whichever cap is lowest for your deal is the one that applies.
Up to
100%
Of total cost
purchase plus renovation
Up to
80%
Of after-repair value
what it should be worth finished
Up to
80%
Of current value
on a refinance
These are maximums, not what everyone gets: the top of a range is reserved for the strongest files, and what is available depends on the lender, the property, your experience and your credit. This is not an offer — terms are set by a lender in writing after underwriting.
Who a fix & flip loan is for
- Investors buying a property that needs work before it can be sold or rented.
- First-time flippers — several lenders write them, generally at lower leverage.
- Experienced operators who want the purchase and the renovation in one loan.
- Buyers at auction or on a short contract, where a bank cannot move in time.
- Anyone whose tax returns do not reflect what they can actually afford.
What people use them for
- Buying a distressed house, renovating it and selling it.
- Buying, renovating and then refinancing into a rental loan instead of selling.
- Funding only the renovation on a property already owned.
- Auction purchases with a short closing window.
- A property a conventional lender will not touch because of its condition.
- A partial rebuild where the structure stays but everything inside changes.
The words lenders use, in plain English
Two of these decide your loan. The rest decide how smoothly it goes.
- ARV
- After-Repair Value. What the property should be worth once the work is finished, supported by sold comparables — not by an asking price and not by your opinion.
- LTC
- Loan-to-Cost. The loan as a share of your total cost, which is the purchase price plus the renovation budget. A lender capping at 90% LTC on a $400,000 total cost would lend $360,000.
- LTV
- Loan-to-value. The loan against what the property is worth today, used more on a refinance than on a purchase.
- Draw
- A release of renovation money after part of the work is done and inspected. You pay for the stage, then get reimbursed.
- Scope of work
- A line-item budget of the renovation. The lender releases draws against it, so it needs to be real rather than a round number.
- Interest-only
- You pay only interest each month, not principal. Standard on these loans because they are short.
- Holding costs
- What it costs you to own it while you work: interest, taxes, insurance, utilities. The thing most first-time flippers underestimate.
- Exit
- How the loan gets repaid — a sale, or a refinance into a longer loan. Lenders underwrite the exit, not just the purchase.
How the arithmetic works
Illustrative arithmetic to show how a lender sizes a flip, using round numbers. Not an offer, not a quote, and not terms available to anyone in particular — real figures depend on the lender, the property and your file.
Cost governs
Purchase $300,000, renovation $80,000, so total cost is $380,000. ARV $500,000. If a lender caps at 90% of cost, that is $342,000; if it also caps at 70% of ARV, that is $350,000. The lower figure wins, so the loan is $342,000 and you bring the $38,000 difference plus points and closing costs.
ARV governs
Same purchase, but the renovation is $140,000 and the ARV only $520,000. Cost is $440,000; 90% of that is $396,000, but 70% of ARV is $364,000. Now the ARV cap bites and you bring $76,000 instead — the same deal, a very different cheque.
The draws, in practice
On that first deal the lender might fund the purchase at closing and hold the $80,000 renovation. You complete the demolition, request a draw, an inspector confirms it, and that portion is released. You fund each stage first and are reimbursed after.
What the exit has to cover
At sale, the loan, the interest paid while holding, the points, both sets of closing costs and the selling costs all come out of the sale price before anything is profit. A deal that works only if everything goes perfectly is a deal without a margin.
What you will be asked for
Nine things to start. Notice there are no tax returns — the deal is doing most of the qualifying.
- The purchase contract, with any assignments or amendments
- A line-item scope of work with the renovation budget
- Photo ID for everyone on the loan
- Authorisation to pull credit
- Proof of funds for your share and the reserves
- Recent bank statements
- Your LLC papers: articles of organization, operating agreement, EIN letter
- A track record of past projects, if you have one
- Contractor details and licence, where the lender requires it
From enquiry to closing
- 1
Tell us the deal
Purchase price, renovation budget, after-repair value and where it is. That is enough for us to see which lenders fit before anyone pulls credit.
- 2
We size it against the caps
We run your numbers against what our lenders publish for cost and after-repair value, so you know your likely cash to close early rather than the day before closing.
- 3
Application and documents
The short list above, uploaded to your own page. Most files are held up here, not in underwriting.
- 4
Valuation
The lender orders an appraisal or a broker opinion, usually with an as-is and an after-repair figure. This is where an optimistic ARV shows up.
- 5
Underwriting and conditions
The lender reviews the deal, your file, the scope of work and the exit. Conditions come back; we work them with you.
- 6
Closing, then draws
The purchase funds. The renovation money is held and released in draws as the work is completed and inspected.
What goes wrong
An ARV nobody can support
The single most common reason a flip is cut back. If the comparables do not support your number, the loan shrinks and the difference comes from you — usually discovered late.
Forgetting the holding costs
Interest, taxes, insurance and utilities for the months you own it. On a six-month project these are real money and they come out of the profit.
A renovation budget with no line items
'$80,000 of work' is not a scope. The lender releases draws against a list, so a vague budget delays the first draw.
Expecting the renovation money at closing
It is almost always held and released in stages. You need to fund the first stage yourself.
No exit, or only one
A plan that only works if it sells at full price in ninety days is fragile. Lenders ask what happens if it does not, and so should you.
Underestimating cash to close
It is not just the gap between loan and cost — it is also points, closing costs, and reserves for the carry. Ask for the full figure early.
Related financing
- Hard money →The same asset-led money, when the deal is not strictly a renovation.
- Private money →Where the capital comes from, and why the decision can be faster.
- DSCR / rental →If you decide to keep it and refinance rather than sell.
- Ground-up construction →When there is nothing there yet, or the structure comes down.
Tell us about the deal
Four short steps. Rough numbers are fine — we are working out which lenders to take it to.
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This is not an offer and not an approval. Terms are set by a lender, in writing, after underwriting, and vary by lender, by property and by file.
Have a property under contract?
Send us the address and the numbers. We will come back with the options our lenders actually publish for a deal like yours.