Fix-and-Flip Loans for Real Estate Investors
Acquire and rehab investment properties fast with purpose-built financing.
Check If You Qualify
What Are Fix-and-Flip Loans?
Fix-and-flip loans provide real estate investors with fast, flexible financing to acquire distressed properties, complete renovations, and sell for a profit. These short-term rehab loans cover both the purchase price and renovation costs, with funds released in draws as construction milestones are completed. After-repair-value (ARV) lending allows investors to borrow based on the future value of the improved property — not just the current distressed price — maximizing the capital available for acquisition and rehab. Most programs evaluate deal economics, investor experience, and exit plan rather than personal income. ARV-based underwriting and collateral quality are the primary approval factors.
How Fix-and-Flip Hard Money Loans Work
Fix-and-flip hard money loans are short-term rehab loans that cover both the property acquisition cost and renovation budget. Lenders underwrite the deal based on the after-repair value (ARV) — the estimated market value of the property after renovations are complete — rather than the current distressed purchase price. This ARV-based lending structure allows experienced flippers to maximize leverage and minimize out-of-pocket capital. Renovation funds are held in a dedicated rehab escrow and released in draws after inspections confirm that each milestone has been completed. The interest-only payment structure during the project keeps carrying costs low while work is underway.
- Lender evaluates purchase price, renovation scope, and projected ARV
- Borrow up to 90% of purchase + 100% of renovation costs in many programs
- Renovation funds held in escrow and released in draw milestones
- Interest-only payments during the construction/renovation phase
- Inspector verifies each milestone before draw release
- Project completed, property sold or refinanced, and loan repaid at maturity
Fix-and-Flip Loan Rates, Terms & Qualification
Fix-and-flip rehab loan interest rates typically range from 9% to 13% annually, with loan terms of 6 to 18 months. Lenders evaluate both the borrower experience level and the deal economics — experienced flippers with a documented track record access better pricing and higher leverage. First-time flippers can qualify for straightforward residential projects, though lenders may require a larger down payment or lower ARV percentage. Experience in construction management, general contracting, or real estate investment significantly strengthens the application. The ability to close in 5 to 10 business days gives fix-and-flip investors the speed advantage needed to compete at foreclosure auctions, bank REO sales, and wholesaler assignments.
- Interest rates: 9%–13% per annum, interest-only during project
- Loan terms: 6 to 18 months depending on project scope
- Borrow based on ARV: Typically up to 65%–75% of after-repair value
- Acquisition + rehab: Up to 90% of purchase + 100% of rehab in select programs
- Closing speed: 5–10 business days for experienced investors
- Loan extensions available for projects that run over schedule
Who This Is For
Fix-and-Flip Loans are best suited for businesses that match one or more of the following profiles:
- ›Real estate investors who purchase distressed properties, renovate them, and sell for profit
- ›Experienced flippers who need fast closings to secure below-market or auction deals
- ›Investors with documented renovation experience or credible contractor partnerships
- ›Operators active in markets where speed-to-close is a decisive competitive advantage
- ›Investors who need to finance both the property acquisition and the full renovation cost
How It Works
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1
Submit the Deal
Provide the property address, purchase price, estimated repair costs, and your after-repair value (ARV) estimate. The deal economics — not your personal financials — are the core of underwriting.
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2
ARV Review & Scope Evaluation
The lender evaluates your ARV estimate against comparable sales and reviews your scope of work. A drive-by or desktop appraisal typically occurs at this stage.
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3
Loan Commitment
Receive a commitment within 24–72 hours. Fix-and-flip loans are structured as acquisition funds at closing plus a construction draw schedule tied to renovation milestones.
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4
Close & Begin Renovation
Close on the property with acquisition funds. Construction draws are released in stages as renovation milestones are completed and inspected by a lender-approved inspector.
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5
Sell or Refinance to Exit
Sell the completed property and repay the loan at closing. Alternatively, investors who want to hold the property long-term can refinance into a DSCR rental loan.
Key Benefits
- Finance up to 90% of purchase + 100% of rehab costs
- Interest-only payments during the project
- Draw schedule aligned with renovation milestones
- Closings in as little as 5 business days
- No income verification required — deal economics drive approval
- Terms from 6 to 18 months
Common Use Cases
- ›Single-family residential flips
- ›Multi-unit conversion and renovation
- ›Distressed property acquisitions
- ›Foreclosure and auction purchases
- ›Wholesale-to-rehab pipeline projects
Qualification Factors
Approval is subject to underwriting. The following factors influence eligibility and offer terms:
After-Repair Value (ARV)
The most important factor. Lenders typically lend up to 65%–75% of projected ARV. Your all-in cost (purchase price + renovation budget) must fall within this range.
Rehab Budget & Scope
A detailed scope of work with contractor quotes helps lenders feel confident releasing construction draws. Vague or unrealistic budgets raise underwriting concerns.
Investor Experience
Prior flip experience is strongly preferred and unlocks better pricing and higher leverage. First-time flippers may need to partner with experienced contractors or accept more conservative terms.
Purchase Price vs. ARV Margin
Lenders want to see a meaningful spread between your all-in cost and expected sale price. A margin of 20%+ of ARV after all costs (purchase, renovation, financing, selling) is generally expected.
Credit Score
Less critical than conventional financing. Most fix-and-flip programs consider scores of 550 and above. A strong deal structure can sometimes compensate for weaker credit.
Liquidity & Reserves
Lenders expect you to cover carrying costs — interest, property taxes, insurance — during renovation. 3–6 months of reserves is commonly expected, though not always explicitly required.
What to Prepare
Have the following documents ready to accelerate underwriting and funding:
- Property address and signed purchase contract
- Detailed scope of work with contractor estimates or bids
- Comparable sales supporting your ARV estimate
- Entity formation documents (LLC strongly recommended for liability protection)
- Government-issued ID for all principals
- Prior project list: completed flips with purchase price, renovation cost, and net sale price
Pros & Cons
Advantages
- ✓Finances both acquisition and full renovation costs in a single loan
- ✓Closes far faster than conventional financing — often within 5–10 business days
- ✓ARV-based underwriting accommodates current distressed property values
- ✓Experienced flippers can maintain multiple concurrent loans simultaneously
- ✓Clear, logical exit path — lenders understand the fix-and-flip business model
Considerations
- ×Higher interest rates than permanent financing — typical range 9%–13% annually
- ×ARV caps limit how much you can finance relative to total deal cost
- ×Construction draws require completed inspection milestones — carry cash for timing gaps
- ×If renovation goes over budget or timeline, carrying costs increase significantly
- ×Strong market comparables and conservative ARV estimates are critical to avoid over-leveraging
Frequently Asked Questions
What is the difference between a fix-and-flip loan and a hard money loan?
Fix-and-flip loans are a type of hard money loan specifically structured for property acquisition and renovation. Hard money is the broader category; fix-and-flip refers to the short-term rehab structure with draw-based renovation funding and ARV-based underwriting.
How quickly can I close a fix-and-flip loan?
Fix-and-flip loans can close in as few as 5–7 business days for experienced investors with complete documentation. New investors typically see closings within 10–14 days depending on appraisal and inspection scheduling.
Do I need prior flipping experience to get a fix-and-flip loan?
Prior experience helps you access better rates and higher leverage, but many programs accept first-time flippers for straightforward single-family projects with a sound deal structure and sufficient down payment.
How are renovation funds disbursed in a fix-and-flip loan?
Renovation funds are held in escrow and released in draws after a lender-approved inspector confirms each construction milestone has been satisfactorily completed. This protects both borrower and lender by ensuring funds are used for their intended purpose.
What is after-repair value (ARV) and why does it matter?
After-repair value is the estimated market value of the property after renovations are complete. Fix-and-flip lenders underwrite based on ARV rather than current purchase price, allowing investors to maximize leverage based on the property's future improved value.
What happens if my renovation goes over budget?
Cost overruns are a major risk in fix-and-flip investing. If your renovation exceeds the original budget, you may need to inject additional cash to complete the project. Most lenders do not automatically increase the renovation escrow — plan a contingency budget of at least 10%–15% above your initial estimate.
Can I refinance a fix-and-flip loan into a rental loan?
Yes. If you decide to hold the property as a rental rather than sell, most investors refinance the short-term fix-and-flip loan into a long-term DSCR rental loan after renovation is complete and the property is leased. This is called a BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat).
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