What is a fix & flip loan?
A fix & flip loan is short-term, asset-based financing designed for investors who buy a distressed property, renovate it, and sell it for a profit — usually within 3 to 12 months.
Unlike a traditional mortgage, a fix & flip loan qualifies you on the property's After-Repair Value (ARV), not your personal income or tax returns. The lender looks at the purchase price, the rehab budget, the ARV, and your experience. That means a first-time flipper with a solid deal and a licensed contractor can qualify the same way a seasoned investor does.
The loan typically covers 85 to 90% of the purchase price and 100% of the renovation costs, disbursed in draws as work is completed. You pay interest-only during the hold period, then repay the full balance when the property sells. Rates are higher than conventional — usually 9 to 13% — because the loan is short-term and the lender takes more risk. The trade-off is speed and leverage: you can close in days, not weeks, and put less cash in the deal.
Fix & flip at a glance
Things most people don't know about fix & flip loans
The details that change whether a deal works.
The ARV is the whole game
Lenders base the loan on After-Repair Value, not purchase price. A property bought for $150K with an ARV of $300K can qualify for more than one bought for $200K with an ARV of $250K. The ARV appraisal — not what you paid — is what unlocks the loan.
Rehab funds come in draws, not upfront
The 100% rehab financing is not deposited on day one. Funds are released in draws as milestones are completed and inspected — foundation, framing, drywall, finishes. This protects the lender and keeps the project on budget.
You can flip into a rental with BRRRR
Buy, Rehab, Rent, Refinance, Repeat. Once the renovation is done and the property is stabilized, you can refinance the fix & flip into a long-term DSCR loan based on the new appraised value — pulling your cash back out to do the next deal.
Speed beats rate on hot deals
A fix & flip loan at 11% that closes in 5 days can beat a conventional loan at 7% that takes 45 days — because in a competitive market, the seller takes the fast, certain offer. The interest you pay is the cost of winning the deal.
First-timers can qualify — with the right deal
Some programs require 1 to 3 completed flips, but others accept first-time flippers when the ARV is strong, the contractor is licensed, and the scope of work is detailed. Your deal quality matters more than your track record.
You need interest reserves, not just the down payment
Most lenders want 6 to 12 months of interest payments set aside (or financed into the loan). This protects you if the renovation runs long or the property takes extra time to sell — the loan stays current while you finish the project.
Run your fix & flip numbers
Enter the purchase price, rehab budget, and After-Repair Value. The calculator shows your projected profit, ROI, deal margin, and total carrying cost — so you know if the numbers work before you make an offer.
Fix & Flip Calculator
Enter your purchase price, rehab budget, and After-Repair Value (ARV). The calculator shows your projected profit, ROI, and deal margin so you know if the numbers work before you commit.
Agent commissions, closing costs, transfer taxes
Projected Profit
$37,150
ROI
13.1%
Margin
11.6%
LTV
76.6%
Margin of 10%+. This is the range where most experienced flippers feel comfortable.
Important Note
Fix & flip loans are short-term, asset-based financing. Rates, LTV, and rehab escrow terms vary by lender. This calculator assumes 100% financing of purchase + rehab; your actual down payment and draw schedule affect real costs.
Who a fix & flip loan fits best
- Investors buying a distressed property to renovate and sell for profit.
- Investors executing a BRRRR strategy (rehab then refinance into DSCR).
- Builders doing ground-up construction on residential lots.
- Experienced flippers running multiple simultaneous projects with a line of credit.
- Investors who need to close fast to win a competitive deal.
Frequently asked questions
Typically up to 85 to 90% of the purchase price and 100% of the renovation costs, with the total loan amount capped at 70 to 75% of the After-Repair Value. You bring the remaining 10 to 15% of the purchase price as cash to closing, plus closing costs.
Educational content only. This page is not financial, legal, or tax advice, a commitment to lend, or an offer of credit. Program requirements and terms vary by lender and change over time; figures cited reflect the sources below as of the dates noted, and eligibility always depends on your full financial profile. Liuver Duran, NMLS #2579601. Sociable Mortgage LLC, NMLS #2498240. Equal Housing Opportunity.
Sources
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