Understanding Fix & Flip / Purchase & Rehab Loans
A fix and flip loan combines acquisition and construction capital into a single short-term, interest-only facility sized against the after-repair value. Rehab funds are held back and released in draws as work is completed and inspected, so you are not carrying interest on money you have not yet spent.
Fix & Flip Loans terms at a glance
Fix & Flip Loans — typical parameters
Illustrative market ranges. Your actual terms depend on lender underwriting, credit, collateral and program availability.
| Loan amount | $75,000 – $5,000,000 |
|---|---|
| Speed to funding | 7 – 14 days |
| Interest rate | 9% – 13% |
| Purchase coverage | Up to 90% of price |
| Rehab coverage | Up to 100% of budget |
| Max loan-to-ARV | 70% – 75% |
| Term | 6 – 24 months |
| Payments | Interest-only on drawn balance |
| Minimum credit score | 620 |
| Prepayment penalty | None |
How Fix & Flip Loans can help you
The economics of flipping are decided by two numbers: how accurate your renovation budget is, and how many months you hold the asset. Good financing protects both.
You control several projects instead of one
With $200,000 in cash you can buy one house outright. At 90/100 leverage the same $200,000 covers the down payments and carry on three or four. Assuming your deals are sound, that is three or four times the annual profit from identical capital — which is the entire argument for leverage in this business.
You only pay interest on money you have drawn
The rehab holdback is not disbursed at closing. If your budget is $90,000 and you have drawn $30,000, you accrue interest on $30,000. Over a six-month project this structure commonly saves several thousand dollars against a fully funded loan.
You can close fast enough to win the deal
Distressed and auction property goes to whoever can perform. A seven-to-fourteen-day close with a proof-of-funds letter beats a conventional buyer at a higher price consistently, and that reliability is what gets you the next call from a wholesaler.
Condition does not disqualify the property
Conventional lenders will not finance a house with no kitchen, a failed roof or unpermitted work. Rehab lenders finance precisely those houses — the distress is the opportunity, and they underwrite to what the property will be worth when you are done.
It sets up the BRRRR refinance cleanly
If you intend to keep the property rather than sell, the exit is a DSCR refinance at the stabilised value. We can price both legs at the outset so you know the permanent payment before you commit — the step most new investors skip and later regret.
How the process works
Submit the deal
Purchase contract, itemised scope of work with a line-item budget, comparable sales supporting your ARV, and your track record if you have one.
Underwriting the asset
The lender orders an as-is and after-repair valuation, and sizes the loan against the lower of cost-based and ARV-based limits.
Close and begin work
Typically 7 to 14 days. You fund your down payment and closing costs; the rehab holdback sits with the lender.
Draw as you complete work
Request draws as milestones finish. Inspection — increasingly by photo or video — releases funds, usually within 24 to 72 hours.
What you will need to qualify
- 620+ credit score
- 10%–20% of purchase price as down payment
- Detailed itemised scope of work
- Comparable sales supporting ARV
- Contractor bids or licence for self-performed work
- Liquidity for carrying costs
- Experience helps but is not always required
The honest drawbacks
What we would want to know if we were you
Two things sink flips, and neither is the interest rate. First, the budget: whatever your contractor quoted, carry a 15% to 20% contingency, because the wall you open is going to have something behind it. Second, the timeline: a six-month project that takes eleven months eats the profit through carry, extension fees and a shifted selling season. When we underwrite your deal we stress it at 20% over budget and 50% over schedule. If it still works, it is a good deal.
Fix & Flip Loans — frequently asked questions
Yes, though terms are more conservative — expect closer to 80% to 85% of purchase rather than 90%, and a somewhat higher rate. A strong credit score, real liquidity and an experienced general contractor materially improve a first-timer's file.
After-repair value is what the property is worth once the scope is complete. Lenders cap total loan proceeds at roughly 70% to 75% of ARV, so on a $400,000 ARV the maximum exposure is about $280,000 to $300,000 across purchase and rehab combined. If purchase plus budget exceeds that, you fund the difference.
You complete a defined phase, request a draw, and provide photos or an inspection. Funds release in 24 to 72 hours with most modern lenders. Some allow an initial draw at closing for materials; most do not, so plan to front the first phase.
Most lenders grant extensions, typically three to six months for a fee of roughly 0.5% to 1% of the loan. Ask about extension terms before you close — it is far cheaper to know your options in month one than to negotiate them in month eleven.
Absolutely — that is the BRRRR strategy. Use the rehab loan to buy and renovate, then refinance into a DSCR loan at the stabilised value and keep the property as a rental. We structure both halves together so there are no surprises at the refinance.
Related commercial real estate programs
Fix & Flip Loans sits alongside a number of related structures. If your situation is close to but not quite this product, one of these is probably the better fit — and the same single application reaches all of them.
- Portfolio Loans — One loan across multiple properties, underwritten as a single pool with a single payment.
- Mixed-Use Property Loans — Financing for buildings that combine ground-floor commercial with residential above.
- Commercial Land Loans — Acquisition capital for raw, entitled or infill land ahead of development.
- Permanent Financing — The long-term, fully amortising debt that takes out your construction or bridge loan.
- Mezzanine Real Estate Loans — Subordinate debt that raises total leverage without giving up ownership.
- Acquisition & Development Loans — Combined land purchase and horizontal-improvement financing for subdivisions and pads.
- Refinance (Commercial & Investment) — Replace maturing, expensive or misstructured debt with better terms.
- Blanket Mortgages — A single mortgage secured by several properties, with release clauses as you sell.