Fix & Flip Loan Guide
The Fix & Flip Loan is a specialized short-term financing tool for real estate investors. It provides the capital needed to acquire distressed properties and cover the costs of significant renovations, enabling you to add value and resell for a profit.
Leverage & LTV Limits
Most lenders will cover up to 85-90% of the purchase price and 100% of the renovation budget. However, the total loan amount is typically capped at 70-75% of the After Repair Value (ARV) to ensure sufficient equity remains in the deal.
The Draw Process
Renovation funds are released in 'draws' as work is completed. An inspector will verify the progress against your original Scope of Work before funds are wired. Planning your cash flow for these intervals is critical for maintaining project momentum.
Experience Requirements
While some programs exist for new investors, more competitive rates and higher leverage are reserved for those with a track record of 3+ successful exits in the last 24-36 months. Partnering with an experienced GC can often help mitigate lack of personal experience.
Essential Exit Strategies
Every fix and flip loan has a term length, usually 12 months. Lenders want to see a clear plan for how the loan will be repaid—either through the sale of the property to a retail buyer or refinancing into a long-term rental loan like a DSCR program.