Fix and flip loans to buy and renovate investment property for resale. Learn how rehab draws, ARV, and exits work, then pre-qualify with no credit hit.
A fix and flip loan is short-term financing used to purchase a property and renovate it for resale. Instead of a 30-year mortgage, these loans typically run for months rather than years and are designed to be repaid when the renovated property sells, or refinanced if you decide to keep it as a rental.
Fix and flip loans are one of the core real estate financing programs FundLogic arranges for investors nationwide. They are built for speed and for properties that conventional lenders often will not touch: homes that need significant work, are vacant, or would not pass a standard appraisal in their current condition.
Most fix and flip loans have two parts:
The loan amount is usually sized against several numbers at once: the purchase price, the total project cost (purchase plus renovation), and the after-repair value (ARV), which is the appraiser's estimate of what the property will be worth once the work is done. Lenders commonly cap the loan at a percentage of each and use whichever is lowest.
Payments on fix and flip loans are often interest-only during the term, which keeps carrying costs lower while the property is being renovated and does not yet produce income. Interest on the rehab holdback may accrue only as funds are drawn, depending on the program.
1. You find a property and put it under contract. 2. You submit the purchase contract, renovation budget, and scope of work. 3. The lender orders a valuation that includes the after-repair value. 4. At closing, acquisition funds are released and the rehab budget is held back. 5. As you complete phases of work, you request draws; an inspector confirms the progress and funds are released. 6. You sell the finished property and repay the loan, or refinance into a long-term loan.
Because these are short-term, asset-focused loans, underwriting centers on the deal and the borrower's ability to execute:
Fix and flip loans are faster and more flexible than bank financing, and they cost more. Across the industry, short-term rehab loans generally carry higher interest rates than long-term mortgages, plus origination fees (points) and fees for draw inspections. Some also have extension fees if the project runs past the original term.
That cost is why the plan matters. Delays in permitting, contractor availability, or the resale market add interest and fees every month. Build in a contingency, budget conservatively, and know your backup exit.
Fix and flip loans are not the right fit if you plan to hold the property for the long term from day one and it is already rentable. In that case, a DSCR loan may offer lower long-term costs. If you need to close very quickly on a property with unusual circumstances, a hard money loan may be the better match. For larger value-add projects such as a small apartment building, a bridge loan is often the tool.
Many investors start a project planning to sell and decide to keep the property once they see the rent it can command. A common strategy is to renovate with a fix and flip loan, place a tenant, and then refinance into a long-term DSCR loan. Whether that works depends on the property's appraised value and rent after renovation, so it is worth running both scenarios before you buy.
Planning the exit at the start also helps you choose the right term length and avoid paying extension fees.
It depends on the program, your experience, and the deal. Fix and flip loans typically fund a percentage of the purchase price and the renovation budget, so you contribute the rest of the purchase price plus closing costs. Experienced investors often qualify for higher leverage than first-time flippers.
Yes. Most fix and flip loans include a rehab budget that is held back at closing and released in draws as work is completed. An inspector verifies the progress before each draw. Some programs fund all of the approved renovation budget, while others fund a portion.
ARV, or after-repair value, is the estimated market value of the property once renovations are complete. Lenders use it to size the loan and judge whether the project has enough margin. An appraiser typically estimates ARV based on comparable recent sales of renovated properties nearby.
Some programs work with first-time investors, usually with lower leverage, a larger down payment, or a requirement to use an experienced contractor. Having a clear budget, a realistic timeline, and enough cash reserves goes a long way. Tell us about your background and we will explain which options fit.
Fix and flip loans are short-term, often structured for roughly 6 to 18 months, with some offering extensions for a fee. The right term depends on the size of the renovation and how long the sale is likely to take.
Short-term investor loans usually close faster than bank mortgages because they focus on the property and the plan rather than extensive income documentation. Actual timing depends on the appraisal, title, and how quickly documents come in. Having your purchase contract, budget, and scope of work ready helps the file move.
Send us the property, purchase price, and renovation budget, and we will walk through how a fix and flip loan would be structured. Pre-qualify here — it will not affect your credit. Or compare all of our real estate financing programs.
