Resources · 7 min read
Fix & Flip Financing Guide
How leverage, draws, and timelines work on a fix & flip loan — and what to budget for beyond it.
Fix & flip loans fund two things in one loan: the purchase and the renovation. Instead of saving up rehab cash separately, you borrow against the deal itself — sized off both what you're paying and what the property will be worth once the work is done. Because they're business-purpose loans, they're underwritten on the deal and your track record rather than your personal income, and fall outside the consumer-mortgage rules the CFPB enforces on primary residences.
Lenders typically finance a portion of the purchase price plus a portion (often up to 100%) of the rehab budget, with the total loan capped relative to the After Repair Value (ARV) — commonly in the 65–75% ARV range depending on experience and deal strength. The stronger your track record and the bigger the margin between total cost and ARV, the more leverage you'll typically see.
The rehab portion isn't handed over upfront. It's held back and released in draws as work is completed and inspected — you or your contractor finish a phase, request a draw, an inspection confirms the work, and funds release. This protects both sides: the lender isn't funding work that hasn't happened, and you're not carrying a giant rehab balance sitting idle.
Timeline and terms
- Short-term by design — commonly 6 to 18 months
- Interest-only during the term, which keeps monthly carrying costs down while you're not yet renting or selling
- A clear exit is part of underwriting: sell the property, or refinance into a DSCR rental loan if you decide to hold
What lenders look at
- Experience — your track record on prior flips or rehabs
- The numbers — purchase price, realistic rehab budget, and a defensible ARV (comps matter)
- Your exit strategy — sell or refinance, and whether that's realistic for the timeline
Budget for beyond the loan itself
- Carrying costs — insurance, utilities, and any payments during the rehab period
- Selling costs — commission and closing costs if you're exiting via sale, typically 8–10% of sale price combined
- Contingency — rehab budgets run over; experienced flippers build in a 10–15% buffer
Use the Fix & Flip mode on the calculator on the home page to pencil a deal, or send us the numbers directly.
Sources & references
Educational references only. Program terms are set by the lender and vary by deal — not a commitment to lend.
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