Fix and Flip Loans: Fast Investor Financing

Fix-and-flip loans give real estate investors fast access to short-term capital — funding both the purchase and renovation of a distressed property based on what it will be worth after repairs, not what it's worth today. If the deal makes sense, the financing follows.

Conventional mortgages don't work for distressed properties. A home that needs $80,000 in rehab won't appraise for the purchase price, won't pass inspection requirements, and often can't even close through a standard lender. Fix-and-flip loans — also called rehab loans or bridge loans — are purpose-built for this reality: they fund based on the property's post-renovation value and release rehab funds in draws as work is completed.

This guide covers how fix-and-flip loans work, what terms look like in 2026, how ARV-based lending is calculated, what lenders require, and how to structure your exit strategy to maximize returns.

How Fix-and-Flip Loans Work

Fix-and-flip loans are asset-based, short-term bridge loans. The lender underwrites the transaction based on the property's projected After Repair Value (ARV) — the appraised value once renovations are complete — rather than its current as-is condition. This is the fundamental difference from conventional lending, which can only lend against the current value.

At closing, you receive funds to purchase the property. The rehab portion of the loan is held in reserve and released in scheduled draws as renovation milestones are reached and verified by a third-party inspector. When the rehab is complete, you sell or refinance the property and repay the loan in full. The entire cycle typically runs 6–18 months.

Because these loans are interest-only during the construction and hold period, your monthly carrying cost is lower than a fully amortizing payment. On a $350,000 loan at 11%, your monthly interest-only payment is roughly $3,208 — a carrying cost you factor into your deal analysis alongside property taxes, insurance, utilities, and rehab labor.

ARV-Based Lending: How Lenders Calculate Your Loan

Understanding ARV math is essential before approaching a lender. Most fix-and-flip lenders use two metrics:

Here's a worked example:

• Purchase price: $200,000
• Estimated rehab budget: $75,000
• Total project cost: $275,000
• ARV (independent appraisal): $380,000
• 70% LTARV: $266,000
• 85% LTC: $233,750
• Maximum loan (lower of the two): $233,750
• Your cash required at closing: $275,000 − $233,750 = $41,250

That $41,250 goes toward the down payment on the purchase. The rehab funds ($75,000 of the loan) sit in reserve and are drawn down as work is completed. Your total cash-in on this deal is roughly $41,250 plus closing costs — far less than the $275,000 you'd need to fund the deal entirely out of pocket.

Loan Terms at a Glance

Fix-and-flip loan terms vary by lender, deal quality, borrower experience, and market conditions. Here's what to expect in the current 2026 lending environment:

What Lenders Require

Fix-and-flip lenders care more about the deal quality and your execution ability than your personal tax returns. The underwriting focus:

• Deal analysis: Purchase price, rehab scope, ARV comparables, and projected profit margin. A deal with 20%+ projected equity after all costs signals a safe loan for the lender.
• Borrower experience: First-time flippers can get funded, but lenders will want to see a realistic rehab plan and strong cash reserves. Experienced investors (3+ flips) get faster approvals and better terms.
• Liquidity: Most lenders require 6–12 months of interest reserves post-closing. They want to know you won't default if the renovation runs over schedule.
• Contractor relationships: Having a licensed, insured GC with a signed contract and line-item scope of work substantially speeds approvals.
• Entity structure: Many experienced investors close fix-and-flip loans through an LLC for liability protection. Our close-in-LLC program makes this straightforward — no personal guarantee required on some programs.
• Insurance: Builder's risk / vacant property insurance is required. Standard homeowner's insurance doesn't cover active rehab projects.

Unlike DSCR loans or bank statement loans, fix-and-flip underwriting is primarily deal-driven. A very strong deal with solid ARV support can overcome modest credit or limited experience. A marginal deal won't get funded regardless of borrower strength.

Exit Strategies: How You Repay the Loan

Your exit strategy determines everything — the loan term you need, the ARV you're targeting, and what happens if the market moves against you. Here are the four main exit options:

The BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat) is particularly powerful in combination with our DSCR loan program. Once your renovation is complete and you've placed a tenant, you refinance out of the high-rate fix-and-flip bridge loan into a long-term DSCR mortgage based on the property's rental income — often pulling back most or all of your initial equity. This lets a single capital stack fund multiple properties over time.

For a complete picture of bridge loans including terms for lot acquisition, new construction, and commercial transitions, see our bridge loan overview.

Ready to run the numbers on a specific deal? Visit our fix-and-flip loan page for current program details and to submit your deal for review.