A fix-and-flip loan is short-term financing for residential investors who buy, renovate, and resell properties for profit. Unlike traditional mortgages, fix-and-flip loans in 2026 are underwritten primarily on the after-repair value (ARV) of the property - what it will be worth after renovations - not the purchase price.
How are fix-and-flip loans structured?
A typical fix-and-flip loan runs 6 - 18 months, interest-only, sized to roughly 85 - 90% of total project cost and capped near 70 - 75% of after-repair value, with rehab funds held back and released in milestone draws. Pricing is quote-specific and sits above permanent financing because the lender is underwriting execution risk.
| Parameter | Typical Range |
|---|---|
| Loan term | 6 - 18 months |
| LTV (purchase) | 70 - 80% of purchase price |
| LTC (total cost) | 85 - 90% of purchase + rehab |
| ARV limit | Up to 70 - 75% of ARV |
| Rate | Quote-specific; often above permanent and DSCR financing |
| Origination fee | Quote-specific; varies by lender, experience, leverage, and project complexity |
| Draw schedule | Rehab funds released in milestone draws |
How is the maximum loan amount calculated from ARV?
Most fix-and-flip lenders cap the total loan at roughly 70% of after-repair value: estimate what the renovated property will sell for, multiply by 0.70, and that ceiling - alongside purchase-price and total-cost limits - sets your real leverage. Whichever cap bites first governs the loan.
The central underwriting metric is ARV-based LTV:
Max Loan = ARV × 70%
If a property will be worth $400,000 after renovation, the max loan is $280,000. This protects the lender and forces the investor to have real equity in the deal.
What rates and leverage can you expect at each experience level?
Experience is the biggest pricing lever in fix-and-flip lending: a borrower with five or more completed flips gets the best private-lender pricing and up to 90% loan-to-cost, while a first-timer sees lower leverage, higher quotes, and more scrutiny on the exit. Every tier is quote-specific - which is exactly why comparing lenders matters.
| Borrower Type | Rate | Points | Max LTC |
|---|---|---|---|
| Experienced (5+ flips) | Best available private-lender pricing | Quote-specific | 90% |
| Intermediate (2 - 4 flips) | Market quote-specific | Quote-specific | 87% |
| First-time flipper | Higher-risk quote-specific pricing | Quote-specific | 80 - 85% |
What do fix-and-flip lenders look for in a borrower?
Beyond the property itself, lenders underwrite the borrower on five axes: flip experience, credit score, liquidity, exit strategy, and the quality of the scope of work. Weakness on one axis can often be offset by strength on another, because thresholds vary significantly from lender to lender.
What most fix-and-flip lenders evaluate:
- Experience: First-time flippers face higher rates and lower LTV caps
- Credit score: Most lenders require 620 - 680+; better credit = better terms
- Liquidity: Most require 10 - 15% cash-to-close plus reserves
- Exit strategy: Refinance into rental (BRRRR) or sell - lenders want clarity upfront
- Scope of work: Detailed rehab budget and contractor bids reduce lender risk and improve terms
How does the renovation draw process work?
Rehab funds are not released at closing - they sit in a holdback and are disbursed under a draw schedule as work is completed and inspected. Draw turnaround ranges from 2 - 5 business days to 1 - 2 weeks per draw depending on the lender, and slow draws directly extend your carrying costs.
The typical draw process:
- Request draw when a milestone is complete (e.g., framing, rough plumbing, drywall)
- Lender inspection - in-person or via photos/video depending on lender
- Funds released - typically within 2 - 5 business days of inspection approval
Faster draw turnaround = faster rehab = lower carrying costs. YieldStack filters lenders by draw speed as part of the matching process.
Should you flip the property or refinance and hold (BRRRR)?
Sell if your profit is in the purchase discount and the market is liquid; refinance into a DSCR loan and hold if the renovated property cash-flows and you're building a portfolio. The financing looks identical up front - the difference is the exit, so decide before you close, not after.
Many investors use fix-and-flip financing as the first step in the BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat). In this case, the flip loan is repaid with a DSCR refinance once the property is stabilized and rented. YieldStack can help with both legs of this transaction.
| Strategy | Exit | Best For |
|---|---|---|
| Fix-and-Flip | Sell after rehab | Profit-taking, market appreciation |
| BRRRR | DSCR refi after stabilization | Portfolio building, long-term income |
What are the biggest risks of a fix-and-flip loan?
The four risks that actually sink flips are scope creep, market movement during the rehab, slow draw disbursements, and running past loan maturity. All four compound the same way - extra months of carrying cost - so pad the budget 10 - 15% and underwrite the exit conservatively before you close.
- Scope creep: Renovations almost always cost more and take longer than projected. Build a 10 - 15% contingency into your budget.
- Market risk: If values drop during your rehab, your ARV-based loan may exceed the actual sale price.
- Draw delays: Some lenders take 7 - 14+ days per draw inspection, adding weeks to your timeline and thousands in extra interest.
- Extension costs: If you can't sell or refi in time, extension fees can compound quickly.
What happens if a lender declines your application?
A decline from one fix-and-flip lender is usually a criteria mismatch - wrong geography, leverage above their cap, credit below their floor, or a scope that outmatches your track record - not a verdict on the deal. Get the specific reason, fix what's fixable, and re-shop lenders whose boxes fit.
We cover the full recovery playbook - which decline reasons are fixable, what to do in the first 48 hours, and when a decline is a genuine warning about the deal - in Declined for a Fix and Flip Loan? Why It Happens and What to Do Next.
How do you find the right fix-and-flip lender?
The hard money / fix-and-flip lending market is crowded. Rates and terms vary enormously - the difference between the best and worst quote on the same deal can easily be .5 - 1.5 points in origination points and 400+ basis points in rate. Shopping multiple lenders manually is essential but time-consuming.
YieldStack aggregates fix-and-flip lenders nationwide, matches your deal criteria automatically, and surfaces competing quotes - without charging you upfront to access the market.
Run your numbers with the free deal analyzer, then submit your deal to compare competing quotes - one submission, no upfront cost.