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 Fix-and-Flip Loans Are Structured
| 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 |
The ARV Calculation
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.
Rates by Borrower Profile (2026)
| 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 Lenders Look For
Beyond the property itself, 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
The Draw Process
Rehab funds are not released at closing - they're disbursed in draws as work is completed and inspected. 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.
Fix-and-Flip vs. BRRRR
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 |
Fix-and-Flip Risks
- 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.
Finding a 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.