Fix and flip loan costs include interest, lender points, draw and inspection charges, third-party closing expenses and any broker or extension fee. The note determines the interest basis, including whether undrawn renovation funds accrue interest. Compare the full dollar cost over your expected hold, then test a delayed sale before choosing an offer.
For your property, submit a fix and flip financing request with the purchase contract, rehab budget, expected draw dates, available cash and exit plan. YieldStack is a commercial mortgage brokerage; lender underwriting determines the actual terms.
How does a fix and flip loan fund the purchase and renovation?
A fix and flip loan can separate purchase funding at closing from renovation advances released later, so its total commitment is different from the cash immediately available to buy the property. Confirm the approved scope, draw conditions, borrower contribution and repayment date before assuming that the commitment covers your entire project budget.
The OCC commercial real estate lending handbook discusses construction inspections, disbursement controls and adequate remaining funds to complete a project. It is bank supervisory guidance, not a universal private-loan program or fee schedule.
Check the lender's LTV, LTC and loan-to-ARV calculations. Also ask what borrower credit, liquidity, experience, guaranty and exit evidence it requires. Property collateral does not remove the lender's other underwriting tests. Program context is on the fix-and-flip loan page.
Which fees should you include in fix and flip loan costs?
Include every financing charge on the lender's written fee sheet, plus quoted third-party expenses and any broker fee, using each charge's actual calculation base. Separate those costs from purchase equity, renovation cash, operating carry and selling expenses, because combining them without labels can hide both the cost of borrowing and your cash requirement.
| Cost line | Calculation or document to request | Timing to confirm |
|---|---|---|
| Cost line Lender points | Calculation or document to request Quoted percentage × stated fee base | Timing to confirm Closing or other stated payment date |
| Cost line Interest | Calculation or document to request Rate × interest-bearing balance × time | Timing to confirm Monthly, reserved or accrued under the note |
| Cost line Draw and inspection fees | Calculation or document to request Per-request charges × planned requests | Timing to confirm Each request or release |
| Cost line Third-party closing costs | Calculation or document to request Title, valuation, legal, recording and other written quotes | Timing to confirm Closing and any advance deposits |
| Cost line Broker fee | Calculation or document to request Engagement agreement and loan amount | Timing to confirm Closing under the agreement |
| Cost line Extension, exit or minimum-interest charge | Calculation or document to request Contract formula and applicable balance | Timing to confirm Extension or payoff, if triggered |
One point is 1% of the stated base: an assumed two-point fee on a $300,000 commitment is $6,000. If the fee base were instead a $240,000 initial advance, it would be $4,800. Confirm the base; do not infer it from the word points.
For the settlement-day checklist, use fix and flip closing costs. For rate-specific questions, see fix and flip loan rates and points. This page compares total dollar costs over the hold period.
Do you pay interest on undrawn renovation funds?
Whether undrawn renovation funds accrue interest depends on the loan documents, so request a written interest calculation covering both the initial advance and future funding. Confirm the day-count basis, payment dates, minimum-interest provision and reserve treatment, then use that exact method when comparing lenders or estimating what a slower draw schedule will cost.
Do not assume a holdback is interest-free or that a reserved amount is freely spendable. Ask when the lender treats each amount as disbursed and whether a separate unused-commitment charge applies. A reserve funded from proceeds also reduces cash available for other purposes; avoid counting it twice.
The calculation below assumes drawn-balance interest with no reserve or minimum-interest charge. It also shows a full-commitment alternative for comparison. Those are teaching assumptions, not a claim that any quoted lender offers either structure.
How much does an illustrative $300,000 fix and flip loan cost?
An illustrative $300,000 commitment costs $38,862.50 over nine months under the stated draw schedule and fee assumptions below, including a $3,000 broker fee. That figure is financing cost, not total project cost or an APR. Changing draw timing, the interest basis, fees or the exit date changes the result.
Assume a $300,000 purchase and $75,000 rehab. The lender accepts only those two lines as its $375,000 LTC budget and lends 80%, or $300,000: $240,000 initially and $60,000 through renovation draws. The borrower funds the $75,000 budget gap plus all costs excluded from that accepted budget. The assumed sale price is $475,000.
Example assumptions: 10.5% fixed interest; a 360-day year with each modeled month equal to 30 days; no principal repayments before sale; two points on the commitment; four combined draw/inspection charges of $400; $7,000 third-party closing costs; and an assumed 1.00% broker fee paid at closing. All are invented inputs, not current market quotes.
The four renovation advances total $60,000: two $15,000 draws at the start of month 4 and two at the start of month 7. This deliberately simplified schedule leaves three interest-bearing periods:
| Period | Drawn balance | Interest calculation | Interest |
|---|---|---|---|
| Period Months 1–3 | Drawn balance $240,000 | Interest calculation $240,000 × 10.5% × 90 ÷ 360 | Interest $6,300.00 |
| Period Months 4–6 | Drawn balance $270,000 | Interest calculation $270,000 × 10.5% × 90 ÷ 360 | Interest $7,087.50 |
| Period Months 7–9 | Drawn balance $300,000 | Interest calculation $300,000 × 10.5% × 90 ÷ 360 | Interest $7,875.00 |
| Period Nine-month interest | Drawn balance — | Interest calculation Sum of the three periods | Interest $21,262.50 |
For the 12-month case, assume the fully drawn balance remains $300,000, the lender approves one three-month extension, and the extension fee is 1% of that balance. Three additional modeled months add $7,875 interest and a $3,000 extension fee.
| Financing cost | Nine-month sale | Twelve-month sale with assumed extension |
|---|---|---|
| Financing cost Interest | Nine-month sale $21,262.50 | Twelve-month sale with assumed extension $29,137.50 |
| Financing cost Lender origination points | Nine-month sale $6,000.00 | Twelve-month sale with assumed extension $6,000.00 |
| Financing cost Four draw/inspection charges | Nine-month sale $1,600.00 | Twelve-month sale with assumed extension $1,600.00 |
| Financing cost Third-party closing costs | Nine-month sale $7,000.00 | Twelve-month sale with assumed extension $7,000.00 |
| Financing cost Assumed broker fee | Nine-month sale $3,000.00 | Twelve-month sale with assumed extension $3,000.00 |
| Financing cost Extension fee | Nine-month sale $0.00 | Twelve-month sale with assumed extension $3,000.00 |
| Financing cost Total financing cost | Nine-month sale $38,862.50 | Twelve-month sale with assumed extension $49,737.50 |
If the same 10.5% rate applied to the full $300,000 commitment for all nine modeled months, interest would instead be $23,625, raising the nine-month financing total to $41,225. The difference is $2,362.50 even though the headline rate is identical.
How much cash do you need, and what profit remains at sale?
Cash needed for a financed flip includes the unfunded purchase and renovation amounts plus expenses outside the lender's accepted budget, while projected sale profit subtracts all investment costs from the sale price. Show those calculations separately so a renovation holdback, loan payoff or reimbursed reserve is not mistaken for an additional expense.
In this example, purchase equity is $60,000. Adding $6,000 points, $7,000 third-party closing costs and the assumed $3,000 broker fee gives $76,000 at closing, before prepaid interest, deposits or other excluded items. The borrower also funds $15,000 of rehab, future draw charges, interest and carry; reimbursement timing may require additional temporary cash.
Assume property taxes, insurance and utilities together cost $600 per modeled month and selling expenses equal 6% of the unchanged $475,000 sale price, or $28,500. These are further illustrative inputs. The comparison excludes income taxes and costs not listed.
| Sale profit calculation | Nine-month sale | Twelve-month sale |
|---|---|---|
| Sale profit calculation Sale price | Nine-month sale $475,000.00 | Twelve-month sale $475,000.00 |
| Sale profit calculation Purchase plus rehab | Nine-month sale −$375,000.00 | Twelve-month sale −$375,000.00 |
| Sale profit calculation Selling expenses | Nine-month sale −$28,500.00 | Twelve-month sale −$28,500.00 |
| Sale profit calculation Financing costs above | Nine-month sale −$38,862.50 | Twelve-month sale −$49,737.50 |
| Sale profit calculation Property carry | Nine-month sale −$5,400.00 | Twelve-month sale −$7,200.00 |
| Sale profit calculation Illustrative profit before income taxes | Nine-month sale $27,237.50 | Twelve-month sale $14,562.50 |
Loan principal is repaid from sale proceeds but is not subtracted again in this profit table: purchase and rehab costs are already included. The three-month delay reduces modeled profit by $12,675, combining $10,875 extra financing cost and $1,800 extra carry. A lower sale price would reduce profit further.
What should you check before relying on an extension or closing estimate?
Before relying on an extension or closing estimate, confirm its written conditions, payment bases and approval status rather than using a standard fee or assuming extra time is available. Obtain a payoff illustration for your planned sale date and a delayed date, and reconcile the settlement estimate with the fee sheet and engagement agreement.
Ask whether the extension is an exercisable option or requires consent, whether the fee uses original commitment or outstanding balance, and whether the rate changes. Check notice deadlines, required paydowns, valuation updates and default provisions. The loan-maturity guide covers that separate decision.
CFPB Regulation Z, section 1026.3 exempts qualifying business-purpose credit from that consumer regulation. Do not assume investor-loan fees follow a consumer FHA renovation program. Request a written fee sheet and draft settlement statement for your actual transaction.
How do you compare lenders for your fix and flip project?
Compare lenders for a fix and flip project using the same purchase budget, renovation scope, draw dates and sale or refinance date, so differences in their fee sheets become visible dollar costs. Include the delay scenario and ask which proceeds are conditional, what cash you must advance first and what evidence remains for underwriting.
It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing. Lender and third-party charges are separate. Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
Bring the purchase contract, line-item rehab scope, draw schedule, supported finished value, available cash, project experience and target closing date. Request comparable written terms and reconcile the cash requirements before accepting an offer.
The bottom line
Calculate financing costs in dollars for your actual draw schedule and exit date. Keep borrower equity, property carry and selling costs visible alongside them. A lower interest rate can still produce a larger total bill when points, undrawn-fund charges or delay conditions differ.