The quick read: A fix-and-flip lender funds the smallest of several tests run on one deal: a share of the purchase price, a share of the rehab budget, a loan-to-cost (LTC) cap on the two combined and a cap on the after-repair value (ARV). Corporate Finance Institute describes hard money flip loans as generally based on 90% of the purchase price plus 100% of the repair costs, and NerdWallet reports that some fix-and-flip lenders offer up to 90% LTC or higher. On a holdback structure, the rehab dollars arrive in draws after work is done, not at closing.
That answer hides the part that decides your cash needs: which test binds first, and when the rehab money actually reaches you. This guide works one illustrative deal through every cap, then walks the holdback and draw schedule dollar by dollar. For the definitions of each ratio, see the LTV, LTC and ARV guide; this page is about how they combine on a flip.
How do the purchase, rehab and ARV caps combine into one loan amount?
A fix-and-flip loan amount is the lowest result of several separate tests run on the same deal: a percentage of the purchase price, a percentage of the rehab budget, a loan-to-cost cap on the two combined, and a cap on the appraiser's after-repair value. Whichever test produces the smallest number sets your loan.
Written as formulas, the tests look like this:
Purchase test: purchase price × purchase advance rate Rehab test: rehab budget × rehab advance rate LTC test: (purchase price + rehab budget) × LTC cap ARV test: after-repair value × ARV cap Loan amount: the smallest of (purchase test + rehab test), the LTC test and the ARV test
The practical consequence is that a headline such as "100% of rehab" is only true up to the point where a cost cap or a value cap cuts in. A lender can advance every rehab dollar on paper and still trim the total because the combined cost, or the finished value, cannot support it. Each rate in these formulas comes from the lender's program and term sheet, so the first thing to ask any lender is which tests it applies and at what percentages.
What do published sources say lenders advance on purchase and rehab?
Published sources give different anchor numbers because they describe different lender types: Corporate Finance Institute describes hard money flip loans as 90% of purchase plus 100% of repairs, NerdWallet reports fix-and-flip LTV usually up to 90%, and FDIC guidance tells banks to keep internal limits for 1-to-4 family construction at or below 85%.
| Lender type | Purchase advance stated | Rehab share and how it is paid | Overall cap or term stated | Source (date on page) |
|---|---|---|---|---|
| Hard money lender (flip loans) | 90% of the purchase price | 100% of the repair costs | Hard money loans typically 65% to 75% of the collateral's value; repaid within one to five years | Corporate Finance Institute, updated 2026-07-10 |
| Fix-and-flip lender (general) | Maximum LTV usually up to 90% | Not stated separately | Some lenders offer up to 90% LTC or higher; terms typically six to 24 months | NerdWallet, updated 2026-09-22 |
| Bank (construction lending) | Internal limits should not exceed 85% for construction of a 1-to-4 family residence and 85% for improved property | Standard payment plan: fixed payments at the end of each stage; progress plan: 90% disbursed, 10% held back until completion | Supervisory limits, not a lender's program terms | FDIC RMS Manual, Loans section 3.2 (05/23) |
| Brokerage (YieldStack, publisher of this page) | YieldStack is a commercial mortgage brokerage, not a lender. | 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. | 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. | Publisher disclosure: YieldStack publishes this page |
Read the table as a map of where the numbers come from, not as a rate sheet. The Corporate Finance Institute figure is a general description of how hard money flip loans are sized (Corporate Finance Institute). NerdWallet's 90% LTC is an upper end that "some" lenders reach, and its 70% ARV figure is a worked example on the page, not a stated norm, so this guide does not treat any ARV percentage as standard (NerdWallet). The FDIC limits are ceilings banks set their own internal policies under (FDIC RMS Manual, section 3.2). Your number is whatever your lender's program and term sheet say, in writing.
Which cap binds first on an illustrative deal?
On an illustrative deal with a $200,000 purchase, a $50,000 rehab and a $350,000 after-repair value, a 90% LTC cap binds first at $225,000, trimming $5,000 from the $230,000 that a 90%-of-purchase-plus-100%-of-rehab formula produces. An ARV cap only takes over if it sits below about 64.3% of the finished value.
Illustrative deal (hypothetical; not a quote, offer or funded loan):
Purchase price: $200,000 Rehab budget: $50,000 Total project cost: $200,000 + $50,000 = $250,000 After-repair value (appraiser's estimate): $350,000 Formula result at 90% of purchase plus 100% of rehab: $180,000 + $50,000 = $230,000 LTC test at 90%: $250,000 × 0.90 = $225,000 Loan amount (smaller of the two): $225,000 Loan as a share of ARV: $225,000 ÷ $350,000 = 64.3% Borrower cash toward cost: $250,000 − $225,000 = $25,000, before closing costs and interest
The ARV test is where the finished value pushes back. Because the ARV caps below are hypothetical term-sheet inputs chosen to show the mechanics, not published norms, treat them as variables you replace with your lender's figure:
| Scenario | ARV | ARV cap (hypothetical input) | ARV test | LTC test at 90% | Loan amount | Binding test | Borrower cash toward cost |
|---|---|---|---|---|---|---|---|
| A | $350,000 | 65% | $227,500 | $225,000 | $225,000 | LTC | $25,000 |
| B | $350,000 | 60% | $210,000 | $225,000 | $210,000 | ARV | $40,000 |
| C | $300,000 | 65% | $195,000 | $225,000 | $195,000 | ARV | $55,000 |
Scenario C is the one that surprises flippers. Nothing about the purchase or the rehab changed from A; the appraiser simply came in $50,000 lower on the finished value, and the borrower's cash requirement more than doubled, from $25,000 to $55,000. That is why the ARV appraisal deserves as much attention as the purchase price. For how the down-payment side of this plays out in one state, see how much money you need down on a Texas fix-and-flip loan.
How does the rehab holdback get paid out in draws?
On a holdback structure, the lender funds the purchase advance at closing and keeps the rehab dollars in reserve, releasing them in draws as stages of work are completed and verified. The borrower pays for each stage first and is reimbursed after the lender checks the work, so the holdback is funding you receive later, not cash on day one.
The FDIC describes the two disbursement patterns banks use on construction loans. A standard payment plan, normally used for residential and smaller commercial construction, uses a pre-established schedule of fixed payments at the end of each specified stage; a progress payment plan, used for larger projects, is generally based on monthly disbursements totaling 90% of the value with 10% held back until the project is completed (FDIC RMS Manual, section 3.2). An FDIC working paper on bank construction lending adds that draw schedules are set in advance and require adequate progress before more funds are disbursed, and that banks commonly hire independent third-party inspectors to document progress before approving a draw, though not every draw is inspected on site (FDIC, Bank Monitoring in Construction Lending).
Applied to the illustrative $225,000 loan, with the $5,000 LTC trim taken out of the purchase advance:
Closing advance toward purchase: $225,000 − $50,000 = $175,000 Borrower cash toward purchase at closing: $200,000 − $175,000 = $25,000 Rehab holdback: $50,000 Draw 1, demolition and rough-in: $15,000 Draw 2, mechanicals and drywall: $15,000 Draw 3, finishes: $12,500 Draw 4, final and punch list: $7,500 Total of draws: $15,000 + $15,000 + $12,500 + $7,500 = $50,000 Peak borrower cash before the first reimbursement: $25,000 + $15,000 = $40,000, before closing costs and interest
If the same $50,000 were paid on a progress plan like the one the FDIC describes, $45,000 would be disbursed during the work and $5,000 would be held until completion. Whether your lender takes the trim from the purchase advance or from the holdback, and whether it retains a share of each draw, are both questions to settle before you sign.
What does the rehab holdback cost you while it sits undrawn?
The cost of an undrawn rehab holdback depends on whether interest accrues on the full loan commitment from closing or only on dollars actually drawn, and the difference is simple arithmetic: the undrawn balance times the note rate times the months it stays undrawn, divided by twelve, which you can compute before signing.
Holdback carried undrawn: $50,000 Months undrawn in this example: 4 Extra interest if charged on the full commitment: $50,000 × note rate × 4 ÷ 12 = $16,667 × note rate Cost per percentage point of note rate: $16,667 × 0.01 = about $167
That figure is small next to the price, but it is not the only draw cost. Ask the lender whether it charges a fee per draw, who pays the inspector, how many business days a draw takes to fund after inspection, and whether a draw can be released for materials delivered but not yet installed. For current pricing on the note rate itself, see what fix-and-flip loans cost in 2026.
What moves the numbers up or down on your deal?
The four inputs that most directly move a fix-and-flip loan amount are the appraiser's after-repair value, the rehab budget the lender accepts, whether the purchase advance is measured on the contract price or on the as-is value, and which cap the program applies last. Each one can be settled in writing before closing.
Put these questions to every lender you are comparing:
- Which tests do you apply: purchase percentage, rehab percentage, LTC, ARV, or all four, and at what percentages?
- Is the purchase advance measured on the contract price, the as-is appraised value, or the lower of the two?
- Who orders the ARV appraisal, and what happens to the loan amount if it comes in below my estimate?
- Does the rehab budget need line-item detail and contractor bids, and will you fund contingency lines?
- Is interest charged on the full commitment or only on drawn funds?
- What does each draw cost, who inspects, and how fast does a draw fund?
The answers turn a percentage on a website into a number you can plan around. Two lenders quoting the same headline leverage can leave you with very different cash needs once the ARV test, the purchase measure and the draw terms are applied.
How do you get lenders competing to fund your rehab?
Getting lenders to compete on your rehab funding starts with one complete file, meaning the purchase contract, a line-item scope, contractor bids and support for the after-repair value, sent to several lender types at once so each quotes its purchase advance, rehab share, caps and draw terms in a form you can compare line by line.
YieldStack is a commercial mortgage brokerage, not a lender. 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. 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.
Submit your fix-and-flip deal with the purchase price, rehab budget and your ARV estimate, and compare how each lender type sizes the same file.
The bottom line
How much of the purchase and rehab a fix-and-flip lender funds is the smallest of its purchase, rehab, cost and value tests, not any single headline percentage. Published descriptions range from 90% of purchase plus 100% of repairs to 90% LTC, but the ARV appraisal and the draw terms decide your real cash need. Run every test on your own numbers, get each cap in writing, and plan to float each rehab stage until the draw funds.