A fix and flip loan is a short-term, asset-based loan used to buy and renovate a property that you plan to sell for profit, usually within 6 to 18 months. The lender bases the loan amount on the property’s After-Repair Value (ARV) — what the home will be worth after renovations. Most fix and flip loans in 2026 finance up to 75% of ARV, charge 9% to 13% interest with interest-only payments, and require 1.5 to 3 origination points. You close fast (often 10 to 15 days), complete the renovation, sell the home, and use the sale proceeds to pay off the loan.
How a Fix and Flip Loan Works: The Five-Step Cycle
A fix and flip loan moves through five clear stages:
Step 1: Find a property and run the numbers. Locate a distressed home priced below market. Estimate the renovation cost. Estimate the After-Repair Value (ARV) using comparable sales of recently renovated homes nearby.
Step 2: Apply with a fix and flip lender. Submit the purchase contract, contractor budget, scope of work, and (if you have it) your past flipping experience. Lenders evaluate the deal quality, the borrower, and the exit plan.
Step 3: Close the loan. Closing usually takes 10 to 15 business days. The lender wires the purchase funds to escrow and holds the rehab budget in a draw account.
Step 4: Renovate the property. Submit draw requests as renovation milestones are met. The lender sends an inspector to verify the work, then releases funds for that stage.
Step 5: Sell the property and pay off the loan. When the renovation is complete, list the home, accept an offer, and use the sale proceeds to pay off the loan balance plus any unpaid interest. Your profit is what’s left.
For investors comparing fix and flip financing against other capital structures, hard money equity loan programs for fast capital explains how asset-based lending works across product types.
The 70% Rule: How Investors Set Maximum Offers
Experienced flippers use the 70% rule to set a maximum offer price:
Maximum Purchase Price = (ARV × 0.70) − Renovation Costs
Worked example. A home with $400,000 in comparable renovated sales has an ARV of $400,000. Repairs estimated at $60,000. Maximum offer:
($400,000 × 0.70) − $60,000 = $220,000
That $220,000 ceiling leaves a 30% margin to cover loan costs, holding costs, closing costs, and profit. Experienced flippers sometimes stretch to 75% in hot markets and tighten to 65% in slower ones.
How Much Money You Actually Borrow
Lenders use two metrics to size the loan:
- Loan-to-Value (LTV) on Purchase: Typically 80% (some lenders go to 90% to 95% for experienced borrowers)
- Loan-to-Cost (LTC): Typically 80% to 90% of total project cost
- After-Repair Value (ARV) cap: Typically 75% (some lenders go to 80% to 90% for experienced flippers)
The actual loan amount is the lower of the LTV, LTC, and ARV caps.
Worked example. Purchase price $180,000. Renovation budget $70,000. ARV $350,000. A lender offering 75% of ARV would offer up to $262,500. That covers the $180,000 purchase plus the full $70,000 rehab budget, with the borrower bringing the rest plus closing costs.
2026 Rates, Points, and Fees on Fix and Flip Loans
Fix and flip rates in 2026 typically run 9% to 13%, with bridge rates having fallen from 11.1% in late 2024 to around 10.4% in early 2026. Expect:
- Interest rate: 9% to 13% (interest-only during hold period)
- Origination points: 1.5 to 3 points (paid at closing)
- Closing costs: 2% to 5% of the loan amount
- Appraisal and ARV review fee: $500 to $1,000
- Draw inspection fees: $150 to $250 per draw
- No prepayment penalties on most programs
Worked monthly cost. On a $262,500 loan at 11% interest-only for 12 months, the monthly payment is about $2,406.
What Lenders Look at Beyond the Property
Although fix and flip loans are asset-based, lenders still evaluate the borrower:
- Credit score: 600 to 640 minimum, 700+ for best rates
- Flip experience: First-time flippers are eligible at some lenders; 2 to 3 prior flips unlock better terms at most others
- Liquidity: Cash reserves to cover unexpected costs and carrying expenses
- Exit strategy: A clear plan to sell or refinance the property
- Entity: Some lenders require an LLC rather than personal name
Investors who already own a rental property may pull equity for the down payment using HELOC options on an investment property, reducing cash needed at closing.
When a Fix and Flip Loan Makes Sense
A fix and flip loan is the right tool when:
- You need to close fast (10 to 15 days)
- You have a clear renovation budget and timeline
- The ARV math leaves a comfortable profit margin
- You can carry the interest-only payments during the rehab
- You have a clear exit (sale or refinance) within 6 to 18 months
For investors building a portfolio rather than flipping, second mortgage options for investment properties offers longer-term capital structures.
A fix and flip loan is a 6-to-18-month, interest-only, asset-based loan based on the property’s After-Repair Value, designed to fund both purchase and renovation. Most lenders finance up to 75% of ARV at 9% to 13% interest plus 1.5 to 3 points, with no prepayment penalty. Use the 70% rule to size offers, leave a 30% margin for unexpected costs, and have a clear sale or refinance exit plan within the loan term.
FAQs on Fix and Flip Loans
What credit score do I need for a fix and flip loan in 2026?
Most fix and flip lenders require a minimum FICO score of 600 to 640, with 700 or higher unlocking the best rates and highest leverage. Some lenders go as low as 550 for experienced flippers with strong deals. Unlike conventional loans, fix and flip underwriting weighs deal quality, ARV, and exit strategy heavily alongside credit. A strong deal can sometimes offset a lower score.
Can a first-time flipper get a fix and flip loan?
Yes. Some lenders (like Kiavi) explicitly allow first-time flippers. However, first-timers typically face lower leverage caps, higher rates, and may need to work with a licensed contractor throughout the project. Repeat borrowers with 2 to 3 successful flips access reduced rates, lower fees, and faster processing. Building experience meaningfully improves terms on your second and third deals.
How fast can a fix and flip loan close?
Most fix and flip loans close in 10 to 15 business days from application. This speed is one of the biggest advantages of the product compared to conventional financing. Streamlined lenders with online applications and clear documentation can sometimes close in 7 to 10 days for experienced borrowers with clean deals. Document responsiveness and contractor budget clarity are the main timing variables.
What is the difference between LTV, LTC, and ARV in fix and flip lending?
LTV (Loan-to-Value) measures the loan against the property’s current purchase price, typically capped at 80% to 90%. LTC (Loan-to-Cost) measures the loan against the total project cost (purchase + renovation), typically capped at 80% to 90%. ARV (After-Repair Value) is the projected post-renovation value, with the loan typically capped at 75% of ARV. The actual loan amount is the lower of all three caps.
Do fix and flip loans require a down payment?
Yes, in most cases. Most fix and flip lenders require 10% to 20% down on the purchase, though some offer up to 95% LTC for experienced borrowers. Some lenders offer cross-collateralization programs that let you use equity from another property to cover the down payment, allowing zero out-of-pocket on the flip. Closing costs of 2% to 5% are still required even with cross-collateralization.
Can I finance 100% of the renovation costs?
Yes, most fix and flip lenders finance 100% of the renovation budget through a draw account. The lender holds the rehab funds and releases them in stages as work is completed and verified by an inspector. You typically still need to bring 10% to 20% of the purchase price plus closing costs at closing. Some programs cap renovation financing at 75% of ARV minus the purchase loan.
What happens if I can’t sell the property within the loan term?
If the property does not sell within the 6-to-18-month term, you have three options: extend the loan (most lenders allow extensions for an additional fee), refinance into a longer-term DSCR loan or conventional mortgage if you decide to hold the property as a rental, or sell at a reduced price to clear the loan. The worst outcome is loan default, so always build a backup exit strategy into the deal.
References
- RefiGuide. (2026, Jan 11). How to Get a Fix and flip loans in California: . https://agoodlender.com/fix-and-flip-loans-in-california
- Crestmont Capital. (2026). Fix and flip loan rates: What to expect in 2026.
- OfferMarket. (2026, April 1). Hard money fix and flip loans: The complete 2026 guide.
Reviewed: by John Tappan NMLS# 394171 | June 2026
Disclosure: This article reflects 2026 fix and flip loan rates, LTV/LTC/ARV caps, and underwriting practices as published by major non-QM and hard money lenders as of May 2026. Loan terms vary by lender, market, property type, and borrower profile. The figures above are general references, not a quote or commitment to lend. BD Nationwide Mortgage connects borrowers with lenders and does not directly originate loans.