Fix & Flip Loans
Compare acquisition and renovation financing with a realistic budget, timeline and repayment or sale plan.
Residential construction photograph by D Goug. Resized. Source · Pexels License. Illustrative photograph.
Photograph by Max Vakhtbovych; resized. Source · Pexels License. Illustrative photograph.
A strong flip starts with a financing plan
The purchase price is only the beginning. Your financing also needs to account for cash to start repairs, carrying costs and how you will repay the loan. We help you compare acquisition and renovation funding, understand the trade-offs, and put the funding schedule alongside your contractor’s schedule before you commit.
Fix-and-flip financing is generally short-term, business-purpose financing for an investment property. It differs from a mortgage for the home you intend to live in. Property condition, proposed improvements, credit, liquidity and experience matter. First project or experienced investor, bring our team the address, proposed price and repair budget so we can review the whole deal.
Acquisition
Review purchase costs, the property condition and the work needed. Start your financing plan →
Renovation
Match scope, draws and timeline to a realistic budget. Start your financing plan →
Exit plan
Plan sale or refinance without assuming either is guaranteed. Start your financing plan →
Smart home financing starts with strategy
Key financial metrics & terms
- ARV — After-repair value
- Estimated market value after the planned renovations. Support it with comparable renovated sales and an appropriate valuation. ARV is an estimate, not a guaranteed sale price.
- LTC — Loan-to-cost
- Total committed loan divided by eligible purchase and renovation costs. Ask which costs count: financing fees, carrying costs and contingencies may be excluded.
- LTV — Loan-to-value
- Loan amount compared with the property’s current as-is value. Compare the purchase advance with as-is value, and separately compare the full commitment with ARV.
- Points
- Upfront fees expressed as a percentage of the loan amount. One point equals 1%; two points on $300,000 equal $6,000. Confirm the calculation base and compare points alongside interest, document fees, inspections and extension costs.
- Draw schedule & renovation holdback
- Repair funds reserved for approved work and released through draws. Reimbursement can require you to pay for labor and materials first, document completed work and pass an inspection. Verify timing, fees, lien waivers and any funds retained until completion.
- Interest-only payments
- Payments covering interest without reducing principal. Ask whether interest applies to the funded balance or the full commitment, including undisbursed repairs.
- Balloon payment & maturity
- The remaining principal and amounts owed become due at contractual maturity. A sale can repay the loan earlier; a delayed sale does not automatically move the due date.
Loan terms: compare the complete structure
The term sheet should fit your project. These are items to compare and verify, rather than universal rates or approval thresholds.
| Financing item | What to compare |
|---|---|
| Loan duration | Match maturity to renovation, marketing and closing time, with a buffer. The example below uses 12 months; a 6–24 month range is not a universal program standard. |
| Rate & payments | Request project-specific pricing. Compare fixed or variable interest, the balance charged, minimum interest and early-payoff rules. The example uses 12%, not an advertised rate. |
| Down payment & leverage | Compare purchase advance, eligible LTC and ARV caps together. Cash contribution is not necessarily a flat 10–20% of the purchase price. |
| Repair funding | Some structures may fund the full approved repair budget, subject to total leverage limits. Confirm draws, inspections and excluded work. |
| Credit & experience | Credit, completed projects and project complexity affect options. A 680 score is not a universal minimum or a promise of optimal pricing. |
| Cash reserves | Include cash to close, repair funds before reimbursement, carrying costs and contingency. A 4–6 month cushion is a planning target, not a universal lender rule. |
| Fees & guarantees | Review points, valuation, legal/document charges, draw fees, extensions and personal guarantees in writing. |
See how the financing works
Illustrative project — not a borrower story, loan offer or profit forecast. Purchase for $300,000, budget $60,000 for repairs and estimate a $450,000 resale value. Assume a $270,000 purchase advance plus a $60,000 repair holdback: a $330,000 commitment. That is 90% of purchase price, 91.7% LTC on $360,000 of eligible costs and 73.3% of ARV. As-is LTV is 90% only if the as-is valuation is also $300,000.
Assume a 12-month interest-only loan at 12% with two points ($6,600). All repairs are drawn at the start of month four, interest applies only to funded balances and the base-plan sale closes at the end of month six. Real draws, fees and day-count calculations will differ. Explore the tabs below.
Estimated project margin before taxes: $35,400.
- Sale proceeds: $450,000
- Purchase + renovation: $360,000
- Interest: $18,000 ($2,700 × 3 months + $3,300 × 3 months)
- Origination: $6,600; other financing, closing and draw costs assumed: $3,000
- Taxes, insurance, utilities and carrying costs assumed: $5,000
- Selling costs assumed: $27,000 (6% of sale price)
- Total modeled costs: $419,600
The $330,000 funded principal must be paid off at sale. It is not subtracted a second time from profit because purchase and renovation costs are already included above. No income taxes or separate compensation for your own labor are included.
Estimated project loss before taxes: $12,650.
Assume repairs cost $9,000 more, the sale price falls 5% to $427,500 and closing takes three extra months. Add $9,900 of interest on the $330,000 funded balance and $3,000 of carrying costs. Selling costs fall to $25,650.
Total modeled costs become $440,150, producing a $12,650 loss. The extra repairs come from your cash; additional financing is not assumed. This remains within the assumed 12-month term, so no extension fee is included.
A reasonable base margin can disappear when cost, timing and resale assumptions move together. Test all three before committing.
Financed repairs still require liquidity. The purchase equity contribution is $30,000. Assumed points and other financing/closing costs add $9,600. If a $15,000 work phase must be paid before reimbursement, you need that temporary cash too, plus carrying costs and contingency.
Maximum allowable offer: target resale proceeds − selling costs − repairs − financing costs − carrying costs − contingency − target profit.
Using $450,000 resale, $27,000 selling costs, $60,000 repairs, $27,600 financing/closing costs, $5,000 carrying costs, a $6,000 contingency and $30,000 target profit produces a $294,400 preliminary offer ceiling. Recalculate financing costs as price changes. This is a budgeting framework, not a property valuation.
Protect cash flow between closing and the final draw
Ask for draw rules before signing. Who pays the contractor initially? What documentation and inspections are required? Are materials on site eligible, or only installed work? What happens when a change order exceeds the approved scope? The financing needs to work with how your contractor expects to be paid.
Allow time for permits, inspections, ordering lead times and marketing. Confirm appropriate renovation insurance and whether coverage changes as the property becomes vacant or construction begins. Keep taxes, insurance and required payments current.
We compare financing structure and costs so a low headline rate does not distract from an expensive draw process, too little cash at closing or a maturity date the project cannot realistically meet.
Your action plan for a stronger project
- Run the numbers. Support ARV with comparable sales, prepare a line-item repair budget and include contingency, selling, financing and carrying costs in your offer ceiling.
- Prepare the project file. Bring the address, contract or proposed price, scope of work, bids, timeline, permit requirements, bank statements and past project details. For an LLC, prepare entity and ownership documents. Entity requirements and personal guarantees vary.
- Review financing before committing. We can compare the purchase advance, repair holdback, cash required and exit conditions. Ask our team about a project-specific prequalification or financing letter. It is not cash proof of funds or final loan approval.
- Coordinate repairs and draws. Agree on phases, track invoices and document completed work. Plan for inspection and reimbursement delays. Obtain approval for changes before assuming they will be funded.
- Manage the exit against maturity. Leave time for listing, buyer financing and closing. For a rental refinance backup, review rent, value, seasoning, property condition and qualification early. Extensions and refinancing require approval.
Tell us about your fix-and-flip project: is this your first project, or do you have completed renovations? Do you have a target property and repair budget? We can use those details to plan your next step.
If a rental exit is possible, compare our Investment Property Loans guide. The FDIC’s lending overview explains acquisition, development, construction and income-property financing; your project still needs its own review.
Explore Mortgage Calculators
Compare purchase, refinance and affordability scenarios, then let our team help turn the estimate into a financing plan.
Questions worth asking
Some programs consider first-time investors; others require completed projects. We review the scope, contractor, cash reserves and property before identifying a path. A documented, manageable project gives us a stronger starting point.
Plan for equity, closing costs, points, carrying costs and contingency, plus cash before reimbursed draws. We separate the purchase advance from the repair holdback so you can see the timing of each dollar.
Purchase-advance, LTC and ARV limits may apply together; the most restrictive limit can control funding. We compare your proposed loan with eligible costs and valuation rather than assuming an advertised maximum applies.
Interest and carrying costs continue while maturity stays in place. Ask our team to review extension rules, fees and a backup exit before closing. Extensions are not automatic, and delays can eliminate the projected margin.
Possibly, if a new rental loan meets its own value, rent, borrower, condition and seasoning requirements. We can evaluate this early, but project financing does not guarantee a refinance. Bring us expected rent and expenses so we can review the backup plan.
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Plan your next move
Bring your goals and a property address if you have one. Paul Cederholm, mortgage expert and real estate financing strategist, can help you compare the financing choices and plan your next step.
Ready to begin? Start your loan application. Prefer a direct conversation? Call 303-931-6798.
*Information, scenarios, and calculations are for educational and illustrative purposes only—not a loan offer, a commitment to lend, a rate quote or an approval. Programs, costs and qualification requirements depend on the borrower, property, selected lender and current guidelines. Examples are not guaranteed results. Our team can review the details for your situation.
Fix & Flip Project Calculator
Test your acquisition, renovation, financing and sale assumptions before making an offer.
Assumes a constant average balance and simple interest. Real loans use their own funded balance, draw timing, fee basis and accrual method. Closing costs, extensions, taxes and costs not entered are excluded. Estimated profit is not guaranteed.
*Information, scenarios, and calculations are for educational and illustrative purposes only—not a loan offer, a commitment to lend, a rate quote or an approval. Programs, costs and qualification requirements depend on the borrower, property, selected lender and current guidelines. Examples are not guaranteed results. Our team can review the details for your situation. These tools do not replace a Loan Estimate, an underwriting decision, or legal or tax advice. Check all figures before relying on them; Cederholm Mortgage Advisors does not warrant the accuracy or completeness of estimates and, to the extent permitted by law, is not responsible for losses arising from reliance on these tools. This notice does not waive rights that cannot legally be waived.