What Is Fix and Flip Loan?
Fix and Flip Loan: A short-term loan to buy and renovate a property for resale, often funding part of the rehab.
Also called: rehab loan, hard money loan
A fix and flip loan is short-term financing, usually 6 to 18 months, for investors who buy a property, renovate it and sell it. Many of these loans also fund a share of the renovation budget.
How it works
- Purchase: the lender funds a percentage of the price, often up to 85% to 90%.
- Rehab: renovation money is held back and released in draws after each phase is inspected.
- Limit: the total loan is usually capped at a share of the after-repair value (ARV), often 70% to 75%.
- Payments: often interest-only, with the balance due at sale.
What lenders look at
The deal itself (purchase price, scope of work, ARV), your experience with past projects, credit and liquidity. Personal income documentation is usually minimal.
Good to know
Rates and fees are higher than long-term mortgages, so speed matters. Some investors refinance into a DSCR loan if they decide to keep the property as a rental.