Investors & Specialty
Fix-and-Flip Loans for Real Estate Investors
Short-term business-purpose financing for eligible investment properties that need repairs, improvements, or renovation before resale or long-term financing.
What Is a Fix-and-Flip Loan?
A fix-and-flip loan is short-term financing designed for investors purchasing or refinancing a non-owner-occupied property that needs renovation. The lender evaluates the borrower, property, renovation plan, projected value, available funds, experience, and exit strategy. Qualification may focus more heavily on the property's current value, estimated after-repair value, project budget, investor experience, and proposed exit plan rather than traditional income metrics.
How Does Fix-and-Flip Financing Work?
The lender reviews the purchase price, current property condition, renovation scope, budget, estimated after-repair value, credit profile, available funds, and exit strategy. Renovation funds are commonly held back and released through draws as completed work is inspected.
What May Be Financed?
- Property Acquisition
- Renovation Costs (eligible labor, materials, repairs, and improvements)
- Closing Costs
- Existing Loan Payoff
- Carrying Costs (interest, taxes, insurance)
- Contingency Funds for unexpected expenses
What Properties May Qualify?
- Commonly Considered: Single-family investment homes
- Commonly Considered: Two- to four-unit residential properties
- Commonly Considered: Townhomes
- Commonly Considered: Condominiums
- Commonly Considered: Properties needing cosmetic repairs
- Commonly Considered: Properties requiring substantial renovation
- Commonly Considered: Vacant or distressed homes
- Commonly Considered: Eligible multifamily properties
- Commonly Considered: Certain mixed-use properties
- Program-Specific or Restricted: Owner-occupied properties
- Program-Specific or Restricted: Properties with major structural issues
- Program-Specific or Restricted: Ground-up construction
- Program-Specific or Restricted: Rural or remote properties
- Program-Specific or Restricted: Condominiums with project concerns
- Program-Specific or Restricted: Properties with environmental issues
- Program-Specific or Restricted: Projects requiring extensive permits or zoning changes
- Program-Specific or Restricted: Properties with incomplete ownership or title issues
Who May Consider Fix-and-Flip Financing?
- Experienced Investors (purchasing or renovating as part of established strategy)
- First-Time Investors (with sufficient liquidity, credit, and credible exit strategy)
- Real Estate Developers (completing renovations and value-add projects)
- Construction Professionals (with renovation or construction experience)
- Rental Investors (renovating before refinancing into long-term financing)
- Distressed-Property Buyers (purchasing REO, foreclosure, auction properties)
Common Fix-and-Flip Exit Strategies
- Sell the Renovated Property
- Refinance Into a DSCR Loan
- Refinance Into Conventional Investment Financing
- Sell to Another Investor
What Determines Your Fix-and-Flip Loan Options?
Available terms depend on:
- Purchase price
- Current property value
- Estimated after-repair value
- Renovation budget
- Scope of work
- Contractor information
- Borrower credit profile
- Investor experience
- Available down payment
- Liquidity and reserves
- Property type
- Property condition
- Loan amount
- Project location
- Construction timeline
- Exit strategy
- Entity structure
- Title and ownership
- Permit requirements
- Lender and state requirements
How Renovation Draws Work
- 1. Budget Approval (lender reviews scope, estimates, timeline)
- 2. Funds Held in Reserve (approved funds retained by lender)
- 3. Work Is Completed
- 4. Inspection or Verification (appraisals, photographs, invoices reviewed)
- 5. Draw Is Released (after approved work stage completion)
Important Fix-and-Flip Loan Considerations
- Rates and Fees May Be Higher
- Interest May Accrue During the Project
- Renovation Funds May Be Reimbursed
- Cost Overruns Are the Borrower's Responsibility
- The After-Repair Value Is Not Guaranteed
- Extensions Can Be Expensive
- Experience Can Affect Leverage
- The Exit Strategy Must Be Realistic
Your Fix-and-Flip Loan Process
- 1. Review the Property and Project
- 2. Estimate the Loan Structure
- 3. Compare Available Programs
- 4. Complete the Application and Valuation
- 5. Close and Begin the Draw Process
- 6. Complete the Exit Strategy
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Frequently Asked Questions
A fix-and-flip loan is short-term business-purpose financing for an eligible non-owner-occupied property that will be renovated and then sold or refinanced.
Yes, many programs finance eligible acquisition and renovation costs. The approved renovation funds are generally held and released through draws.
Not always. Some programs permit first-time investors, although experience can affect leverage, pricing, reserves, and loan terms.
The required contribution varies based on the purchase price, current value, after-repair value, credit, experience, project type, and lender.
After-repair value, or ARV, is the appraiser's estimate of the property's value after the proposed renovation is completed.
Some programs focus more heavily on the project and borrower liquidity than on traditional income documentation.
Renovation funds are commonly released in draws after completed work is inspected or otherwise verified.
Possibly. Contractor licensing, insurance, experience, references, estimates, and other requirements may apply.
Some programs allow borrower-completed work, while others require licensed third-party contractors.
Potentially. Eligibility depends on the completed property, rental income, appraisal, seasoning, credit, loan-to-value, reserves, and DSCR lender requirements.
No. These are generally business-purpose loans for non-owner-occupied investment properties.
Terms are generally short and designed to cover the renovation and exit period. Exact terms and extension options vary by lender.
The borrower is generally responsible for expenses beyond the approved loan and renovation budget.
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