Fix & Flip Financing Explained

Fix and flip deals live and die on speed and margin. The financing behind them is built for exactly that — short timelines, purchase-plus-rehab budgets, and an exit through resale.

What a fix and flip loan covers

Most fix and flip loans fund two things:

• The purchase price of the property
• The renovation budget, released in draws as work is completed

Lenders typically size the loan against the property's after-repair value (ARV) — what it should be worth once the renovation is done — rather than just the current purchase price.

Typical structure

Fix and flip loans are usually short-term, often 6 to 18 months, with interest-only payments. Because the timeline is short, rates are typically higher than a conventional mortgage, but the loan is designed to be paid off quickly when the property sells.

What lenders look at

• The purchase price relative to ARV
• A realistic renovation scope and budget
• Your track record with similar projects
• Comparable sales in the neighborhood
• Your exit strategy and timeline

First-time investors can still get funded — a solid plan, a good contractor, and a conservative budget go a long way.

Three mistakes to avoid

1. Underestimating the rehab budget. Build in a contingency of at least 10–15%.
2. Ignoring holding costs. Interest, taxes, insurance, and utilities add up every month the property sits.
3. Overestimating ARV. Use recent, nearby comps — not the best house on the block.

Profit is made on the buy and protected by the budget.

Ready to move on a deal?

Submit a quick financing inquiry and tell us about the property. We'll route it to lenders in our network who focus on fix and flip projects. ConstructionLoanZone is a connection service, not a lender, and all funding is subject to lender approval.