The Basic Structure
A fix & flip loan typically funds up to 90% of the purchase price plus 100% of the rehab budget, capped at a percentage of the ARV (After Repair Value) — usually 70–75%.
Term is short: 6 to 18 months, interest-only, with no prepayment penalty. Exit is either a sale or refinance into a long-term DSCR loan.
ARV: The Number That Matters
ARV is what the property will be worth after renovations are complete. The lender orders an appraisal or BPO that values the property "as if repaired" using comparable sales. Maximum loan size is constrained by both LTC (loan-to-cost) and LTARV — whichever is lower.
How Rehab Draws Work
The rehab budget doesn't fund at closing. It sits in a holdback account and releases in draws as you complete work.
- You complete a phase of work (e.g., demo + framing).
- You request a draw with photos and an inspector visit.
- Funds release within 24–72 hours.
Plan working capital to front each phase before reimbursement.
What Lenders Underwrite
- The deal: purchase price, scope of work, ARV, comps.
- The borrower: credit score (usually 660+), liquidity, and flip experience.
- The exit: realistic sale timeline or refinance plan.
Speed Is the Whole Point
Investor-focused private capital closes in 7–14 days on clean files. That speed is often what wins competitive deals. For more on the speed advantage, see private money vs bank financing for investors.