An ARV loan looks at what the property will be worth once the work is done, not just what you paid. Here is how the after-repair value limits your loan and how to make sure it holds up.
In short: An ARV loan is a fix and flip loan sized with the property's after-repair value in mind. Most lenders, including LendingStreet, calculate the loan two ways: by cost (up to 90% of purchase plus up to 100% of rehab) and by a maximum percentage of ARV. You get the lower of the two. A strong, well-supported ARV lets the cost-based number stand, while a weak ARV shrinks the loan and raises the cash you bring.
After-repair value, or ARV, is the estimated market value of the property once the planned renovation is complete. It is based on recent sales of similar, updated homes nearby.
Lenders care about ARV because it is the value they would rely on if the project had to be sold. It is the ceiling on how much risk they will take.
Fix and flip loans are first sized on cost. On our programs, that is up to 90% of the purchase price plus up to 100% of the rehab budget, paid in draws.
Then the total is checked against a maximum loan-to-ARV. That limit is set by the program and is commonly somewhere around 70% to 75% of ARV, depending on experience, credit and property type. The loan is the lower of the cost-based amount and the ARV cap.
This example is illustrative and not a quote. Assume a program with a 70% maximum loan-to-ARV. An investor buys a house for $200,000 with a $100,000 rehab budget.
On cost, the loan would be 90% of purchase ($180,000) plus 100% of rehab ($100,000), or $280,000. If the ARV is $380,000, the ARV cap is 70% x $380,000 = $266,000. The loan is $266,000, and the investor covers the $34,000 gap between total cost ($300,000) and the loan, plus closing costs.
If the same house had a supported ARV of $420,000, the cap would be $294,000. The cost-based $280,000 is lower, so it becomes the loan, and the investor brings $20,000 plus closing costs.
| ARV $380,000 | ARV $420,000 | |
|---|---|---|
| Total project cost | $300,000 | $300,000 |
| Cost-based loan (90% / 100%) | $280,000 | $280,000 |
| ARV cap at 70% | $266,000 | $294,000 |
| Final loan (lower of the two) | $266,000 | $280,000 |
| Investor cash, before closing costs | $34,000 | $20,000 |
Your own ARV estimate starts the conversation, but the lender will order or review an independent valuation of the as-completed value. That valuation leans on comparable sales.
The strongest comps are recent, close by, similar in size, bedrooms and lot, and renovated to a similar standard as your plan. A comp from a different school district or a much larger house is easy to challenge.
If the independent ARV comes in below your estimate, the cap drops and the loan may shrink. Your options usually include bringing more cash, renegotiating the purchase price, trimming or adjusting the scope, or providing additional comps for review.
It is better to stress-test your ARV before you are under contract. Run the numbers at a lower value and see if the deal still works.
ARV is not only a lending limit. It is also your expected sale price or the value a refinance lender will look at if you keep the property as a rental.
If you plan to hold, a DSCR refinance after the rehab will be based on the finished value and the rent. A realistic ARV keeps both paths open.
Include the purchase contract, a line-item rehab budget, your ARV estimate with the comps behind it, photos of the current condition and a summary of past projects. Use our ARV calculator to test your numbers first.
Our financing team will check the deal against both the cost and ARV limits and come back with 2–3 options. Loans run from $150K to $5M+.
It is a fix and flip loan where the after-repair value caps the loan amount. The lender sizes the loan on cost, checks it against a maximum percentage of ARV and uses the lower number.
It varies by program. A maximum somewhere around 70% to 75% of ARV is common, with experience, credit and property type affecting where you land.
Not entirely. Our programs cover up to 90% of the purchase and up to 100% of the rehab, and only if the ARV supports that total. You still bring the remaining purchase price and closing costs.
The lender relies on an independent valuation of the as-completed value, based on comparable sales. Your estimate and comps help, but they do not set the number.
The loan may be reduced. You can bring more cash, renegotiate, adjust the scope or submit additional comps for review.
Not exactly. The current, as-is value reflects the property today. ARV is the projected value after the planned work is completed.
2-3 competing quotes from 30+ capital sources. No credit pull. No commitment.
By clicking, you provide express written consent to be contacted by LendingStreet (NMLS #1734316) via SMS, phone, or email, possibly using automated technology, regarding your loan inquiry. Reply STOP to opt out. Consent is not required to obtain services. See our Privacy Policy and Terms.