A gut job can produce the biggest spread on a flip, and it is also the deal lenders look at hardest. Whether yours qualifies comes down to the scope, the team doing the work and whether the after-repair value carries the whole budget.
In short: Yes, LendingStreet finances heavy rehab and gut renovation flips, including projects where the rehab budget is larger than the purchase price. We can finance up to 90% of the purchase and up to 100% of the approved rehab budget, paid in draws after work is completed and inspected, with rates from 9.99% for qualified borrowers. Heavy rehab files get closer review of the scope, the contractor and your experience, and the loan has to fit within the program's ARV limit. Leverage and terms vary by program and by how much structural work is involved.
There is no single cutoff, but lenders usually treat a project as heavy when it goes past cosmetic work into the bones of the house. The bigger the share of the budget that goes to structure and systems, the more scrutiny the file gets.
Heavy does not mean unfinanceable. It means the lender needs more proof that the plan, the budget and the timeline are realistic.
Gut jobs often flip the usual ratio. A $150,000 house with a $200,000 renovation is common in older neighborhoods. Lenders that only look at loan-to-cost on the purchase can struggle with these deals.
The deciding number is usually the total loan against the after-repair value. If comparable sales support the ARV, a rehab-heavy budget can work. Our page on financing when the rehab costs more than the purchase walks through how that leverage is calculated.
Structural, electrical, plumbing and mechanical work almost always needs permits, and some projects need engineer letters or stamped plans. Lenders often ask for permits, or proof they have been applied for, before releasing draws on that work.
Permit timing depends on the city and the scope. Ask the building department about current wait times before you set your schedule, and build that wait into your loan term.
A cosmetic flip might take three or four months. A gut renovation can take eight to twelve, before the house is even listed. With terms typically 12 to 18 months, a heavy rehab leaves less room for permit delays, inspection backlogs or a slow sale.
If you run past maturity, you may be able to extend, often for a fee and only if the loan is current and the project is moving. Options vary by program. The safer path is to pick a term that fits the real schedule and to carry a contingency in your budget.
The paperwork is heavier because the risk is in execution. A clear plan from day one also speeds up draws later.
Experience helps pricing and leverage on every flip, and it matters most on gut jobs. A borrower with several completed heavy renovations will usually see more options than someone on a first project.
First-time flippers can qualify on some programs, often at lower leverage. On a heavy rehab, a first-timer working with an experienced, licensed general contractor is a stronger file than one managing trades alone.
This example is illustrative and not a quote. An investor buys a house for $180,000 with a $220,000 rehab budget and an ARV of $560,000. The loan covers 85% of the purchase ($153,000) plus 100% of the rehab ($220,000), for $373,000, about 67% of ARV. The investor brings a $27,000 down payment.
At a sample rate of 10.75%, with interest on the full balance to stay conservative, interest is about $3,341 a month. The plan is 10 months to sale. The table shows the plan and what happens if permits and inspections add two months.
| Item | 10-month plan | 12 months (2-month delay) |
|---|---|---|
| Sale price | $560,000 | $560,000 |
| Purchase price | -$180,000 | -$180,000 |
| Rehab | -$220,000 | -$220,000 |
| Closing costs (sample) | -$12,000 | -$12,000 |
| Interest | -$33,414.58 | -$40,097.50 |
| Taxes, insurance, utilities ($900 a month) | -$9,000 | -$10,800 |
| Selling costs (7%) | -$39,200 | -$39,200 |
| Estimated profit | $66,385.42 | $57,902.50 |
On a $220,000 budget, draws are the cash flow of the project. Each draw is paid after the work is completed and inspected, so you front each phase and get reimbursed. Plan for the first phase, often demolition and structural work, to come out of your own pocket.
Break the budget into phases that match how the job is actually built, keep dated photos and lien waivers, and request draws as each phase closes out. Our rehab draw process guide covers the steps in detail. Send your scenario and our financing team will review it and come back with 2–3 options.
Yes. We finance gut renovations when the scope, budget and ARV support the loan. Expect closer review of the contractor, permits and your experience than on a cosmetic flip.
Often, yes. We can finance up to 100% of the approved rehab budget, and the total loan is measured against the after-repair value. If comparable sales support the ARV, a rehab-heavy budget can work.
Not always before closing, but lenders often want permits issued, or applied for, before releasing draws on structural, electrical, plumbing or mechanical work. Requirements vary by program.
Terms are typically 12 to 18 months. Pick one that covers permits, construction and time on the market. Extensions may be available, often for a fee, but they are not automatic.
Some programs allow it, often at lower leverage. Working with an experienced, licensed general contractor and showing a detailed scope makes the file much stronger.
Yes. Draws reimburse completed, inspected work, so you or your contractor front each phase. Have enough cash on hand to cover at least the first phase of the job.
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