A fix and flip loan pays for most of the purchase and the renovation, then gets paid off when you sell or refinance. Here is how each stage works, from signed contract to payoff.
In short: A fix and flip loan is a short-term, business-purpose loan secured by the property you are renovating. The lender funds part of the purchase at closing and holds the rehab money back, releasing it in draws after work is completed and inspected. You usually pay interest only each month, with terms typically 12 to 18 months. The loan is repaid in one payment when you sell the property or refinance it into a long-term rental loan.
Most flips follow the same path. The order matters, because each step depends on the one before it.
Getting the financing team involved before you sign a contract, or right after, gives you the most room to adjust the numbers.
A fix and flip loan has two parts. The first is the purchase portion, funded at closing. LendingStreet finances up to 90% of the purchase price (loan-to-cost) for qualified borrowers, so you bring the rest plus closing costs.
The second part is the rehab holdback. We can finance up to 100% of the approved rehab budget, but that money is not handed over at closing. It sits in reserve and is released in stages as work gets done. Most programs also cap the total loan at a percentage of ARV, so the after-repair value has to support the deal.
You or your contractor pay for a phase of work, then request a draw. An inspector, often a third party, visits or reviews photos to confirm the work is done. Once approved, the lender reimburses that line item.
Because draws come after the work, you need cash to front at least the first phase. Clear line items, dated photos and a realistic budget keep draws moving. Our rehab draw guide covers the process in detail.
Rates on our fix and flip loans start at 9.99% for qualified borrowers and move with the market, experience and leverage. Payments are usually interest only, so your monthly cost depends on how much of the loan is outstanding.
Some lenders charge interest on the full loan from day one, and others only on funds actually disbursed. It varies by program, so ask. Terms typically run 12 to 18 months, which gives a typical flip room for permits, delays and time on the market.
The classic exit is a sale. At closing, the title company pays off the loan from the sale proceeds, and you keep the rest after selling costs.
If the numbers work better as a rental, you can refinance into a DSCR loan instead, which qualifies on the property's rent rather than your income. See how to refinance hard money to DSCR, or plan for it from the start with a fix to rent loan.
This example is illustrative and not a quote. An investor buys a house for $300,000 with an $80,000 rehab budget and an expected ARV of $480,000. The loan covers 85% of the purchase ($255,000) plus 100% of the rehab ($80,000), for a total of $335,000, about 70% of ARV. The investor brings a $45,000 down payment.
At a sample rate of 10.5%, and assuming interest on the full balance to stay conservative, interest is about $2,931 a month, or $17,587.50 over six months. The project sells at $480,000 and the investor nets about $34,500, as shown below.
| Item | Amount |
|---|---|
| Sale price | $480,000 |
| Purchase price | -$300,000 |
| Rehab | -$80,000 |
| Closing costs (sample) | -$10,700 |
| Interest, 6 months | -$17,587.50 |
| Taxes, insurance, utilities ($600 x 6) | -$3,600 |
| Selling costs (7%) | -$33,600 |
| Estimated profit | $34,512.50 |
| Cash invested (down payment, closing costs, interest, holding) | $76,887.50 |
Lenders want to see the deal and the borrower. Having these items ready helps you close in as little as 10 days.
Send the scenario and our financing team will review it and come back with 2–3 options.
Yes. We can finance up to 100% of the approved rehab budget. It is held back at closing and paid in draws after each phase of work is completed and inspected.
With up to 90% of the purchase financed, you bring at least 10% of the price plus closing costs. Many borrowers, especially first-time flippers, see lower leverage and bring more.
Usually yes, interest-only payments. Whether interest is charged on the full loan or only on drawn funds varies by program.
You may be able to extend, often for a fee and if the loan is current, or refinance into a bridge or DSCR loan. Options vary by program.
Some programs finance first-time flippers, often at lower leverage. Experience helps pricing and leverage, so list any past projects you have.
Yes. Many investors refinance into a DSCR loan once the rehab is done and the property is rented, which pays off the short-term loan.
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