Two term sheets with similar rates can cost thousands of dollars apart by the time you sell. The way to compare them is to add up what each loan actually costs over your project.
In short: Compare fix and flip lenders on total project cost, not the headline rate. Add up lender and closing costs, draw fees and interest for your expected hold time, and check whether interest is charged on the full loan or only on funds disbursed. Then compare leverage, draw speed, extension terms, experience rules and how fast the lender can close. The cheapest loan on paper is not the best one if slow draws or a tight term stall your project.
Rate is one line on the term sheet. Underwriting, processing and document fees, title and other closing costs, and draw fees all come out of your profit too.
The method is simple. Estimate how many months you will hold the loan, then add every cost for that period. A loan with a slightly higher rate and lower closing costs can come out ahead on a short flip, and the reverse can be true on a long one.
This detail is easy to miss. Some lenders charge interest on the entire loan amount, including rehab money still held back. Others charge only on funds actually paid out. Practice varies by lender and program.
On a project with a large rehab budget, the difference can be meaningful. Ask each lender directly and get the answer in writing on the term sheet.
Leverage decides how much cash you bring. Look at loan-to-cost on the purchase, how much of the rehab is financed and any cap based on after-repair value. LendingStreet finances up to 90% of purchase price and up to 100% of the rehab budget for qualified borrowers.
Draws decide whether your contractor keeps working. Ask how draws are requested, who inspects, how long reimbursement usually takes and what each draw costs. Extensions matter if your timeline slips. Ask what an extension costs, how long it lasts and what conditions apply.
Put each offer side by side using the same project assumptions. Our compare lenders page and best fix and flip lenders guide can help you build a shortlist.
| Item | What to ask | Why it matters |
|---|---|---|
| Rate | Fixed for the term? Based on experience? | Drives monthly cost |
| Lender and closing costs | Underwriting, processing, doc fees, title | Paid at closing, cuts profit |
| Interest basis | Full loan or disbursed funds only? | Changes total interest |
| Leverage | LTC, rehab percentage, ARV cap | Sets your cash to close |
| Draws | Fee per draw, inspection method, turnaround | Keeps the job moving |
| Term and extensions | Length, extension fee, conditions | Protects you if the project runs long |
| Experience rules | How are past deals counted? | Affects pricing and leverage |
| Closing speed | Realistic timeline from contract to funding | Can win or lose the deal |
| Prepayment | Any minimum interest or exit fee? | Matters on fast flips |
This example is illustrative and not a quote. Both offers are for a $300,000 loan ($240,000 purchase plus $60,000 rehab), held six months. Offer A has a 10.5% rate, sample lender and closing costs of $7,500, four draws at $250 each, and interest on the full loan. Offer B has an 11.25% rate, sample lender and closing costs of $5,500, no draw fees, and interest on disbursed funds, with an average balance of $270,000.
Offer A: interest $15,750 + closing costs $7,500 + draw fees $1,000 = $24,250. Offer B: interest $15,187.50 + closing costs $5,500 = $20,687.50. The higher-rate offer costs $3,562.50 less on this project.
Lenders count experience differently. Some count only completed flips in your name, others count rentals, entity deals or partner projects. That can change your tier, rate and leverage. Ask how they will count your track record before you compare prices.
Speed matters when you are competing for a property. We can close in as little as 10 days when the file is complete, but any lender's timeline depends on title, valuation and how quickly you send documents.
Ask the same questions of every lender so the answers are comparable. Vague answers on draws or extensions are worth a follow-up.
Total cost over your expected hold time, including lender and closing costs, draw fees and interest. Then draw speed, because slow reimbursement can stall a project.
It depends on how long you hold the loan. Closing costs are paid once, so they weigh more on a short flip, while rate matters more the longer the loan stays open. Run both offers over your actual timeline.
No. Some charge on the full loan, others only on disbursed funds. It varies by program, so ask and confirm on the term sheet.
Two or three offers on the same deal is usually enough to see the range. Use identical assumptions so the comparison is fair.
Depending on the program, your loan is funded by LendingStreet or by one of our capital partners; your term sheet names the lender of record.
Speed matters when you are competing for a property, but weigh it against cost, draw terms and extension terms. A fast close followed by slow draws can cost more.
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