⚡ The 60-Second Answer
A fix-and-flip loan is short-term leverage for the buy-renovate-sell play: 6-24 month term, 8.5-12% interest-only, 1-3 points, funding 80-90% of purchase and 100% of rehab through draws. You bring 10-20% down plus reserves. The deal qualifies more than you do — which is why beginners get funded and why the 70% rule exists.
How Fix-and-Flip Financing Actually Works
Unlike a 30-year mortgage priced on your income, hard money underwrites the deal: purchase price, rehab budget, and After Repair Value (ARV). The lender's exit is your sale — so they care about margin, not your tax returns. Curious what your deal qualifies for? Get a quote in 48 hours.
1. Acquisition
Lender funds 80-90% of purchase price at closing. You bring 10-20% down plus closing costs (~2-4%). Close in 5-15 days — competitive with cash offers.
2. Rehab Draws
Renovation budget is held in escrow and released in draws (typically 3-5) as work is verified by inspection. You front each phase; the draw reimburses within 24-72 hours.
3. Exit
Sell the property, pay off the loan at closing, keep the spread. Typical hold: 4-9 months. Extensions cost 0.5-1 point per 3-6 months — plan conservatively.
2026 Fix-and-Flip Rates & Terms by Experience Level
| Profile | Rate (Interest-Only) | Points | Max LTC | Max ARV |
|---|---|---|---|---|
| First-time flipper | 10.5-12% | 2-3 pts | 80-85% | 65-70% |
| 1-4 completed flips | 9.5-11% | 2 pts | 85-90% | 70% |
| 5-9 completed flips | 9.0-10% | 1.5-2 pts | 90% | 70-75% |
| 10+ flips / pro | 8.5-9.5% | 1-1.5 pts | 90-100% | 75% |
LTC = loan-to-cost (purchase + rehab). ARV cap is the binding constraint on most deals. Rates assume 620+ credit and LLC borrowing. These tiers are quote-specific — see your actual number before assuming where you land.
Real Deal Math: A $300K ARV Flip, Line by Line
The 70% rule in action on a typical deal:
| Line Item | Amount |
|---|---|
| After Repair Value (ARV) | $300,000 |
| Max offer (70% rule): ($300K × 0.70) − $45K rehab | $165,000 |
| Rehab budget | $45,000 |
| Loan: 85% of purchase + 100% of rehab | $140,250 + $45,000 |
| Cash needed at close (15% + ~3% closing) | ~$30,000 |
| Interest: 10.5% on ~$185K, 6 months | ~$9,700 |
| Points (2% of loan) | ~$3,700 |
| Holding costs (taxes, insurance, utilities) | ~$3,600 |
| Selling costs (6% agent + 1% closing) | ~$21,000 |
| TOTAL COSTS | ~$68,000 |
| Sale proceeds − purchase − rehab − costs | =$67,000 gross profit |
~$67,000 gross profit on ~$34,000 cash deployed in 6 months — before taxes and overruns. That is the pitch. The discipline: every line item above is why the 70% rule exists. Stretch to 75% and a $15,000 surprise (roof, permit delay, price cut) erases the deal.
Get Funded in 5-15 Days — No Tax Returns
Investment-property specialists underwrite the deal, not your W-2. Purchase + 100% rehab draws, LLC-friendly, first-time flippers welcome.
Fast pre-approval • LLC borrowers welcome • No income verification
What Lenders Actually Require (Beginners Included)
✅ What matters
- • The deal: 70-75% max ARV, real contractor bid, solid comps
- • Liquidity: 15-20% of project cost in reserves post-closing
- • Credit: 620+ for best pricing; some lenders go to 580
- • Entity: LLC or corp — personal-name hard money is rare
- • Scope: realistic rehab plan (light cosmetic deals fund easiest)
❌ What usually doesn't
- • W-2 income or employment history
- • Tax returns (no doc on most programs)
- • DTI ratios — irrelevant to deal-secured loans
- • First-timer status — you pay 1-2% more, but you get funded
- • Old credit events 3+ years back (BK/foreclosure)
Fix-and-Flip vs Bridge vs DSCR vs Conventional: Pick the Right Tool
| Loan Type | Rate | Term | Close Speed | Best For |
|---|---|---|---|---|
| Hard money / fix-flip | 8.5-12% | 6-24 mo | 5-15 days | Buy-renovate-SELL |
| Bridge loan | 8-11% | 6-36 mo | 10-21 days | Buy before selling / gap funding |
| DSCR loan | 6.5-8.5% | 30 yr | 14-30 days | Buy-renovate-RENT (the second half of BRRRR) |
| Conventional investment | 6.5-7.5% | 15-30 yr | 30-45 days | Rent-ready properties, W-2 investors |
BRRRR investors stack two of these: hard money for the acquisition + rehab, then a DSCR cash-out refinance to hold it as a rental. Full strategy: the BRRRR financing guide and DSCR loans explained.
The 7 Mistakes That Kill First Flips
- Paying over 70% rule — the margin IS the deal; negotiate the purchase, not the finishes.
- Underbudgeting rehab 20%+ — get a real contractor bid before closing, add 10-15% contingency.
- Ignoring holding costs — $1,500-$2,500/month of interest, taxes, insurance and utilities compounds fast past month 6.
- Wrong comps — ARV must come from renovated sales within 0.5 mile / 6 months, not list prices.
- Over-improving for the block — quartz in a laminate neighborhood returns cents on the dollar.
- No exit plan B — if the flip stalls, can it rent at DSCR parity? Verify before you buy.
- Choosing on rate alone — a 9% lender who funds reliably beats an 8.5% lender who misses your closing date.
Frequently Asked Questions
What is a fix-and-flip loan?▼
A fix-and-flip loan is short-term financing (typically 6-24 months) used to buy and renovate a property for resale. Most are hard money or private-money loans secured by the property itself rather than your income. They fund fast (5-15 days), cover 85-95% of purchase plus up to 100% of rehab, and cost 8.5-12% interest plus 1-3 points. They are designed for speed and leverage — not long holds.
What are hard money loan rates in 2026?▼
2026 hard money rates for fix-and-flip projects run 8.5-12% interest-only, plus 1-3 origination points. First-time flippers see 10.5-12% with 2-3 points; experienced investors (10+ completed deals) get 8.5-9.5% with 1-2 points. LTV caps typically sit at 70-75% of After Repair Value (ARV) or 85-90% of purchase price — whichever is lower.
How much down payment do fix-and-flip loans require?▼
Expect 10-20% of the purchase price as skin in the game — hard money lenders fund 80-90% of purchase and up to 100% of rehab via draw schedules. On a $200,000 purchase + $50,000 rehab: you bring roughly $20,000-$40,000 at closing, then draws fund renovation as work is completed and verified. Some lenders offer 100% financing to proven operators with strong ARV margins.
Can beginners get fix-and-flip loans with no experience?▼
Yes — most hard money lenders fund first-time flippers because the loan is secured by the deal, not your resume. Beginners pay a premium (10.5-12% vs 8.5-9.5%), get lower leverage (80-85% LTC vs 90%), and should expect tighter ARV scrutiny. Requirements that matter more than experience: 15-20% liquidity after closing, 620+ credit (some go lower), a real contractor bid, and a deal with 25%+ margin.
What is the 70% rule in house flipping?▼
The 70% rule: never pay more than 70% of the After Repair Value minus repair costs. On a home worth $300,000 fixed up needing $45,000 in work: max offer = ($300,000 × 0.70) − $45,000 = $165,000. The 30% margin covers closing costs (~4%), financing (~6-8%), holding costs, selling commissions (~6%), and profit. Conservative flippers use 65% in slower markets; aggressive ones stretch to 75% only on fast flips.
How fast can a hard money loan close?▼
Hard money fix-and-flip loans close in 5-15 business days — versus 30-45 for conventional. Fastest lenders fund in 3-5 days when title, insurance, and the rehab budget are clean. That speed is the entire point: it lets investors compete with cash buyers on distressed deals where sellers choose certainty over price.
Do fix-and-flip loans require good credit or income verification?▼
Minimal requirements on both. Most hard money lenders want 620+ credit (pricing improves above 680) and skip income verification entirely — the property's ARV is the underwriting. Bankruptcies or foreclosures 3+ years old are often acceptable. Entity borrowing (LLC) is standard and usually required. What they verify: the deal math, your liquidity, and your contractor plan.
Fix-and-flip loan vs DSCR loan: which do I need?▼
Different tools for different exits. Fix-and-flip/hard money = short-term (6-24 months) for buy-renovate-SELL. DSCR = 30-year financing for buy-renovate-RENT, qualified on rental income not your paycheck. BRRRR investors use both in sequence: hard money to acquire and rehab, then a DSCR cash-out refinance to pay it off and hold the property.
Keep Reading: Investor Financing Series
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