What is a fix and flip loan?
A fix and flip loan is short-term financing for investors who purchase a property, renovate it, and resell it for profit. Unlike a conventional mortgage, these loans are underwritten around the property’s after-repair value (ARV) and the deal’s timeline rather than the borrower’s long-term income.
How It Works
- The loan funds both the purchase and renovation costs, often disbursed in draws as construction milestones are completed.
- Underwriting centers on the property’s ARV — its projected market value after renovations — rather than solely its current condition.
- Loan terms are short, typically 6 to 18 months, matching the renovate-and-sell timeline.
- Repayment comes from the sale of the renovated property or from a refinance into longer-term financing if the investor decides to hold and rent instead.
Who Uses This Loan
- Real estate investors buying distressed or undervalued properties
- Contractors and rehabbers who need fast, flexible funding to close quickly
- Investors who don’t want renovation costs tied up in their own cash reserves
- Borrowers who plan to sell within months rather than hold long-term