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.
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.
Answers to common questions about fix and flip financing.
Because these loans are asset-based and don’t rely on lengthy income verification, they can often close significantly faster than a conventional mortgage - frequently within days to a couple of weeks.
Most fix and flip loans finance both the purchase price and a portion of renovation costs, typically released in draws as work is completed and inspected.
After-repair value (ARV) is the estimated market value of the property once renovations are complete; lenders use it, rather than the current “as-is” value, to determine how much they’ll lend.
Options depend on the lender, but can include a short extension or refinancing into a longer-term loan - this is worth clarifying with the lender before the deal closes.
