Question 1

How is fix-and-flip funding different from a traditional mortgage?

Accepted Answer

Traditional mortgages are long-term loans underwritten on borrower income and credit, designed for properties in move-in condition. Fix-and-flip funding is short-term (typically 6–18 months), underwritten primarily on the property's after-repair value (ARV) and the investor's track record, and is designed specifically for properties that require renovation before they can be sold or refinanced. Traditional lenders routinely decline fix-and-flip scenarios because the property does not meet standard habitability or valuation requirements at the time of purchase.

Question 2

What is ARV and how does it affect my loan amount?

Accepted Answer

ARV stands for after-repair value — the estimated market value of the property after renovations are complete. Most fix-and-flip lenders size loans as a percentage of ARV (commonly 65–75%) rather than a percentage of the purchase price. This means a property purchased for $120,000 with an ARV of $220,000 might support a loan of $143,000–$165,000 at 65–75% LTV, which covers the purchase and some or all of the renovation costs. ARV is typically established by an independent appraisal.

Question 3

What does "draw-based" renovation funding mean?

Accepted Answer

Draw-based funding means renovation funds are disbursed in stages as work is completed rather than all at once at closing. A lender holds the full renovation budget in reserve and releases funds in draws — typically tied to inspection milestones such as "foundation complete," "rough-in complete," "drywall complete." This structure protects both the lender and the investor by ensuring funds track completed work rather than being disbursed speculatively.

Question 4

How quickly can fix-and-flip funding close?

Accepted Answer

Closing timelines vary by lender and deal complexity. Experienced fix-and-flip lenders commonly close in 7–14 business days for straightforward acquisitions with complete documentation. Speed depends on title clearance, appraisal scheduling, documentation completeness, and borrower responsiveness. When a deal requires faster closing (10 days or less), some lenders offer expedited processing, typically with an associated fee. We recommend contacting us early in the deal pipeline to discuss timing.

Question 5

Do I need experience as a real estate investor to qualify?

Accepted Answer

Experience matters but first-time investors are not automatically disqualified. Lenders typically tier their terms based on track record — investors with a documented history of completed flips receive more favorable LTV and rate terms than first-time investors. A first-time investor with strong credit, significant liquidity, and a well-scoped deal may still qualify, sometimes with a lower LTV cap or additional reserve requirements. Discussing your background early in the conversation helps identify what structure makes sense for your situation.

Question 6

What happens if my renovation runs over budget or the sale takes longer than expected?

Accepted Answer

Cost overruns and extended timelines are the most common risks in fix-and-flip projects. Most fix-and-flip loans allow a single extension (typically 3–6 months) for a fee. If a project experiences significant cost overruns beyond the original renovation budget, additional funds may be available through a supplemental draw request, subject to updated underwriting. It is critical to build a realistic contingency into your renovation budget — typically 10–15% of hard costs — before finalizing your funding request.

Question 7

Can I use fix-and-flip funding for multi-family or mixed-use properties?

Accepted Answer

Yes, though underwriting and LTV criteria differ from single-family residential. Multi-family (2–4 units) is commonly funded by fix-and-flip lenders. Larger multi-family (5+ units) and mixed-use properties typically fall under commercial bridge loan programs, which have different underwriting standards. The deal structure — short-term, renovation-focused, exit via sale or refinance — remains similar, but property type affects which product and which lender criteria apply. Contact us to discuss the specific property type you are evaluating.

Question 8

What documentation is typically required?

Accepted Answer

Standard documentation for a fix-and-flip loan evaluation includes: purchase contract or executed HUD/closing disclosure, scope of work and renovation budget (line-item), contractor information and licensing documentation, recent bank statements or proof of liquidity for down payment and reserves, entity documents (if purchasing through an LLC or corporation), and a real estate schedule or track record (for investors with prior flips). A property appraisal or broker price opinion (BPO) establishing ARV is also typically required, often ordered by the lender.

Fix-and-Flip Funding

What Is Fix-and-Flip Funding?

How Fix-and-Flip Funding Works

Discuss the Deal

Underwriting & Term Sheet

Closing

Draw Disbursements

Exit — Sale or Refinance

What We Evaluate

When This Is Not the Right Product

Typical Timeline: From Contact to Closing

Frequently Asked Questions

Discuss Your Next Deal