Fix and Flip Financing: A Guide for Real Estate Investors
Fix and flip financing is not a mortgage with a shorter term. It is a different instrument, underwritten on a different question: not what the property is worth today, but what it will be worth once you have finished with it — and whether you are the person who can get it there.
How the money is structured
A flip loan is usually two amounts in one facility.
The purchase portion funds acquisition, released in full at closing.
The rehab portion funds the work — and it is not released at closing. It sits with the lender and is paid out in stages as work is completed and verified.
This catches first-time flippers repeatedly. You do not receive the renovation budget up front. You spend your own money on the first stage of work, request a draw, wait for the inspection, and get reimbursed. Then you repeat that for every stage.
Which means you need genuine working capital beyond your down payment. An investor who budgets to the last dollar of the loan discovers mid-project that they cannot fund the work that unlocks the next draw — and a stalled project with an accruing short-term loan is the worst position in this business.
Leverage is measured against cost, not value
Residential lending talks in loan-to-value. Flip lending mostly talks in loan-to-cost — the percentage of your total project spend, purchase plus rehab, that the lender will fund.
A second constraint usually sits alongside it: a cap on after-repair value, the appraised worth once the work is done. Your loan has to satisfy both tests, and whichever binds first is the one that decides your number.
Published market figures currently run up to around 95% of cost at the top of the range, with that ceiling reserved for experienced sponsors on strong deals. Current ranges across every program we place, with sources, are on the rates page.
What the lender is actually checking
- The scope of work. A line-item budget, not a total. Vague scopes get conservative valuations.
- The after-repair value. Supported by comparable sales, not by your expectations. This figure is the whole deal, and a lender will always take the appraiser’s view over yours.
- Your track record. How many projects you have completed, and whether they resembled this one. Experience moves leverage and pricing more than credit does.
- Your liquidity. Enough cash to carry the project between draws and cover the holding costs.
- The exit. A sale, with a realistic timeline — or a refinance if you intend to keep it, which is a different plan and should be declared up front.
- Credit. It matters, but as one input. A strong asset and a real track record can carry a weaker file, and the reverse is also true.
The costs people underestimate
Points, not the rate. On short-term debt, points move the real annualised cost far more than the headline interest rate. Three points on a nine-month project is three percent of the loan on top of the interest, compressed into three quarters of a year. Compare offers on total cost over your actual expected hold, not on the rate.
Holding costs. Interest, taxes, insurance and utilities run every month the property is not sold. Projects overrun. Budget for the overrun rather than the plan.
Extension fees. If the loan matures before you sell, extending is rarely free. Ask what an extension costs before you need one, because your negotiating position is considerably worse afterwards.
The exit that becomes a hold. If the property does not sell and you decide to rent it instead, you need a takeout — typically a DSCR loan qualified on the rent. That refinance has its own seasoning requirements and, frequently, its own prepayment penalty. Plan the second loan before you need it.
Where we fit
Easy Lending USA is not a lender, a bank or a mortgage broker, and we do not approve, price or fund anything. We are a referral service that introduces real estate investors to independent private lenders, and we are compensated by the lender when a transaction closes. There is no application fee and no upfront fee of any kind.
The terms you are offered are set by whichever lender underwrites your file. What we can do is tell you whether the deal is in range and route it to lenders who actually place this profile. The fix and flip program page has the structures, and if you have a specific property, send it over.