What Is a Fix and Flip Loan? #

A fix and flip loan is a short-term financing solution designed for investors who buy properties, renovate them, and sell them at a higher price. Unlike traditional mortgages that are based on the current condition of a home, these loans are structured around the property’s after-repair value, or ARV.

That means the lender considers what the property will be worth once renovations are complete.

This type of loan is ideal for properties that wouldn’t pass conventional underwriting due to condition, age, or required repairs.

For investors, that means access to opportunities in the distressed property market that other buyers can’t touch.

Whether it’s a single-family home in need of cosmetic upgrades or a multi-unit property requiring major repairs, a fix and flip loan provides the speed and flexibility needed to act quickly.

How a Fix and Flip Loan Works #

Fix and flip loans are short-term, usually lasting six to twelve months. Payments are often interest-only, which helps investors manage carrying costs while renovations are underway. Loan amounts are calculated using the purchase price, renovation budget, and projected ARV.

Many programs fund up to ninety percent of total project cost or seventy-five percent of ARV. Because they are asset-based, approval does not rely heavily on personal income documents like W-2s or tax returns. Lenders focus more on the numbers of the deal and the investor’s plan.

Why Investors Use Fix and Flip Loans #

Investors use fix and flip loans to access opportunities in distressed or outdated properties that banks typically avoid. These loans allow buyers to act quickly, which is important in competitive markets.

They also free up capital so investors can take on more than one project at a time. By leveraging financing rather than tying up all of their own cash, investors can scale their business and increase returns.

Summary #

The primary draw is speed and flexibility. In competitive real estate markets, being able to close quickly can be the difference between securing a high-potential property and losing it to another buyer. For distressed or outdated properties, a fix and flip loan can bridge the gap between acquisition and profitable resale.

A fix and flip loan is a short-term, asset-based tool that funds both the purchase and renovation of an investment property. When used strategically, it allows investors to move quickly, complete renovations, and maximize profits on resale.