Purchase and As-Is Value
Review the contract price, current condition, title and a supportable as-is valuation.
Home / Loan Programs / Fix-and-Flip Financing
FINANCING FOR AN INVESTMENT PROJECT
Fix-and-Flip Financing
Fix-and-flip financing may help an experienced or prepared investor acquire, renovate and resell a property. The loan should be evaluated together with the purchase price, construction plan, carrying costs, available cash and exit strategy.
29 years of mortgage experienceProject-focused reviewClear cost and exit analysis
THE SHORT ANSWER
What Is Fix-and-Flip Financing?
A fix-and-flip loan is commonly used to purchase and renovate a non-owner-occupied property intended for resale. It differs from a standard long-term home mortgage because the underwriting considers the renovation scope, project timeline, as-is value, estimated completed value and planned exit.
Structures vary. Some loans combine acquisition and renovation funds, while others require separate sources of capital. Renovation proceeds may be held back and released after inspections confirm completed work.
A profitable-looking spread is only a starting point.Budget overruns, delays, financing costs, market changes and selling expenses can materially change the result.
BUILD THE COMPLETE PROJECT01 02 03 04 05 06
Six Areas That Shape a Fix-and-Flip Review
A sound comparison connects the property, borrower, renovation and exit rather than focusing on a single loan term.
Scope of Work
Use a detailed line-item budget with bids, permits, materials, labor and contingency.
After-Repair Value
The estimated completed value should be supported by the planned improvements and relevant market data.
Borrower Experience
Prior projects, credit, business organization and the ability to manage the work may be reviewed.
Cash and Liquidity
Down payment, reserves, uncovered costs and the ability to absorb delays are part of the analysis.
Exit Strategy
Sale, refinance or another documented plan should be realistic for the property and timeline.
MATCH THE CAPITAL TO THE PLANPURCHASE SIDE RENOVATION SIDE
Acquisition Funds and Renovation Funds Work Together
The exact structure varies, but both sides of the project must be documented and affordable.
Acquire the Property
- Purchase price and as-is value
- Required cash contribution
- Title, insurance and closing costs
- Property eligibility and condition
- Initial reserves and carrying costs
Complete the Business Plan
- Approved scope and budget
- Draw schedule and inspections
- Permits and contractor documentation
- Contingency for unexpected work
- Timeline to completion and exit
MEASURE THE WHOLE INVESTMENT
Do Not Judge the Project by Rate Alone
- Interest and lender charges
- Points, appraisal and inspection fees
- Closing, title and recording costs
- Renovation budget and contingency
- Taxes, insurance, utilities and maintenance
- Brokerage, staging and resale costs
- Time required to finish and sell
- Cash remaining after the transaction
Estimate the Complete Cost
Purchase + Renovation + Financing + Carrying + Selling Costs
This simplified framework is a planning tool, not a promise of profit or completed value.
PROTECT THE EXIT
Build Room for Delays and Changes
A project can change after closing. Review how the plan performs if costs rise, work takes longer or the expected resale price changes.
- Use verified contractor bids and a realistic contingency
- Confirm which costs are eligible for draws and which must be paid in cash
- Understand draw timing, inspection requirements and interest calculations
- Budget for taxes, insurance, utilities and security during construction
- Stress-test the resale price and expected marketing time
- Keep sufficient liquidity for changes and extensions
THE PROJECT PROCESS01 02 03 04
From Property Review to Final Exit
The exact steps vary by lender and project, but a disciplined review generally follows these stages.
Define the Project
Identify the property, improvements, budget, timeline and intended exit.
Review the File
Evaluate experience, credit, liquidity, property documents and contractor information.
Confirm Structure
Compare proceeds, cash required, draws, costs, term and extension provisions.
Renovate and Exit
Complete work, satisfy inspections and execute the sale or refinance plan.
CONTINUE YOUR RESEARCH
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Ready to Review a Fix-and-Flip Opportunity?
Start with the property, purchase price, renovation scope, budget, available cash, experience and planned exit.