Fix and Flip Loans: Everything You Need to Know in 2025
Fix and Flip Loans: Everything You Need to Know in 2025
Fix and flip loans — also called hard money loans, bridge loans, or rehab loans — are short-term financing products designed for real estate investors who purchase distressed properties, renovate them, and sell for a profit. Unlike conventional mortgages, fix and flip loans are underwritten primarily on the property's after-repair value (ARV), not the borrower's income.
How Fix and Flip Loans Work
A fix and flip loan has two components:
- Purchase financing — covers 80–90% of the purchase price
- Rehab financing — covers 100% of the renovation budget, disbursed in draws
The combined loan amount typically cannot exceed 65–75% of the property's after-repair value (ARV). This protects the lender by ensuring there's sufficient equity margin after the renovation is complete.
Example:
- Purchase price: $150,000
- Renovation budget: $60,000
- After-repair value (ARV): $280,000
- Max loan (70% ARV): $196,000
- Purchase loan (90% of $150K): $135,000
- Rehab financing: $60,000
- Total loan: $195,000 ✓ (under 70% ARV)
Fix and Flip Loan Rates in 2025
Fix and flip rates are higher than conventional mortgages because they're short-term, asset-based loans with higher risk profiles:
| Experience Level | Rate Range | Points |
|---|---|---|
| 5+ flips | 9.0% – 10.5% | 1–2 |
| 2–4 flips | 10.0% – 11.5% | 1.5–2.5 |
| First-time flipper | 10.5% – 12.5% | 2–3 |
Rates are typically interest-only during the loan term, which keeps monthly carrying costs low. On a $200,000 loan at 10.5%, the monthly interest-only payment is just $1,750.
Qualification Requirements
Credit score: Most programs require a minimum 620 FICO. Experienced flippers with 680+ get better rates and terms.
Experience: First-time flippers can qualify with strong credit (680+) and adequate reserves. Experienced flippers (3+ completed flips) get the best leverage and rates.
Reserves: Most lenders require 10–15% of the total loan amount in liquid reserves after closing.
Property condition: Fix and flip loans are available for properties in any condition — including those that conventional lenders won't touch (no kitchen, no HVAC, fire damage, etc.).
The Draw Schedule Process
Rehab funds are not disbursed upfront. Instead, they're released in draws as work is completed and inspected:
- Borrower completes a phase of renovation work
- Borrower submits a draw request with photos and invoices
- Lender orders a third-party inspection (typically $150–200)
- Inspector confirms work completion
- Lender releases funds within 2–5 business days
Most lenders allow 3–5 draws over the loan term. Planning your renovation phases around the draw schedule is critical for cash flow management.
Loan Terms and Extensions
Fix and flip loans are typically 12–18 months. Extensions are available (usually 3–6 months) for an extension fee of 1–2 points. Most experienced investors budget for a 12-month term and request an extension only if the market slows or the renovation takes longer than expected.
First-Time Flipper Programs
Many lenders offer first-time flipper programs with:
- Up to 85% of purchase price
- 100% of renovation budget
- No experience requirement
- Mentorship or coaching requirements in some cases
AllApprovedHere.com has first-time flipper programs available in Arizona, California, Washington, Nevada, and Colorado. Get pre-approved today.
Fix and Flip vs. DSCR: Bridge-to-Perm Strategy
Many investors use a bridge-to-perm strategy: finance the flip with a fix and flip loan, then refinance into a DSCR rental loan if they decide to hold the property instead of selling. This gives you maximum flexibility — you can sell for a profit or hold for cash flow depending on market conditions at completion.