Fix and flip investing is one of the most popular real estate strategies in the US — and for good reason. Buy distressed, renovate, sell at a profit. But none of it works without the right financing. This guide covers everything you need to know about fix and flip loans in 2026, from how they work to how to qualify.
What Is a Fix and Flip Loan?
A fix and flip loan is a short-term bridge loan that covers both the purchase price and the renovation costs of an investment property in a single loan. Unlike conventional mortgages — which only fund the purchase — fix and flip loans are structured around the deal's economics: the after-repair value (ARV) and the total project cost.
Key features of fix and flip loans:
- Short terms: 6–18 months
- Up to 90% of purchase price and 100% of rehab costs (for experienced investors)
- Interest-only payments during the term
- Rehab funds released in draws as work is completed
- Based on ARV, not just current as-is value
- Close in 5–10 business days
How Fix and Flip Loans Work
Fix and flip loans have two components baked into one loan:
- Acquisition portion: Funds the purchase. Disbursed at closing, similar to a standard bridge loan.
- Rehab portion (draw facility): Funds renovation in stages. You draw money as work is completed and verified by an inspector.
Here's a simple example. You purchase a distressed home for $200,000 with $80,000 in planned renovations. The ARV is $380,000.
- Acquisition loan: $180,000 (90% of purchase)
- Rehab facility: $80,000 (drawn in stages)
- Total loan: $260,000 against a $380,000 ARV = 68% LTARV ✅
- Your out-of-pocket: $20,000 (10% of purchase) + closing costs
Running the Numbers: ARV, MAO, and ROI
Before applying for fix and flip financing, you need to know three numbers:
1. ARV — After Repair Value
The estimated market value of the property after all renovations are complete. Use comparable sales (comps) from the last 6 months within ½ mile. Be conservative — lenders will order their own appraisal.
2. MAO — Maximum Allowable Offer
The most you should pay for the property. The classic 70% Rule:
MAO = (ARV × 70%) − Rehab Costs
Example: ARV $380,000 × 70% = $266,000 − $80,000 rehab = $186,000 MAO. Don't pay more than this.
3. ROI — Return on Investment
Estimated profit ÷ total invested capital:
- Gross profit: $380,000 (sale) − $200,000 (purchase) − $80,000 (rehab) − $25,000 (holding costs, closing, agent) = $75,000
- Capital invested: $20,000 (down payment) + $12,000 (interest payments) + $13,000 (closing costs) = $45,000
- ROI: $75,000 ÷ $45,000 = 167% — excellent deal
How to Qualify for a Fix and Flip Loan
Fix and flip loans are asset-based, meaning lenders focus on the deal more than your personal finances. That said, here's what most lenders look at:
| Factor | Typical Requirement |
|---|---|
| Minimum Credit Score | 620+ (some lenders go lower with more equity) |
| Down Payment | 10–20% of purchase price |
| Experience | First-timers accepted with strong purchase discount |
| ARV LTV | Under 70–75% of ARV |
| Rehab Budget | Detailed scope of work with contractor bids |
| Income Verification | Not required at most bridge lenders |
Understanding the Draw Schedule
Your rehab budget isn't handed over in one lump sum. It's released in draws — typically 3 to 5 draws tied to construction milestones. Here's how a typical draw process works:
- You submit a draw request when a phase of work is complete (e.g., demolition, framing, rough-in mechanicals)
- An inspector visits the property (usually within 48 hours) to verify the work is done
- Funds are wired within 24–48 hours of inspection approval
- You pay contractors and move to the next phase
Pro tip: Line up your contractors before closing. Delays in renovation extend your holding period and increase your interest cost.
5 Mistakes New Fix and Flip Investors Make
- Underestimating rehab costs. Add a 15–20% contingency buffer to every rehab budget. Surprises always happen.
- Overestimating ARV. Use conservative comps. A sale price $20,000 lower than expected can turn profit into loss.
- Ignoring holding costs. Interest, taxes, insurance, and utilities add up fast. Budget 6–12 months even if you plan to sell in 4.
- Not having an exit strategy. Know before you buy: will you sell retail, wholesale, or refinance into a rental? Lenders ask this question.
- Choosing a slow lender. If your lender can't close in 10 days, you'll lose competitive deals to cash buyers. Speed is leverage.
How to Apply for a Fix and Flip Loan at BridgeLoans
Our fix and flip loan application takes about 10 minutes. Here's what you'll need:
- Property address and purchase price
- Your rehab budget and scope of work
- Your ARV estimate and comps
- Your experience level (first flip or experienced)
- Your desired loan amount
We issue a term sheet within 24 hours and can close in 5–7 business days after full document submission.
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Up to 90% of purchase · 100% of rehab · Close in 5–7 days
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