Fix & Flip Loan Requirements Explained

Fix-and-flip loans are short-term financing for the purchase and renovation of a distressed investment property. The lender funds the acquisition and the rehab together, releases rehab funds in draws as work is verified, and expects the investor to exit — by selling or refinancing — within 6 to 18 months.

Three numbers drive every fix-and-flip loan. ARV (after-repair value) is what the property will be worth once renovated. LTV (loan-to-value) is the loan as a percentage of ARV — most direct lenders cap this around 85%. LTC (loan-to-cost) is the loan as a percentage of total project cost (purchase plus rehab) — often capped near 90%. The lower of the two governs your max loan.

Beyond the numbers, lenders review your rehab scope and budget, your contractor (or owner-builder track record), and your exit plan. A credible, itemized budget and a qualified general contractor do more for your approval than almost anything else.

Draws are where good projects stay on track. Rehab funds release in stages — demo, framing/rough, drywall, finish, final — as inspections clear. That keeps your contractor paid on schedule and your budget honest, and it protects both you and the lender from a half-finished renovation.