Buying a run-down property, renovating it, and reselling for a profit sounds simple on paper. The part that trips up most new investors isn't finding the deal, it's figuring out how to finance a fix and flip property before someone else buys it out from under them. Understanding how this type of financing actually works can be the difference between confidently making an offer and watching a good opportunity pass you by.

This guide breaks down what fix and flip loans are, how the approval and funding process works, what lenders typically require, and how rates and terms compare across different fix and flip programs. Whether this is your first project or your fifteenth, you'll walk away knowing exactly what to expect.

What Is a Fix and Flip Loan?

A fix and flip loan is a short-term loan used to purchase and renovate a property with the intent to sell it, usually within six to eighteen months. Unlike a traditional mortgage, fix and flip financing is built around the project timeline rather than long-term homeownership, and it typically covers both the purchase price and a portion of the rehab budget.

How Does a Fix and Flip Loan Work?

Most fix and flip loans are based on the property's after-repair value (ARV) rather than just its current purchase price. A lender evaluates the deal, the purchase price, the scope of renovations, and the projected resale value, then structures a loan that covers a percentage of the purchase and a percentage of the rehab costs. Renovation funds are typically released in draws as work is completed and verified through inspections, which protects both the borrower and the lender as the project moves forward.

Fix and Flip Loan Requirements

Requirements vary by lender, but most fix and flip loan lenders look at a similar set of factors:

• Down payment or equity position, often 10-20% of the purchase price depending on experience and leverage.

• A clear renovation budget and scope of work, since lenders want to see a realistic plan, not just a rough estimate.

• Exit strategy, meaning a believable plan to sell or refinance once renovations are complete.

• Property type and condition, since most rehab fix flip lending focuses on residential properties that can realistically hit their ARV after repairs.

• Investor experience, though many lenders offer first time fix and flip loans with slightly more conservative terms for newer investors.

Credit still matters, but it's typically weighted less heavily than it would be for a conventional mortgage, since the loan is secured by the property itself.

Fix and Flip Loan Interest Rates

Fix and flip loan rates run higher than a conventional 30-year mortgage, generally reflecting the short-term, higher-risk nature of the loan. Rates and points vary based on the lender, the borrower's experience level, and the strength of the deal. When comparing offers, look at the full cost of the loan, rate plus origination points plus any extension fees, rather than focusing on rate alone. A slightly higher rate with lower fees and faster funding can end up costing less over a typical six-month hold than a lower rate with a longer closing timeline.

Types of Fix and Flip Financing

Not every project fits the same loan structure. Here's a look at the most common types of fix and flip funding.

Fix and Flip Rehab Loans

These are the standard fix and flip rehab loans most investors use: financing structured around the purchase price plus a renovation budget, with funds released in draws as work progresses. This is the go-to option for a single project with a defined scope of work.

Fix and Flip Line of Credit

For investors doing multiple deals at once, a fix and flip line of credit offers revolving access to capital rather than a one-time loan tied to a single property. This can streamline financing for active investors who are regularly buying, renovating, and selling.

100 Percent Fix and Flip Financing

Some lenders offer 100 percent fix and flip loans, or a combination of financing plus a portion of rehab costs, for highly experienced investors with a strong track record and a well-underwritten deal. These programs typically come with stricter requirements and are less common than standard leverage structures, but they can be a powerful tool for scaling a portfolio without tying up personal cash in every deal.

How to Finance a Fix and Flip Property, Step by Step

1. Get pre-qualified before you shop for properties, so you know your budget and leverage before making offers.

2. Underwrite the deal yourself first: purchase price, renovation budget, and realistic ARV based on comparable sales.

3. Submit the deal to your lender with your scope of work and timeline.

4. Close and begin renovations, requesting draws as milestones are completed and inspected.

5. List and sell, then repay the loan from sale proceeds, or refinance if your plan shifts.

Fix and Flip Financing for Beginners

If you're new to flipping, look for a lender who offers real guidance through the process, not just capital. The best fix and flip financing for beginners comes with transparent underwriting criteria, a straightforward draw process, and a team willing to walk through your first deal in detail. Starting with a smaller, well-scoped project is usually smarter than jumping into a large rehab on your first deal, since it gives you a chance to learn the draw and inspection process with less at stake.

Fix and Flip Refinance: When the Project Runs Long

Renovations don't always go according to plan. If a project takes longer than expected or your strategy shifts from selling to holding as a rental, a fix and flip refinance into a longer-term loan, such as a DSCR loan, can help you avoid a rushed sale or a costly loan extension. This is a common move among experienced fix and flip investors who want the flexibility to pivot based on market conditions rather than being locked into a short repayment window.

If you're working on a project in South Florida, the team at Bentley Equity Loans, based in Fort Lauderdale, FL, underwrites deals with local market knowledge that helps keep both approval and draw timelines moving. Take a look at our full range of lending services to see current fix and flip programs.

Frequently Asked Questions

What is a fix and flip loan? 

A fix and flip loan is a short-term, asset-based loan used to purchase and renovate a property for resale, typically covering both the purchase price and a portion of renovation costs.

How does a fix and flip loan work? 

Lenders finance the deal based on the property's after-repair value, releasing renovation funds in draws as work is completed and inspected, with the loan repaid once the property sells or refinances.

What credit score do I need for a fix and flip loan? 

Most fix and flip lenders look for a minimum credit score in the mid-600s, though the property's value and the strength of the deal typically carry more weight than credit alone.

Can I get a fix and flip loan with no experience? 

Yes. Many lenders offer first time fix and flip loans, though terms may be slightly more conservative until you build a completed project track record.

How much of the renovation budget will a lender cover? 

This varies by lender and deal strength, but many fix and flip programs finance up to 100% of rehab costs alongside a percentage of the purchase price.

Ready to Finance Your Next Fix and Flip?

Understanding how fix and flip loans work takes the guesswork out of financing your next project, so you can move quickly when the right deal comes along.

Contact Bentley Equity Loans to discuss your project and get a funding estimate, or visit our blog for more insights on fix and flip financing and real estate investment strategy.