Fix-and-flip investing can be highly profitable, but success depends on securing the right financing. Unlike traditional mortgages, flip loans are short-term products designed to fund both the purchase and renovation of a property, with the expectation that you'll sell within 6-18 months.
Types of Fix-and-Flip Financing
Hard Money / Bridge Loans The most common financing for flips. These loans are asset-based, meaning the lender cares more about the property's value (both as-is and after-repair) than your personal income. Typical terms include 12-18 month durations, interest-only payments, and funding for both purchase and renovation costs.
Fix-and-Flip Specific Programs Many lenders offer dedicated flip programs with streamlined processes. These typically fund up to 85-90% of the purchase price and 100% of the renovation budget (up to a certain percentage of the after-repair value, or ARV). The total loan amount usually can't exceed 70-75% of the ARV.
DSCR Loans for the BRRRR Strategy If you plan to Buy, Rehab, Rent, Refinance, and Repeat (BRRRR), you'll use short-term financing for the purchase and rehab, then refinance into a long-term DSCR loan once the property is stabilized and rented.
What Lenders Look At
Fix-and-flip lenders evaluate your deal based on:
- After-Repair Value (ARV): What the property will be worth after renovation. This is the most important number.
- Purchase price: How much below market value you're buying.
- Renovation budget: Your detailed scope of work with contractor bids.
- Experience: First-time flippers can still get funded, but experienced investors get better terms.
- Exit strategy: How and when you plan to sell or refinance.
Structuring Your Deal
A well-structured flip typically looks like this: purchase at 65-75% of ARV, renovation costs of 15-25% of ARV, and a target profit margin of 10-15% after all costs (purchase, rehab, financing, holding costs, and selling costs).
The Broker Advantage
Fix-and-flip financing varies dramatically between lenders — rates, leverage, draw schedules, and extension options all differ. As a broker, SiFi Lending shops multiple bridge and hard money lenders to find the best terms for your specific project. Whether it's your first flip or your fiftieth, we can help structure the financing.
Have a property in mind? Explore our fix-and-flip financing programs or submit your deal for a quick quote.
Simonich Financial, Inc. dba SiFi Lending | NMLS #2563307 | Licensed Mortgage Broker | Equal Housing Opportunity. SiFi Lending arranges financing through third-party lenders and does not make direct loans. This article is for informational purposes only and does not constitute a commitment to lend or a guarantee of any specific terms. All loan programs are subject to borrower qualification, credit approval, and property eligibility.