The short answer
Fix-and-flip loans fund both the purchase and the renovation, usually as a hard money loan at 10-14% plus 1-3 points. Lenders commonly cover up to ~90% of the purchase price and 100% of the rehab, capped near 70% of the after-repair value (ARV), over a 6-18 month term. The deal's numbers matter more than your credit score.
By Growth Fund Partners Advisory Team
Commercial financing & fractional CFO advisory specialists
How does fix-and-flip financing work?
A fix-and-flip loan is built around one number: the after-repair value (ARV)— what the property will be worth once renovated. The lender sizes the loan against ARV, releases the purchase money at closing, and holds the renovation budget in reserve, releasing it in draws as you complete the work.
Because it is asset-based and short-term, it funds fast and does not depend heavily on your personal income — but you carry interest for the whole hold, so a realistic timeline and budget are everything.
The 70% rule in action
A worked example on a typical starter flip:
After-repair value (ARV)
$300,000
Max lend (70% of ARV)
$210,000
Renovation budget
$50,000
Target purchase price
$160,000
70% of the $300,000 ARV is $210,000. Subtract the $50,000 rehab budget and your maximum purchase price is $160,000 — the margin left over absorbs financing costs and your profit.
The fix-and-flip process, step by step
Find the deal and run the numbers
Estimate ARV from comparable sales, subtract a realistic rehab budget, and apply the 70% rule to set your maximum purchase price.
Get pre-qualified
A lender confirms how much they will lend against purchase and rehab based on ARV and your plan, so you can make credible offers.
Close and start rehab
Hard money closes fast (often 1-2 weeks). Purchase funds release at closing; rehab funds are held for draws.
Draw, renovate, and sell
Complete work in phases, pull draws as you go, then sell (or refinance) and repay the loan. Your profit is what remains after all costs.
Frequently asked questions
What is a fix-and-flip loan?
A fix-and-flip loan is short-term financing that funds both the purchase and the renovation of a property you intend to sell for a profit. It is usually a hard money loan, underwritten primarily on the property's after-repair value (ARV) and your exit plan rather than your personal income, with terms of roughly 6-18 months.
How much do fix-and-flip loans cost in 2026?
Expect interest rates around 10-14% plus 1-3 points in origination fees. Because the loan is short-term, the total dollar cost is often modest relative to your projected profit, but you must budget for interest during the entire hold, not just the months you are actively renovating.
How much can a beginner borrow?
Many lenders finance up to about 90% of the purchase price and 100% of the renovation budget, as long as the total stays within roughly 70% of the ARV (the '70% rule'). Beginners may see slightly more conservative limits until they build a track record.
Do I need experience or good credit to get a fix-and-flip loan?
Not necessarily. These loans are asset-based, so the deal itself matters most. That said, first-time flippers should expect a lender to look closely at the numbers, the contractor plan, and cash reserves. A strong deal with a realistic budget can get funded even without prior flips.
What is the 70% rule?
The 70% rule is a quick screen: do not pay more than 70% of a property's after-repair value minus renovation costs. For example, on a $300,000 ARV with $50,000 in repairs, 70% of $300,000 is $210,000, minus $50,000 leaves a $160,000 maximum purchase price. It keeps enough margin for financing costs and profit.
How does the money get released for renovations?
Renovation funds are typically held back and released in stages called draws. You complete a phase of work, request a draw, the lender verifies progress (sometimes via inspection), and funds are disbursed. Budgeting for this timing is essential to keep the project moving.
Sources & further reading
- Federal Reserve — Selected Interest Rates (H.15), Bank Prime Loan Rate — prime rate benchmark for hard money pricing, July 2026
- U.S. Department of Housing and Urban Development — Housing Market Data — home sales and market context for resale planning, 2026
Rates, costs, and figures cited above are drawn from the sources listed and were accurate as of the last-updated date. Actual terms vary by borrower, lender, and market conditions. This content is educational and is not financial advice.
Ready to fund your first flip?
Bring us the deal and we will size a fix-and-flip loan against ARV, structure the draws, and close fast through direct lender relationships.