Short-term financing that covers a percentage of the purchase and, separately, the renovation budget — released in draws as work is completed and inspected. Underwritten primarily on the deal: as-is value, scope of work, and after-repair value.
Below: how leverage is actually set, how the draw process works in practice, the carrying costs most spreadsheets forget, and a calculator that shows cash required and projected profit on a specific deal.
Ranges reflect common guidelines across the lenders we work with. Leverage is tiered by experience and credit; first-time flippers price differently. Not an offer.
Fix and flip lenders size a loan against two ceilings at once, and the smaller one wins. The first is loan-to-cost: a percentage of your purchase price plus the rehab budget. The second is loan-to-after-repair-value: a percentage of what the property will be worth finished. A deal can sail through the first test and fail the second, which is where most surprises come from.
Understanding which constraint binds on your deal tells you what to negotiate. If loan-to-cost is the limit, you need a lower purchase price. If loan-to-ARV is the limit, either the renovation isn't adding enough value or the ARV is optimistic — and the appraiser will say so before the lender does.
Experience moves both numbers. A borrower with five documented flips in the last three years gets materially better leverage and pricing than a first-timer with the same credit and the same property, because completed projects are the lender's best predictor of a completed project. First flips absolutely get funded — just plan on more cash in and a shorter leash on draws.
One structural note that catches people: the rehab portion is almost always reimbursement-based. You pay the contractor, then the lender inspects and reimburses. You need working capital to run the first phase of construction regardless of how well the loan is sized.
Purchase, rehab, and ARV are the easy part. What kills margin is holding time, interest on drawn funds, origination points, and the selling costs on the back end. All of it is below.
Assumes max loan to ARV of 70%, interest accruing on an average of 60% of the rehab draw over the hold, closing and carrying costs at 2% of purchase, and selling costs at 7% of ARV.
Illustration only. Actual leverage, rate, points, and eligible rehab depend on the lender, your experience, and the appraisal. Not a quote or commitment to lend.
The renovation budget is held by the lender and released in stages against completed work. Knowing the rhythm of it is the difference between a project that flows and one that stalls waiting on cash.
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Plan on funding the first phase yourself. Between paying the contractor, requesting the draw, scheduling inspection, and receiving the wire, most draws take five to ten business days — and the first one is always the slowest. Investors who run out of working capital in week three lose more to schedule slip than they ever saved on rate.
These solve different problems, and the wrong one is expensive. Flip financing is for a property you intend to sell inside a year; DSCR is for one you intend to keep and rent. Buying to hold with flip money means paying short-term rates on a long-term asset.
None of these are about the rate. Every one of them is about time, scope, or the exit.
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Have the address, purchase price, scope, and your ARV comp ready and we'll tell you on the call whether it pencils.
Talk it through →Yes, with a bigger down payment and a tighter file. Expect leverage nearer the bottom of the range, a rate premium, and more scrutiny on your contractor and scope of work. What helps most: a licensed general contractor with a written bid, real reserves beyond the down payment, and a modest first project. Lenders decline ambitious first flips far more often than they decline inexperienced borrowers.
You have three paths, and you want to choose before the maturity date is close. Most lenders offer an extension for a fee, typically a fraction of a point per month. Alternatively, refinance into a DSCR loan and rent it — this is the standard fallback, and a finished renovated property usually appraises and cash-flows well enough to support it. The third path is cutting price to move it. Decide at month four of a nine-month term, not month eight.
For most lenders, yes — licensed and insured, with a signed contract and itemized budget. Self-performed work is allowed by some lenders for experienced investors, though usually only for labor, and draws still require inspection. Structural, electrical, plumbing, and roofing almost always require a licensed trade regardless of your experience, because permits and resale disclosures depend on it.
An appraiser values the property twice — as-is today, and as-completed assuming your scope of work is executed. The as-completed number is built from comparable sales of similar finished properties nearby, not from your budget. Two consequences worth internalizing: spending more doesn't raise ARV if the comps don't support it, and finishes above the neighborhood standard rarely return their cost. Bring your own comps to the appraisal — appraisers can consider them.
Usually not in the conventional sense, since selling quickly is the entire point. What you'll often find instead is a minimum interest period — three or six months of interest owed even if you pay off in month two. On a fast cosmetic flip that minimum can cost more than the rate difference between two lenders, so read for it specifically when comparing term sheets.
Yes to both. Entity vesting is standard here, and the buy-rehab-rent-refinance-repeat sequence is a normal use of this product — flip loan for the acquisition and renovation, then a cash-out DSCR refinance once it's rented. Plan the refinance before you close the first loan, because seasoning requirements and the ratio at the new loan amount decide whether the whole strategy works. Tell us it's a BRRRR up front and we'll structure both ends together.
The calculator above sizes the loan against both ceilings and shows cash required and projected margin. When it holds up, apply through Edge Home Finance — or call before you're under contract and we'll pressure-test the ARV.