Investor financing
Fix and Flip Loans
Fix and flip financing is about speed, leverage, and clean execution. This guide explains common loan structures, draw schedules, and what lenders care about so you can move fast without getting trapped.
Flip funding basics
What a fix and flip loan is designed to do
Fix and flip loans are short term investor loans built for acquisition speed and renovation execution. They usually combine purchase funding with rehab funds released through a draw process. The tradeoff is a higher cost of capital compared to long term financing, but the benefit is speed and flexibility when a property is not financeable with conventional loans.
The flip loan mindset
You are not buying a mortgage. You are buying time. A good flip loan closes quickly, supports the rehab, and gives you a clean exit path.
If your end goal is to keep the property as a rental after rehab, also read: BRRRR financing guide.
Common fix and flip loan structures
Exact terms vary by lender, but these are the typical building blocks.
Purchase plus rehab
- Funds the purchase and a rehab budget
- Rehab released via draws
- Best when you want leverage and speed
Purchase only bridge
- Fast close on acquisition
- Rehab funded separately
- Useful when rehab scope is uncertain
Refinance or cash out for flips
- Tap equity in existing rentals to fund acquisitions
- Can reduce reliance on high cost short term funds
- Works best with strong reserves
Hold to rental exit
- Buy and rehab with a flip loan
- Refinance into DSCR or conventional once stabilized
- Capital recycling depends on timing rules
What lenders look at on a flip loan
The deal itself
- Purchase price relative to value and rehab scope
- After repair value support in comps
- Market liquidity and days on market
Your experience and execution plan
- Prior flips or rehab projects
- Contractor plan and scope of work
- Timeline realism
Liquidity and reserves
- Cash buffer for overruns and delays
- Ability to cover interest and carrying costs
- Plan for utilities, insurance, and taxes during rehab
Flip underwriting is risk underwriting
Lenders care less about your W2 and more about whether the project finishes on time with margin and whether you can survive surprises.
Draw schedules and rehab funding
Most fix and flip loans release rehab funds in stages. You typically pay for work, then get reimbursed after inspection. That means you still need some liquidity even when the rehab is financed.
Typical draw flow
- Scope of work and budget approved up front
- Initial draw may be limited or zero
- Work completed in phases
- Inspection confirms completion
- Funds released to reimburse or pay contractors
Timeline planning
- Permits and inspections can add weeks
- Material delays create carrying costs
- Contractor scheduling is often the true bottleneck
- Build buffers into your hold period
If you plan to refinance into a rental loan after rehab, map the exit early: BRRRR financing guide.
Exit strategies
Sell the property after rehab
This is the classic flip exit. Speed matters. Carrying costs can destroy margin if the rehab drags or the listing sits.
Rent it and refinance
If the deal pencils as a long term rental, you can convert from flip funding into DSCR or conventional financing after rent stabilization and any seasoning requirements.
Start with: DSCR loan requirements and DSCR vs conventional investment loans.
Cash out from your portfolio to reduce flip debt
Some investors prefer using portfolio equity to fund acquisitions or rehab, reducing reliance on high cost short term debt.
Risk management that protects your profit
Budget buffers
Build contingency into rehab. Surprises are normal. A thin budget is a stress machine.
Carrying cost awareness
Interest, insurance, utilities, and taxes continue every month. Timeline slippage is expensive.
Scope control
Scope creep eats margin. Choose improvements that buyers actually pay for in that market.
Contractor plan
Execution is the risk. Document responsibilities, milestone dates, and payment flow.
Liquidity
Even with financed rehab, you often need cash on hand to keep momentum between draws.
Exit optionality
The strongest flips can be sold or held. Optionality reduces panic decisions.
If you want long term scalability options beyond DSCR, see: Portfolio loans explained.
Florida fix and flip considerations
In Florida, insurance, wind exposure, and permitting timelines can materially affect a flip. It is smart to get early clarity on insurance availability and expected carrying costs before you commit.
Florida investors should also review: Rental property financing in Florida.
Want a flip loan plan for your deal?
Send the address, purchase price, rehab budget, and your target timeline. We will tell you what terms are realistic, how draws will work, and what a clean exit looks like.
Disclosure: Licensed mortgage broker in Missouri, Kansas, and Louisiana.
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