Fix and flip financing is a short-term loan used to buy a property, renovate it and sell it. It is usually provided by a private lender, secured by a deed of trust on the property and underwritten on the property's value, your renovation plan and the sale exit rather than on conventional income documentation.
It is built for speed and for properties banks will not finance in their current condition. This guide covers how funding works, how renovation draws are handled and how to present a file that lenders can say yes to.
How a flip loan is structured
A typical flip loan has two parts: money to acquire the property and money for the renovation. The lender may fund the purchase at closing and hold the rehab portion back, releasing it in stages as work is completed. Terms vary by lender and deal, so the details below describe the general mechanics, not our specific limits.
Lenders think about the loan in relation to value: the purchase price, the renovation budget and the expected value after the work is done. Your own equity or cash contribution is what protects the loan, so expect to put money into the deal. For larger rehab or ground-up work, our construction program can lend up to 90% of loan-to-construction-cost, and our explainer on loan-to-construction-cost shows how that ratio is calculated.
How rehab draws work
Because the renovation money is held back, you do not receive it all up front. A common process looks like this:
- You complete a stage of work, such as demolition, framing or mechanical systems.
- You request a draw.
- The lender or its inspector verifies the work is done.
- Funds are released for that stage, often after title is checked for liens.
This protects both sides, but it means you usually need cash flow to bridge between draws or contractors willing to wait. Plan for this when you build your budget. Our article on the construction loan draw schedule explains the process in more depth.
Scope and budget
A lender wants a scope of work and a line-item budget. Vague budgets are the most common reason rehab files stall. Include:
- A room-by-room or system-by-system scope.
- Contractor bids or a clear cost basis for each line.
- A contingency for surprises, which are common in older buildings.
- A timeline with milestones.
Our guide on construction budget, contingency and interest reserve shows how to size the cushion.
Key takeaways
- Flip loans typically fund the purchase and release renovation money in draws as work is verified.
- Lenders underwrite the property, your scope and budget, your contribution and the sale exit.
- Realistic budgets, permits and timelines matter more than optimistic resale numbers.
Permits and approvals
Permitted work protects your resale and your loan. Unpermitted work can create problems at appraisal, in escrow with a buyer and with the lender's collateral. Identify which parts of the scope need permits, how long approval is likely to take in the local jurisdiction and whether it affects your schedule. Do not assume that permits will be quick; build the time into your plan.
The exit: selling the finished property
The loan is repaid from the sale. Lenders will want to see how you arrived at the after-renovation value, what comparable sales support it and how long you expect the property to take to sell. Be conservative. If the deal works only at the top of your range, it is a thin deal. Run it at a lower price and a longer marketing period, and see our piece on exit strategies for a bridge loan for backup options, such as renting the property and refinancing.
Risks to take seriously
- Budget overruns. Hidden conditions can raise costs mid-project.
- Schedule delays. Each extra month adds interest and holding costs.
- Market softening. The after-renovation value is a projection, not a promise.
- Contractor problems. Draws depend on work being completed and verified.
How to present a flip file
A complete package makes underwriting faster. Typically that includes the purchase contract, the property address and photos, the scope and budget, the timeline, comparable sales for the after-renovation value, your entity documents if you are buying through one, and a summary of your experience with similar projects. The documents page and our guide to documents needed for a private money loan list what to prepare. Investors who finance multiple projects can also review our investors page.
We lend across California and review every application individually. Approval in as little as 24 hours and funding in as little as seven days are possible, subject to a complete file, underwriting, title review and property valuation, and are not guaranteed. To discuss a flip, call (800) 943-1314 or apply online.
Published by the US Lending & Company underwriting desk. General information only — not legal, tax or investment advice.