How to Get Approved for a Fix and Flip Loan

Fix and flip investing remains one of the most popular strategies in real estate, and for good reason. Buying a distressed property, renovating it, and selling it for a profit can generate significant returns in a relatively short time frame. But to make it work, you need the right financing in place, and that is where fix and flip loans come in.

What Is a Fix and Flip Loan?

A fix and flip loan is a short-term financing product designed specifically for investors who purchase, renovate, and resell residential properties. Unlike traditional mortgages, fix and flip loans are designed to be repaid within 6 to 18 months. They typically cover both the purchase price and the renovation costs, with rehab funds distributed through a draw schedule as work is completed.

How Fix and Flip Loans Are Structured

• Loan Amount: Up to 90% of the purchase price plus 100% of rehab costs
• ARV-Based: Total loan typically capped at 70-75% of the After Repair Value
• Interest Rate: 9-13% (interest-only payments during the project)
• Term: 6-18 months
• Closing Speed: 5-10 business days
• Draw Schedule: Rehab funds released in stages as inspections confirm completed work

What Lenders Look For

Fix and flip lenders evaluate deals differently than traditional mortgage lenders. The primary factors are the deal itself and your experience. Lenders want to see a solid scope of work with realistic cost estimates, a clear exit strategy (sell or refinance), a reasonable After Repair Value supported by comparable sales, and a borrower with some track record of completing projects. First-time flippers can still get approved, but may face slightly higher rates or lower leverage.

Tips to Maximize Your Approval Chances

Preparation is everything when applying for a fix and flip loan. Start by getting accurate contractor bids and building a detailed scope of work before you apply. Have your proof of funds or down payment ready to show. Research comparable sales in the area to support your ARV estimate. If you are a first-time flipper, consider partnering with an experienced investor or working with a mentor who can help you navigate the process.

Common Mistakes to Avoid

The most common mistakes flippers make are underestimating rehab costs, overestimating the ARV, and not accounting for holding costs like insurance, property taxes, and loan interest during the renovation period. Always build a contingency buffer of 10-15% into your rehab budget to account for unexpected issues.

Ready to Fund Your Next Flip?

Slate Financial works with fix and flip lenders who can close in as little as 5 business days. Whether this is your first project or your fiftieth, we can match you with the right lender and terms.

Apply for a Fix and Flip Loan and get your project moving.

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