Fix & Flip Loans Explained (2026 Investor Guide)

Fix & flip loans are short-term, asset-based loans designed for real estate investors who buy distressed properties, renovate them, and sell (or refinance) within 6–18 months. They're how most professional flippers finance both the purchase and the rehab budget in a single loan.

Here's exactly how fix & flip financing works in 2026 — what it costs, what you need to qualify, and how to structure a deal that actually pencils.

What Is a Fix & Flip Loan?

A fix & flip loan is a short-term loan (typically 6–18 months, interest-only) that funds two things at once:

• A portion of the purchase price (usually 80–90%)
• Up to 100% of the renovation budget, paid out in draws

The loan is underwritten primarily on the property's After Repair Value (ARV) — what the home will be worth once rehabbed — not on your personal income.

Key Numbers: LTV, LTC, and ARV

• LTC (Loan-to-Cost): typically up to 90% of purchase + 100% of rehab
• LTV (Loan-to-Value): capped at ~70–75% of ARV
• ARV: appraised value once renovations are complete

Whichever cap is more restrictive wins. A great deal hits both — meaning the all-in cost is well under 70% of ARV.

A Real Example

Purchase: $250,000 · Rehab: $60,000 · ARV: $400,000

• 90% of purchase = $225,000 financed
• 100% of rehab = $60,000 in draws
• Total loan: $285,000 (about 71% of $400K ARV — within limits)
• Investor brings ~$25K down + closing costs + carry

Rates & Costs in 2026

• Rates: typically 9.5%–12% (interest-only)
• Origination: 1.5–3 points
• Term: 6, 12, or 18 months with extension options
• Prepay: usually no prepayment penalty

Rates are higher than conventional, but you're paying for speed (close in 10–21 days) and leverage (financing the rehab).

How Rehab Draws Work

You don't get the rehab budget upfront. Instead, you fund the work, then submit draw requests as scopes complete. The lender sends an inspector, verifies the work, and reimburses you. Plan your liquidity for 1–2 draws of carry at any time.

Borrower Requirements

• Credit score: typically 660+ for best pricing (some lenders go to 620)
• Liquidity: 10–15% of project cost in reserves
• Experience: first-time flippers can qualify, but get better terms after 1–3 completed projects
• No personal income docs required (it's an asset-based loan)

Exit Strategies

Every fix & flip loan needs a clear exit before you close:

• Sell: traditional flip — list the renovated property and pay off the loan at closing
• Refinance to DSCR: the BRRRR play — keep the property as a rental, refinance into a long-term DSCR loan
• Refinance to conventional: if you'll occupy or hold long-term with W2 income

Not sure which to pick? Read our DSCR vs. Fix & Flip comparison.

Common Mistakes to Avoid

• Underestimating rehab cost (always pad 10–15%)
• Overestimating ARV — get real comps, not Zillow estimates
• Forgetting carrying costs (interest, taxes, insurance, utilities) in the deal math
• No clear exit before closing

Final Thoughts

Fix & flip loans are the workhorse of professional real estate investors — fast, leveraged, and structured around the deal, not your W2. The math is unforgiving, but the right loan partner makes a huge difference on speed, draws, and pricing.

At Tayton Capital, we structure fix & flip financing for investors across Colorado and Florida — purchase + rehab in one loan, fast closings, and a clean exit to DSCR refinance if you decide to hold. Get a quote on your next project.

📧 tj@taytoncapitalllc.com
📞 970-708-9624