What Is a Fix & Flip Loan?

A fix and flip loan — also called a hard money rehab loan — is a short-term, asset-based loan designed for real estate investors who purchase distressed properties, renovate them, and sell for profit. These loans fund both the property acquisition and renovation costs in a single loan instrument.

Unlike a conventional mortgage requiring income verification, W-2s, and 30–90 days to close, a fix and flip loan closes in 7–21 days, requires minimal documentation, and qualifies based primarily on the property's value and your renovation plan.

"The speed of a hard money loan is often the single difference between winning and losing a deal in today's competitive real estate market."

How LTV and ARV Work for Fix & Flip Loans

The two most important numbers in fix and flip financing are LTV (Loan-to-Value) and ARV (After-Repair Value).

LTV measures the loan relative to the property's current value. Most hard money lenders fund up to 90% of the purchase price — meaning a $200,000 purchase requires only a $20,000 down payment.

ARV is the estimated value of the property after renovation, determined by comparable sales (comps). Hard money lenders cap the total loan at 75% of ARV as a protective margin.

Example: Purchase price = $200,000. Renovation budget = $60,000. ARV = $380,000. ARV cap = $285,000 (75% × $380,000). Total needed = $260,000. This deal qualifies because $260,000 is below the $285,000 ARV cap.

The Renovation Draw Process

Renovation funds are not released all at once. They are held in escrow and released in "draws" as work is completed and verified:

  1. Initial draw at closing — some lenders release a portion for mobilization (permits, demo, initial materials).
  2. Draw requests — as each phase completes, the borrower submits a draw request with photos, invoices, and lien waivers.
  3. Inspection — an independent inspector verifies work completion.
  4. Release of funds — upon approval, funds are released within 2–5 business days.

Tip: Budget for the fact that renovation funds arrive after work is done, not before. Having working capital for contractor deposits and materials is essential for smooth project execution.

True Costs and Fees for Fix & Flip Loans

Understanding the full cost of fix and flip financing is critical for accurate profit projections:

  • Interest rate: 9.5%–12% annualized, paid monthly on outstanding balance
  • Origination fee: 1–2 points paid at closing (1%–2% of loan amount)
  • Appraisal/BPO: $300–$600 for residential properties
  • Title and closing: $1,500–$3,000 depending on loan size and state
  • Draw inspection fee: $150–$300 per inspection

Cost example: $200,000 fix and flip loan held for 6 months at 10% = $10,000 interest. Add 2-point origination ($4,000) = $14,000 total financing cost. If your gross flip profit is $80,000, you net approximately $66,000 after financing costs.

How to Qualify for a Fix & Flip Loan

Qualifying with Sab Tera Lending requires:

  • Minimum 660 FICO score
  • Property address and purchase price
  • Scope of work and renovation budget
  • ARV supported by comparable sales
  • Down payment of 10–20% of purchase price
  • Clear exit strategy (sell the property)

Experience is helpful but NOT required. We fund first-time flippers with strong deals regularly. The deal quality matters more than your track record. A well-underwritten deal in a strong market with solid ARV can qualify even without prior flipping experience.

Top Fix & Flip Markets in 2026

Our most active fix and flip markets and what makes them strong:

  • Long Island, NY — Median price $680K, average flip profit $92K. Nassau County is our highest-volume market.
  • New York City — Brooklyn, Queens, and the Bronx offer strong margins on gut renovations of 2–4 family homes.
  • Northern New Jersey — Bergen, Essex, and Passaic counties. NYC commuter demand drives premium ARVs.
  • Fairfield County, CT — Greenwich, Westport, Darien. High ARVs ($1M–$2.5M) and affluent buyer base.
  • South Florida — Miami, Fort Lauderdale. Strong flip volume and rapid absorption.
  • Atlanta, GA — Large inventory of older homes, strong buyer demand, $61K average flip profit.