Fix-and-Flip Loans: Pricing, Draw Schedules, and ARV Math
The fix-and-flip lending market is large, competitive, and built around speed. The good lenders fund in 7–14 days with minimal docs. The bad ones bury you in junk fees. Knowing the standard terms keeps you from overpaying.
Loan-to-cost vs loan-to-ARV
Lenders cap at the lower of: 85–90% of purchase + 100% of rehab, OR 70–75% of ARV. The ARV cap is binding on most deals — buy too high and you're bringing extra cash.
Pricing
9–12% interest, 1.5–3 points, 9–18 month term, interest-only. Some lenders offer no-points/higher-rate or higher-points/lower-rate trades — points are cheaper if you hold under 6 months.
Draw schedule
Funds rehab in 2–6 draws against completed work. Inspector verifies; reimbursement hits your account 2–5 days later. Plan to front the first 1–2 weeks of rehab from your own cash.
Experience tiers
First flip: max 85% LTC, 70% ARV, 12%+ rate. 5+ flips: 90% LTC, 75% ARV, 9–10% rate. Track record matters more than FICO above 660.
Exit strategy
List 30 days before completion. If the market softens, refinance to DSCR and hold as rental. Lenders look favorably on borrowers with a B plan.
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