Fix and flip loans.

How it works

Two pieces of money. The first funds the acquisition at closing. The second is a rehab budget held back and released in draws as the work is completed and inspected, the same mechanic as a construction loan. You are not handed the renovation budget on day one and you should not want to be.

The number that governs everything is the after-repair value: what the property is worth once the scope of work is finished. An appraiser gives an opinion of that value from your plans and from comparable finished properties, and the loan is sized against it.

What underwriting weighs

• The deal. Purchase price against after-repair value, and whether the scope of work actually gets you there.
• Your track record. How many projects you have completed. First-time investors are financeable; experienced ones get more room.
• Liquidity. Reserves to carry the property and cover overages, because the budget will move.
• The exit. Sell it, or refinance into a hold. Have an answer before you start, not after.

If the exit is to hold it

A lot of projects that start as flips end as rentals, and that is a legitimate plan rather than a failure. The refinance out of a fix and flip into a long-term hold is usually a DSCR loan, which qualifies on the rent the finished property produces. Line that up while the renovation is underway rather than after it closes.

Questions people ask

Can I live in it?

No. These are non-owner-occupied business-purpose loans. If you intend to live in the house while you fix it, you want a renovation loan instead, which is a completely different product.

Do I need tax returns?

Usually not. Most programs underwrite the property and the sponsor rather than personal income documents. Credit and liquidity still get reviewed.

Can I borrow through an LLC?

Yes, and most investors do. Business-purpose lending is generally written to entities.

What if the renovation runs long?

These loans are short-term, so time is the risk that actually bites. Extensions exist on most programs and they are not free. Build slack into the schedule at the start.

Business-purpose, non-owner-occupied lending. Program availability varies by state and by property. A licensed loan officer will confirm what is available for your situation.