Traditional mortgages aren't built for this. Banks want W-2s, 30-year terms, and owner-occupancy. Flippers need speed, renovation funding, and financing tied to what the property will be worth, not what the borrower earns.
This guide breaks down fix and flip loans: how they work, what they cost, how to qualify, and how the 70% rule helps you screen deals before you're locked into a bad one.
Key Takeaways
- Fix and flip loans are short-term, asset-based financing tied to a property's after-repair value (ARV), not personal income
- Budget for four cost buckets: purchase price, renovation, carrying costs, and selling costs
- The 70% rule is a fast screening tool, not a guaranteed formula
- Qualification is more flexible than a conventional mortgage — credit and income documentation matter less than the deal itself
- Pick a lender based on speed, leverage, and draw process, not just the interest rate
What Are Fix and Flip Loans?
Fix and flip loans are short-term financing, typically running 12 to 18 months, used to purchase and renovate a distressed property before reselling it, according to Forbes Advisor's 2023 breakdown of the product. Some hard-money products run as short as six months, but 12 to 18 months is the fix-and-flip norm.
Most of these loans are interest-only with a balloon payment due at maturity, according to Chase's 2025 hard-money loan overview. That structure keeps monthly payments low while you're mid-renovation and not generating income from the property.
Underwriting Looks at the Deal, Not Your Tax Returns
Conventional mortgages hinge on W-2s, debt-to-income ratios, and tax transcripts. Fix and flip underwriting focuses on:
- The property's projected after-repair value (ARV)
- Your renovation budget and contractor bids
- Overall project viability
How the Draw Process Works
Lenders typically release funds in two phases:
- At closing — covers the purchase price
- During renovation — released in stages ("draws") as work is completed and inspected
Draws protect the lender and give you working capital as work clears inspection. Kingdom Capital Financial connects investors with lending partners who structure fix-and-flip financing for fast moves on time-sensitive properties nationwide.
Understanding Flip Costs and the 70% Rule
A "flip" is straightforward in concept: buy a distressed property, renovate it, and resell for a profit within a short holding period, usually under a year.
The costs are where it gets complicated. Angi's 2026 national renovation data estimates a 1,250–1,600 sq. ft. whole-home renovation at between $19,470 and $88,356, averaging about $52,151.
That figure is a general renovation benchmark, not a flip-specific number. Your actual cost still hinges on scope, permits, and structural surprises.
Four Cost Categories to Budget
- Purchase price: what you pay for the property
- Renovation costs: materials, labor, permits, contingency
- Carrying costs: interest, property taxes, insurance, utilities during the hold
- Selling costs: agent commissions, closing costs, staging
Those four buckets are why purchase price has to leave room for more than repairs alone.
The 70% Rule, Explained
The formula: Maximum offer = (ARV × 0.70) − estimated repair costs.
This rule of thumb, outlined by Kiavi, leaves room for holding costs, selling costs, financing fees, and profit. It's a screening guideline, not a lender requirement or a guarantee of profitability.
Example:
- ARV: $400,000
- Estimated repairs: $50,000
- Maximum offer: ($400,000 × 0.70) − $50,000 = $230,000
If the seller wants $260,000, the deal likely doesn't pencil out unless your ARV estimate is conservative or repairs come in lower than projected.
How to Qualify for a Fix and Flip Loan
Lenders care more about your deal's math and your capital position than your income history. That's the core difference from conventional financing.
Common Qualification Factors
- Credit score — often more flexible than conventional mortgages; some fix-and-flip lenders accept scores in the mid-600s, per LendingOne's qualification guide
- Down payment — varies by lender and project, generally tied to loan-to-cost limits
- Liquid reserves — cash to cover carrying costs and unexpected overruns
- Renovation scope — backed by contractor bids, not guesswork
First-Time Flippers Can Still Qualify
Lack of a completed-project track record doesn't automatically disqualify you. Lenders may adjust leverage or pricing based on risk, though a strong budget, clear exit plan, and adequate liquidity carry more weight when you don't have prior flips to point to.
LTC and ARV Ratios
Those same risk factors show up in two ratios that set how much financing you can get:
- Loan-to-Cost (LTC): percentage of total project cost (purchase + rehab) the lender finances
- Loan-to-ARV: percentage of the projected after-repair value the lender will lend against
Published industry examples show programs advertising up to 92.5% LTC and around 75-80% ARV, according to lender-published maximums from LendingOne — program ceilings, not guaranteed terms.
Kingdom Capital Financial works with lending partners on fix-and-flip and related investor financing. Depending on the program, credit scores as low as 575 may be considered, and some investor loan options—such as DSCR-style products—do not require tax returns or financial statements. That path helps investors who don't fit the conventional mortgage mold.
Fix and Flip Loans vs. Other Financing Options
| Option | Best For | Key Tradeoff |
|---|---|---|
| Fix & flip / hard money | Dedicated flip financing | Higher rates, but built for speed and rehab funding |
| HELOC | Investors with home equity | Puts your primary residence at risk as collateral |
| Home equity loan | Lump-sum equity access | Same collateral risk; fixed terms, less flexible for a project timeline |
| Cash-out refinance | Longer-term capital access | Slower to close; not ideal for time-sensitive acquisitions |
| Personal loan | Small gap funding | Limited loan amounts; not a primary financing tool |
| FHA 203(k) | Owner-occupants only | Requires you to live in the home — disqualifies most flips entirely |
Two options on that list deserve a closer look before you rule them in or out.
HELOC risk sits on your primary home. HELOCs averaged about 8.90% on a $30,000 line as of September 2025, per Bankrate's national HELOC survey. They're adjustable-rate products secured against your residence, per the CFPB—not the flip property. That collateral difference is the real tradeoff versus a dedicated investment loan.
FHA 203(k) is off the table for flips. The program requires owner-occupancy within 60 days, and HUD's handbook excludes transactions structured to acquire investment properties. If you're flipping, remove this option from consideration.
Are Fix and Flip Loans Worth It?
Yes—when you underwrite the full deal and control the rehab clock. No—when the spread only works on paper or the timeline slips.
The upside is leverage. Instead of tying up $250,000 cash in one property, financing lets you spread that capital across several projects at once instead of betting everything on a single flip.
The downside is risk. ATTOM's Q3 2024 data found the average flip gross ROI was 28.7% before expenses, with a median gross profit of $70,250. That figure excludes rehab costs, interest, taxes, insurance, and commissions. Once the loan clock is running, delays and cost overruns eat directly into that margin.
Mitigating the Risk
- Build a contingency budget of 10-15% above your renovation estimate
- Base ARV on recent, comparable sales, not optimistic projections
- Lock a clear exit strategy before you close: sell, or refinance into a hold
The average flip took 162 days from purchase to resale in 2024, per ATTOM's year-end report. That’s roughly five to six months against a typical 12-month loan term. If a project that should finish near that median stretches toward eight or nine months, interest and holding costs compress profit fast—so the loan is only worth it when your numbers still work after those all-in costs.
Why Work With Kingdom Capital Financial for Your Next Flip
Kingdom Capital Financial connects investors with a nationwide network of investor loan partners specializing in fix-and-flip, bridge, construction, and DSCR lending. Rather than acting as a direct lender, it structures financing through experienced partners who understand time-sensitive acquisitions—so you can move on a deal without waiting on a conventional bank timeline.
What that means for you:
- A streamlined application process without unnecessary paperwork
- Flexible terms designed around your project, not a rigid conventional checklist
- Loan structures based on ARV or loan-to-cost, tailored to the deal
Planning to hold instead of sell? Once your flip is complete, Kingdom Capital Financial can help refinance the property into a DSCR loan, qualifying based on the property's rental income rather than your personal income. That path suits investors who want to keep the property as a rental and grow a long-term portfolio without requalifying on personal income alone.
Frequently Asked Questions
What is the best loan for a fix and flip?
Hard money and dedicated fix-and-flip loans are generally best for speed and renovation funding. HELOCs or cash-out refinances can work if you already have significant home equity, but they carry more personal risk.
How hard is it to get a loan for flipping a house?
Generally easier than a conventional mortgage since approval centers on the property's value and your project plan. You'll still need reserves and a credible renovation budget backed by contractor bids.
What is the best way to borrow money against my house?
HELOCs and home equity loans let you tap existing equity, but both use your primary residence as collateral. That's a real risk if a flip runs over budget or timeline.
How much does it cost to flip a 1,500 sq ft house?
Renovation alone can run roughly $19,000 to $88,000 depending on scope, per national data. Add carrying costs (taxes, insurance, utilities) and selling costs (commissions, closing fees) before estimating your profit.
Are fix and flip loans worth it?
They can multiply your investment capacity and speed up acquisitions, but only with careful budgeting. A realistic timeline and contingency plan matter more than the interest rate.
What is the 70% rule in flipping?
Maximum offer = (ARV × 0.70) − repair costs. On a $400,000 ARV with $50,000 in repairs, that's a $230,000 ceiling on your purchase price.
