Complete Guide
Published by Pinnacle Funding Network | Updated March 2026
Flipping houses isn't a get-rich-quick scheme. It's a capital-intensive business where your financing structure determines whether you make money, break even, or lose your shirt.
Most flippers focus on finding deals. Smart flippers focus on structuring deals - and financing is the structure. This guide covers every financing option available for fix-and-flip projects in 2026, how to choose between them, and how to build a financing strategy that scales.
Fix and flip loans are short-term loans designed for investors who buy properties, renovate them, and sell them within 6-18 months. They're fundamentally different from long-term mortgages.
Key differences from buy-and-hold financing:
The lender's primary question isn't "can the borrower afford this payment for 30 years?" It's "will this project create enough value that the borrower can repay the loan from the sale proceeds?"
Hard money is the traditional fix-and-flip financing vehicle. These are short-term, asset-based loans from private lenders.
| Feature | Typical Range |
|---|---|
| Interest Rate | 10% - 14% |
| LTC (Purchase) | 70% - 85% |
| LTC (Rehab) | 70% - 100% |
| LTARV | 65% - 70% |
| Term | 6 - 18 months |
| Points | 2 - 4 |
| Closing Speed | 3 - 10 days |
| Credit Requirement | 580+ (some have no minimum) |
Best for: Speed-critical deals, borrowers with lower credit, first-time flippers, situations where a conventional or bridge lender would take too long.
Watch out for: High points (origination fees), aggressive rate structures, draw inspection costs, extension fees if the project runs over timeline.
These sit between hard money and conventional - longer terms, lower rates, and more structured draw processes.
| Feature | Typical Range |
|---|---|
| Interest Rate | 8% - 11% |
| LTC (Purchase) | 85% - 90% |
| LTC (Rehab) | 90% - 100% |
| LTARV | 70% - 75% |
| Term | 12 - 24 months |
| Points | 1 - 3 |
| Closing Speed | 7 - 14 days |
| Credit Requirement | 640+ |
Best for: Experienced flippers doing 3+ deals per year, larger projects ($200K+ rehab budgets), investors who want more leverage and lower costs.
Here's what separates good flippers from great ones: the exit strategy.
Most flippers plan to sell. But the smartest flippers keep the option to hold. If the market shifts, if a property rents for more than expected, or if you simply want to build a portfolio - you refinance the flip into a long-term DSCR loan.
The BRRRR Method:
This strategy lets you have it both ways: flip if the sale price is right, hold if the rental numbers work. Having a lending partner who does both fix-and-flip and DSCR makes that pivot seamless.
Before you apply for financing, run the numbers yourself. Here's the framework:
```
PURCHASE:
Purchase Price: $[amount]
Closing Costs (buy, ~2-3%): $[amount]
REHAB:
Renovation Budget: $[amount]
Contingency (10-15%): $[amount]
Total Rehab: $[amount]
HOLDING COSTS (Monthly × Hold Time):
Loan Interest: $[amount]
Property Taxes: $[amount]
Insurance: $[amount]
Utilities: $[amount]
Total Holding: $[amount]
TOTAL PROJECT COST: $[sum of all above]
EXIT:
After Repair Value (ARV): $[amount]
Selling Costs (~6%): -$[amount]
Loan Payoff: -$[amount]
Net Proceeds: $[amount]
PROFIT: $[Net Proceeds - Cash Invested]
ROI: Profit ÷ Cash Invested × 100
```
The classic rule: never pay more than 70% of ARV minus repair costs.
Maximum Purchase Price = (ARV × 0.70) - Rehab Costs
Example: ARV of $400,000, rehab of $60,000
Max purchase = ($400,000 × 0.70) - $60,000 = $220,000
This rule provides a margin of safety, but it's a guideline, not gospel. In competitive markets, experienced flippers adjust to 73-75% and make it work through faster timelines and tighter rehab management. In risky markets or with inexperienced crews, you might want 65%.
Understanding how much cash you need is crucial:
```
YOUR CASH IN:
Down Payment (purchase): $[purchase price × (1 - LTC%)]
Down Payment (rehab): $[rehab budget × (1 - rehab LTC%)]
Closing Costs: $[amount]
Upfront Points: $[amount]
Reserves Required: $[amount]
TOTAL CASH NEEDED: $[sum]
```
With 90% purchase LTC and 100% rehab financing on a $200K purchase with $60K rehab:
That $31K controls a $260K project. Leverage is the game.
Rehab funds aren't disbursed all at once. They're released in draws as work is completed.
| If You Are... | Best Option | Why |
|---|---|---|
| First-time flipper, need hand-holding | Hard money (local lender) | They'll work with less experience, close fast |
| Doing 1-2 flips/year, solid credit | Fix & flip bridge loan | Better rates and terms than hard money |
| Doing 3+ flips/year, want scale | Bridge loan with DSCR exit option | Maximum flexibility, best economics at volume |
| Flipping in a hot market, speed critical | Hard money | Fastest close, fewest conditions |
| Planning to BRRRR (flip or hold) | Fix & flip + DSCR from same lender | Seamless refinance from short-term to permanent |
| Cash-rich, rate-sensitive | Cash purchase + delayed refinance | Buy cash, rehab, then take a DSCR or conventional loan at better terms |
Underestimating rehab costs. The #1 reason flips lose money. Budget 10-15% contingency minimum. Walk the property with your contractor before making an offer.
Overestimating ARV. Use sold comps, not active listings. Look at properties within 0.5 miles, sold within 90 days, with similar square footage and condition. Be conservative.
Ignoring holding costs. Every month you hold the property costs you money - loan interest, taxes, insurance, utilities, lawn care. A 6-month project at $3,000/month holding costs is $18,000 off your profit.
Not having an exit strategy. What if it doesn't sell in 30 days? 60 days? 90 days? Have a plan: price reduction schedule, rental analysis, refinance option.
Using the wrong lender. The cheapest rate isn't always the best deal. Speed, reliability, draw process efficiency, and flexibility matter more than saving 0.5% on rate when you're trying to close in 10 days.
If you have a flip deal - or are looking for one - and want to understand your financing options, reach out. We'll run the numbers: purchase financing, rehab draws, holding costs, and projected ROI. If the deal works, we move fast. If it doesn't, we'll tell you.
James Loffredo, Principal
Pinnacle Funding Network
214-846-8602
james@pinnaclefundingnetwork.com
pinnaclefundingnetwork.com
Pinnacle Funding Network is a mortgage broker. PFN does not make loans or credit decisions. Loans are originated through PFN's lending partners. Rates, terms, and programs are subject to change. All loan applications are subject to credit review, property appraisal, and underwriting approval.