Complete Guide
Published by Pinnacle Funding Network | Updated July 2026
The short answer: fix and flip loans are short-term, interest-only loans that fund both the purchase and the rehab, sized against two caps: up to 90 percent of cost (LTC) with 100 percent of the rehab financed, and roughly 70 to 75 percent of the after-repair value (ARV). Through Pinnacle Funding Network, fix and flip rates start at 8 percent (as of June 2026), standard closings run 14 to 21 days with expedited files in 7 to 10, and the exit is either the sale or a refinance into a 30-year DSCR loan.
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. For a deeper comparison, read Hard Money vs. DSCR Loans.
| 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 | 7-10 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. For more on these metrics, read LTV, LTC, and ARV Explained.
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.
The framework above is where every deal starts. Here it is filled in, using the same property as the 70 percent rule example: ARV $400,000, rehab $60,000, purchased at $220,000.
The structure: 90 percent LTC on the purchase and 100 percent of the rehab financed, at an illustrative 8 percent interest-only (2026 fix and flip rates start at 8 percent; each file prices to experience, leverage, and project profile), with a 6-month hold.
| Sources and Uses | Amount |
|---|---|
| Purchase price | $220,000 |
| Lender funds at 90% LTC | $198,000 |
| Rehab holdback (100% financed, drawn in stages) | $60,000 |
| Total loan commitment | $258,000 |
| Down payment (your cash) | $22,000 |
| Closing costs | $6,000 |
| Points (2%) | $5,160 |
| Carry and Exit (6-month hold) | Amount |
|---|---|
| Interest (interest-only on the drawn balance, ramping from $1,320/mo to $1,720/mo as draws fund) | $9,120 |
| Taxes, insurance, utilities ($650/mo) | $3,900 |
| Total cash invested | $46,180 |
| Sale price (ARV) | $400,000 |
| Selling costs (6%) | -$24,000 |
| Loan payoff | -$258,000 |
| Profit | $71,820 |
That is roughly a 155 percent return on the $46,180 of cash in the deal, in six months, at full leverage. Every line above moves: hold two extra months and the carry eats about $4,000 of profit; miss the rehab budget by 15 percent without a contingency and it eats $9,000 more. The financing structure is not paperwork around the deal. It is the deal.
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 |
Same deal, one more decision. The renovated property would rent for $3,000 a month. Now there are two honest exits, and the smartest flippers underwrite both before they buy.
| Factor | Exit A: Sell | Exit B: DSCR refinance |
|---|---|---|
| What happens | Sell at $400,000 | Refinance at 75% of the new $400,000 value = $300,000 30-year DSCR loan |
| Cash at exit | $71,820 profit | Roughly $39,000 back at closing after the $258,000 payoff and costs |
| What you keep | Nothing; the deal is done | The asset, about $100,000 of equity, and roughly $250/mo of cash flow (rent $3,000 against an illustrative PITIA near $2,750) |
| Qualifying | A buyer's problem | DSCR near 1.09x on the property's own rent; no tax returns |
| Best when | The sale market is strong and you want the capital for the next flip | The property rents well and you are building a portfolio |
Exit B is the BRRRR strategy in practice: nearly all of the cash comes back out, the asset stays, and the DSCR loan (rates starting at 5.8 percent as of June 2026) qualifies on the rent rather than your income. Having the fix and flip loan and the DSCR exit under one roof is what makes the pivot seamless; the numbers above are illustrative, and a same-day quote prices both exits on your actual deal.
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, request your free quote or try our deal calculator. 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
214-885-4313
info@pinnaclefundingnetwork.com
pinnaclefundingnetwork.com
Pinnacle Funding Network is a correspondent lender and loan originator. PFN originates loans and funds them through its network of institutional capital partners, who make final funding decisions; PFN may sell or assign loans at or after closing. Rates, terms, and programs are subject to change. All loan applications are subject to credit review, property appraisal, and underwriting approval.
Pinnacle Funding Network's fix and flip programs fund up to 90 percent of the purchase price (LTC) plus 100 percent of the rehab budget, capped at roughly 70 to 75 percent of the after-repair value. On a $220,000 purchase with a $60,000 rehab, that structure means about $22,000 down controls a $280,000 project.
Standard fix and flip closings run 14 to 21 days. Expedited files, meaning clear title, a complete scope of work, and responsive insurance, close in 7 to 10 days, which is where the as few as 7 days timeline comes from. The scope of work and the title search are usually the pacing items.
As of June 2026, fix and flip rates start at 8 percent through Pinnacle Funding Network, interest-only, with origination points typically between 1 and 3. Because the loan is short-term, total carry cost depends more on your hold time than on the rate itself: a month of delay usually costs more than a quarter point of rate.
No. First-time flippers are financeable, and a detailed scope of work with real contractor bids does a lot of the convincing. Experience does move terms: investors with completed projects unlock higher leverage tiers and better pricing, which is one reason the first deal's execution matters beyond its own profit.
Rehab funds are held back and released in stages as work completes. You finish a phase, submit photos and invoices, the lender verifies the work, and funds release, typically within 3 to 5 business days. Budget by phase, keep reserves for the gap between paying contractors and receiving the draw, and document everything.
You have three real options: adjust price on a planned schedule, extend the loan if your program allows it, or put a tenant in place and refinance into a 30-year DSCR loan that qualifies on the rent (DSCR rates start at 5.8 percent as of June 2026). Underwriting that third exit before you buy is what turns a stuck flip from a crisis into a pivot.
Keep Reading
Related Guides: DSCR Loans Guide · New Construction Guide · Build to Rent Guide
Tools: Deal Calculator · Browse Markets
A note every other week on private lending, market shifts, and what real estate investors are actually doing right now. From The Pinnacle Team.