Best Fix & Flip Loans for Beginners: Top Lenders & Loan Options

Finding the right financing for your first house flip can feel overwhelming. With so many loan types, rates, and lenders out there, knowing where to start is half the battle. The good news? The best fix-and-flip loans make it possible for new investors to buy, renovate, and sell properties without tying up all their own cash. Whether you’re searching for the best fix and flip lenders or trying to figure out which option fits your experience level, this guide will simplify the process and help you choose wisely.

Fix and flip loans are short-term, project-based loans designed for real estate investors. They’re typically used to purchase distressed or undervalued properties, fund renovations, and then sell the home for a profit—all within a few months. Choosing the right lender isn’t just about finding the lowest rate; it’s about speed, reliability, and flexibility when managing your first flip.

• What Are Fix and Flip Loans?
• Benefits & Risks for Beginners
• How Fix and Flip Loans Work
• Top Fix and Flip Lenders
• Qualifications & Application Tips
• Loan Terms & Costs Explained
• Fix and Flip Loans vs. Traditional Financing
• Tips for Choosing the Best Lender
• Mistakes to Avoid
• FAQs

What Are Fix and Flip Loans?

Fix and flip loans give real estate investors the quick cash they need to buy, renovate, and sell properties for a profit. These short-term loans—usually lasting anywhere from six months to a year and a half—are built for speed. Instead of waiting through the slow approval process of a traditional mortgage, investors can tap into fast funding to act on great opportunities, especially when dealing with undervalued or distressed homes.

The goal behind a fix-and-flip loan is straightforward: to cover both the purchase price and the renovation costs until the property sells. Because the loan is backed by the property itself, lenders care more about what the home will be worth after repairs—the After-Repair Value (ARV)—than about the borrower’s credit score. In other words, if the deal makes sense, the funding usually follows.

Common Types of Fix and Flip Loans

• Hard Money Loans: Offered by private lenders or companies specializing in real estate investment financing. These loans are funded quickly and based primarily on the property’s ARV rather than credit score.
• Private Money Loans: Financed by individual investors or small lending groups. They often offer flexible terms, especially when working with trusted borrowers or local investors.
• Institutional Fix and Flip Programs: Provided by established financial institutions or online lenders. These programs combine technology and underwriting to streamline funding for repeat investors.

Typical Fix and Flip Loan Terms

Benefits & Risks for Beginners

Fix and flip loans can be an incredible tool for new investors—but like any investment strategy, they come with tradeoffs. Understanding both the advantages and potential pitfalls will help you decide whether this type of financing fits your goals and experience level.

Benefits of Fix and Flip Loans

• Fast Approval: Many lenders can approve and fund within days, allowing you to act quickly on great deals before competitors do.
• Flexible Credit Requirements: Unlike traditional banks, hard money and private lenders focus on the property’s potential rather than your credit score or income history.
• Funding for Repairs: These loans often include renovation budgets—meaning you can finance both the purchase and rehab through a single loan.
• Short-Term Commitment: Because these loans are typically repaid within 6–18 months, you’re not locked into long-term debt.

Risks of Fix and Flip Loans

• Higher Interest Rates: Expect rates between 8–12%, reflecting the speed and flexibility of these loans.
• Short Repayment Windows: Tight loan durations mean you must stay on schedule—delays can eat into profits fast.
• Potential Overleveraging: Borrowing too much without accounting for extra costs can leave little room for error.
• Upfront Costs: Points and origination fees can increase your total borrowing cost, especially for smaller projects.

When to Avoid a Fix and Flip Loan

Fix and flip financing isn’t right for every deal. If the property doesn’t have enough spread between the purchase price, repair costs, and the After-Repair Value (ARV), the loan’s fees and interest can quickly erase your profit. Avoid overpaying by running conservative numbers and leaving room for unexpected repairs or delays.

How Fix and Flip Loans Work

Fix and flip loans are structured specifically for short-term investment projects. Unlike traditional mortgages that stretch over decades, these loans are designed to move fast, fund both the purchase and renovation, and be repaid once the property sells. Understanding how they work—from structure to key ratios—helps investors plan efficiently and avoid costly missteps.

Loan Structure

Most fix-and-flip loans are divided into two main parts: the purchase portion and the rehab portion. The purchase funds are released at closing to acquire the property, while rehab funds are disbursed in stages, known as draws, as renovation milestones are completed. These loans typically require interest-only payments during the term, with the full balance due at sale or maturity—often referred to as a balloon payment.

• Purchase Funding: Released at closing for property acquisition.
• Rehab Draws: Paid in stages after lender inspections confirm completed work.
• Interest-Only Payments: Helps preserve cash flow during renovation.
• Balloon or Sale Payoff: Full balance is paid once the property sells or refinances.

Key Ratios to Know

Lenders use several core metrics to assess risk and determine how much they’ll lend. As a borrower, understanding these ratios ensures you’re making smart, data-driven decisions.

Application Process

Getting approved for a fix-and-flip loan is faster than a traditional mortgage, but still involves a few key steps. Here’s what to expect:

1. Prequalification: Submit basic information about your experience, target property, and estimated ARV to get a conditional offer.
2. Property Appraisal: The lender orders an appraisal to verify the property’s current and potential after-repair value.
3. Loan Approval: Once documents are reviewed, the lender issues a final approval outlining your rate, term, and draw schedule.
4. Funding Timeline: Closings can happen in as little as 5–10 business days, depending on your lender’s process and documentation readiness.

*For in-depth training on real estate investing, Real Estate Skills offers extensive courses to get you ready to make your first investment! Attend our FREE Webinar Training and gain insider knowledge, expert strategies, and essential skills to make the most of every real estate opportunity that comes your way!

Top Fix and Flip Lenders

To help you get started, here’s a breakdown of some of the leading fix-and-flip lenders featured in top industry publications like FitSmallBusiness and The Close. Each lender has unique strengths and terms—especially for beginners—and knowing them will help you decide who to approach when you’re ready to fund your first flip.

Lender 1: Kiavi

Kiavi is one of the most accessible nationwide fix-and-flip lenders, offering fast closings and flexible terms. New investors can qualify with minimal experience, and loans cover up to 95% of the purchase and 100% of rehab costs, with a cap at 80% of ARV.

Lender 2: Conventus

Conventus offers a strong balance of personalized service and competitive pricing. It's well-suited for both new and experienced flippers, with flexible underwriting, local market insights, and support for high-volume investors.

Lender 3: CoreVest

CoreVest offers more structured, institutional-style financing with clear draw schedules and underwriting requirements. Ideal for investors planning multiple projects or those who value consistency and detailed process control.

These are just example profiles—actual lenders in your region may have different thresholds, criteria, and structures. Before choosing, always ask for sample term sheets, inspect their draw schedule mechanics, and test whether their underwriting aligns with your property types. For beginners, working with a lender who offers solid support and clarity can make all the difference.

Qualifications & Application Tips

Securing a fix and flip loan is all about preparation. While these loans are easier to qualify for than traditional bank financing, lenders still want reassurance that you—and the property—can deliver a profitable outcome. Knowing what lenders look for and how to present your project professionally can make all the difference, especially for beginners.

Credit Score & Financials

Most lenders require a minimum credit score between 600 and 660, though private and hard money lenders may be more flexible if the deal is strong. You’ll also need to provide proof of funds for your down payment, closing costs, and reserves. Experience helps, but it’s not mandatory—many first-time investors get approved by demonstrating a solid plan and realistic numbers.

Property Analysis

Lenders focus on the property’s potential more than your personal finances. A well-prepared After-Repair Value (ARV) analysis and a clear scope of work show that you understand the project’s economics. Use comparable sales from nearby properties to justify your ARV and back it up with a detailed rehab estimate. A professional spreadsheet or calculator can help you present this data clearly.

Required Documentation

• Purchase Contract: Proof that you have the property under contract or are negotiating terms.
• Rehab Budget: A detailed breakdown of materials, labor, and timelines.
• Contractor Bids: Written estimates from licensed contractors for transparency and accuracy.
• Exit Strategy: Whether you plan to sell or refinance after completion, lenders want a clear repayment plan.

Tips for Beginners

• Partner with Experienced Investors: Teaming up with someone who has a few successful flips under their belt can boost your credibility with lenders.
• Build a Strong Business Plan: Include your deal analysis, budget, and exit strategy—treat it like a mini proposal for your lender.
• Shop Multiple Lenders: Compare interest rates, loan-to-value ratios, and draw schedules to find the best fit.
• Stay Organized: Having all documents ready (IDs, bank statements, contractor bids, ARV comps) speeds up approval and shows professionalism.

Loan Terms & Costs Explained

Understanding the full cost structure of a fix-and-flip loan is essential for maximizing profit and minimizing surprises. These loans are fast, flexible, and built for short-term use—but that also means they come with unique fees, terms, and draw schedules you’ll want to master before signing any agreement.

Interest Rates & Points

Interest rates for fix and flip loans typically range between 8% and 12%, depending on the lender, borrower experience, and property risk. In addition to the rate, most lenders charge 1–5 points (1 point equals 1% of the loan amount) as an upfront cost. Points compensate the lender for taking on short-term risk and can vary based on your credit score, project size, and flip experience.

• Lower Rates: Usually available to experienced investors or those with multiple completed flips.
• Higher Rates: Common for first-time flippers, high-risk neighborhoods, or heavy rehab projects.
• Negotiating Tip: Some lenders reduce points on repeat deals—ask before committing.

Down Payments & Reserves

Most fix and flip lenders require a 10–30% down payment, depending on the loan-to-value ratio (LTV) and your track record. In addition, many require cash reserves—typically enough to cover three to six months of interest payments and emergency costs. Having these reserves signals to the lender that you’re financially stable and can handle unexpected delays or overruns.

Fees to Expect

Beyond the interest and points, fix and flip loans include several additional fees. Understanding these ahead of time helps you budget accurately and avoid last-minute surprises at closing.

• Origination Fees: Charged by the lender for setting up the loan—typically 1–3% of the total amount.
• Underwriting Fees: Cover the cost of verifying your documents, deal structure, and exit strategy.
• Inspection/Draw Fees: Applied each time a lender inspects completed work before releasing rehab funds.
• Prepayment Penalties: Some lenders charge a fee if you repay the loan too quickly, typically within the first three months.

Rehab Draws

Unlike traditional home loans that release funds all at once, fix and flip lenders often use a draw system for rehab funding. You’ll submit draw requests as work milestones are completed, and the lender releases funds after verifying progress through inspections. Staying on schedule—and communicating proactively with your lender—ensures that you maintain cash flow throughout the project.

• Typical Draw Frequency: Every 2–4 weeks, depending on project scope.
• Inspection Requirements: Lenders verify work completion before disbursement.
• Tip: Always build in extra time between draw requests to avoid contractor delays or payment gaps.

Fix and Flip Loans vs. Traditional Financing

When it comes to funding an investment property, not all loans are created equal. Fix and flip loans and conventional mortgages serve very different purposes—and choosing the right one can make or break your first project. While a traditional loan might seem appealing because of its lower rates, it’s often too slow and restrictive for the fast-moving world of house flipping.

Comparison with Conventional Mortgages

Case Examples

To see how these differences play out, here are two common real-world scenarios:

• Scenario 1 – The Quick Flip: An investor finds a distressed home listed below market value. A hard money lender approves funding within a week, allowing the investor to buy fast, renovate in 60 days, and sell within four months. A conventional loan would have taken too long, causing them to miss the opportunity entirely.
• Scenario 2 – The Cosmetic Rehab: A beginner investor targets a light rehab project and plans to hold the property as a rental. In this case, starting with a fix and flip loan to complete renovations and then refinancing into a conventional mortgage after the rehab can combine the best of both worlds—speed upfront and low rates long-term.

Tips for Choosing the Best Lender

Choosing the right lender can make a massive difference in how smoothly your fix-and-flip project runs. Beyond just comparing interest rates, smart investors look for partners who understand the business, move fast, and support long-term success. Here’s how to evaluate and select the best lender for your needs.

Evaluate Experience

Work with lenders who specialize in fix and flip financing or have a proven track record with real estate investors. These professionals understand the importance of fast funding, draw schedules, and property-based underwriting. A lender familiar with flips will also know how to structure your loan to cover both the purchase and renovation phases efficiently.

Compare Terms

Don’t stop at the headline interest rate—look at the complete loan package. Compare each lender’s points, origination fees, interest rates, loan-to-value (LTV) ratios, and draw schedules. A lender offering slightly higher rates but better rehab draw terms might save you time and stress during the project. Use a loan comparison spreadsheet to calculate your total cost of capital before making a decision.

Check Reviews & Reputation

Before signing, do a background check on potential lenders. Read online reviews, ask for investor referrals, and check their responsiveness during your initial inquiry. Transparent communication, clear documentation, and reliable draw releases are all signs of a trustworthy lender. Avoid any lender who hesitates to provide written fee breakdowns or verifiable testimonials.

Importance of Relationships

Real estate is a relationship-driven business. Building a strong rapport with your lender can lead to better terms, faster approvals, and higher borrowing limits over time. Many seasoned flippers work with the same lender for years because consistency in funding creates stability—and leverage—for scaling their business.

Mistakes to Avoid (Beginner Pitfalls)

Every successful fix and flip project starts with careful planning—but even small oversights can lead to major losses. New investors often make the same avoidable mistakes when rushing into deals or underestimating costs. Here are the most common pitfalls to watch out for and how to steer clear of them.

Underestimating Rehab Costs

One of the biggest mistakes beginners make is assuming renovations will cost less than they actually do. Always build your rehab budget using real contractor bids, not rough estimates, and include a 10–15% contingency buffer for unexpected repairs. Skimping on this step can turn a profitable flip into a financial burden fast.

Overleveraging

Borrowing too much money can quickly erase your profits if the market shifts or your rehab takes longer than expected. Stay conservative with your loan-to-value (LTV) ratios and leave room for error in your projections. Remember, just because a lender offers a large loan doesn’t mean you should take it.

Ignoring Exit Strategy

Before you buy, know exactly how you’ll sell. Always calculate your After-Repair Value (ARV) conservatively and plan your exit strategy around realistic timelines and market conditions. Whether your goal is to sell immediately or refinance into a rental, clarity on your exit plan protects your capital and your credibility with lenders.

Skipping Inspections

Cutting corners on property inspections is a costly mistake. Always invest in a professional inspection—especially when dealing with older or distressed homes. Unseen issues like foundation damage, electrical problems, or plumbing failures can blow up your budget and delay your project significantly.

FAQs About Fix and Flip Loans

Here are answers to some of the most common questions investors ask about fix and flip loans. Whether you’re new to real estate investing or preparing for your first project, these quick explanations will help you understand the essentials.

What’s the difference between a fix-and-flip loan and a hard money loan?

They’re often the same thing. A fix-and-flip loan is a type of hard money loan specifically designed for short-term projects where investors buy, renovate, and sell properties quickly. Hard money loans can also be used for other investment purposes, but fix and flip loans focus exclusively on funding renovations and resales.

How do I calculate my ARV and MAO?

Your After-Repair Value (ARV) is the estimated value of the property after renovations, based on comparable sales. To find your Maximum Allowable Offer (MAO), use the formula: (ARV × 70%) – Repair Costs. This helps ensure you leave room for your profit, holding costs, and lender fees.

How fast can I get funding?

Most fix and flip lenders can close in as little as 5 to 10 business days once your documents are ready. Private and hard money lenders move faster than banks because they base approvals primarily on the property and the deal, not lengthy credit underwriting.

What happens if I finish the flip early or late?

If you finish early, many lenders allow you to pay off the loan ahead of schedule, though some may charge a small prepayment penalty. If your project takes longer than expected, you may need to request a loan extension—often for a small fee—or refinance into another short-term loan to avoid default.

Can I get fix-and-flip loans with bad credit?

Yes, it’s possible. Many hard money and private lenders focus more on the property’s potential and your project plan than your credit score. However, expect to pay slightly higher interest rates or provide a larger down payment if your credit is below 650.

Final Thoughts on the Best Fix & Flip Loans

Finding the best fix-and-flip loan is one of the most important steps in creating a successful, profitable real estate investment. The right financing can be the difference between a smooth project that finishes on time and a stressful one that drains your budget. By understanding loan terms, comparing lenders, and preparing strong documentation, you’ll position yourself for success on your very first flip—and every one that follows.

Remember, fix and flip loans are designed for speed, flexibility, and opportunity. Use this guide to evaluate your options carefully, focusing on total costs, draw schedules, and lender reliability. Don’t just choose the first loan that approves you—choose the one that fits your strategy and timeline.

*Disclosure: Real Estate Skills is not a law firm, and the information contained here does not constitute legal advice. You should consult with an attorney before making any legal conclusions. The information presented here is educational in nature. All investments involve risks, and the past performance of an investment, industry, sector, and/or market does not guarantee future returns or results. Investors are responsible for any investment decision they make. Such decisions should be based on an evaluation of their financial situation, investment objectives, risk tolerance, and liquidity needs.