Fix-and-flipping is one of the fastest and most profitable ways to make money in real estate.
Unlike rental properties, where profits come in small amounts over time, with a fix-and-flip you can make a big chunk of money in just a few months.
And the best part?
You don’t need to have capital to buy the property.
It’s very common for fix-and-flippers to use loans to purchase, renovate and sell properties without tying up their own cash.
But getting a loan isn’t easy or straightforward
That’s why in this blog, we’re covering the 9 most common ways to secure a fix-and-flip loan. By the end, you’ll know exactly how to fund your next deal—and get closer to your first big payday.
What is a Fix-and-Flip Loan?
Fixing and flipping is the process of buying a distressed property, renovating it, and selling it for a profit.
It’s a popular way to get started in real estate investing.
However, not many people (especially beginner investors) have the capital to purchase a property in cash and pay for the rehab themselves. That’s why these investors seek out fix-and-flip loans to finance their deals.
In fact, even experienced real estate investors will take out fix-and-flip loans, usually because their capital is tied up in other deals.
But there’s an important point to make here: fix-and-flipping is complex and expensive.
According to investors at BiggerPockets, the “life cycle” costs for fix-and-flip projects typically can range from $23,000 to $48,000. These costs include:
- Downpayment
- Closing costs
- Insurance
- Holding costs of the loan
- Utilities and property taxes until you sell or refinance
- Downpayment to the contractor to begin work
See the video below from Ryan Dossey (Call Porter co-founder) for an example of a fix-and-flip property that cost $61k to rehab, and went under contract after 7 days on the MLS.
Fix-and-Flip vs Traditional Home Loans
Fix-and-flip loans and traditional home loans (or mortgages) are both types of real estate financing.
But there are major differences between the two.
Fix-and-flip loans are short-term, with repayment durations typically around 6 months and rarely exceeding 2 years. Meanwhile, home loans are long-term and repaid over 20-30 years or more.
Interest rates are another big difference.
Fix-and-flip loans can have interest rates as high as 12-18%, while traditional home loans often have rates as low as 2-4%.
Because of these differences, banks, private lenders, and other short-term capital sources view fix-and-flip loans differently than traditional mortgages. This means you’ll find unique requirements, including different types of collateral and eligibility standards.
For instance, you could secure a fix-and-flip loan even if your credit score disqualifies you from a traditional home loan.
3 Main Ways to Determine a Fix-and-Flip Loan
If you want to mortgage a home, the bank will get a licensed appraiser to determine the property’s current value.
The amount you can borrow is based on this appraisal.
Fix-and-flip loans are different.
This is because investors buy distressed properties and sell them at a higher price after renovation. So lenders calculate the loan using different methods.
The main three are:
- Loan-to-Value Ratio (LTV):
This formula compares the loan amount to the property’s value as it stands.
Like a traditional bank, when using LTV a fix-and-flip lender might provide up to 90% of the property’s value. - Loan-to-Cost Ratio (LTC):
This formula looks at the loan amount compared to the total cost of the project.
Total costs include the property purchase price, renovation expenses, and other related costs. - After-Repair Value (ARV):
ARV is the estimated value of the property after renovations are completed. Lenders usually offer up to 70% of ARV for a fix-and-flip loan.
5 Benefits of a Fix and Flip Loan
Fast Funding
Investors purchasing foreclosures or auctioned properties need cash quickly. While traditional home loans can take a month or more to process, hard money fix-and-flip loans can deliver funds within a week (or less).
Flexible Terms
Fix-and-flip loans from private lenders offer more flexibility than traditional bank loans. These loans aren’t tied to the same strict processes and requirements, allowing borrowers who don’t qualify for traditional financing to secure funding.
Less Risk
Traditional home loans are backed by your personal credit and property, putting your home at risk. Hard money loans, however, are backed only by the property being flipped—limiting your personal financial exposure.
Good for Beginners
Even first-time investors with limited credit history or personal capital can use fix-and-flip loans to get started. The structure of these loans can help new investors access deals that would otherwise be out of reach.
Profitable
Fix-and-flip loans enable investors to leverage borrowed funds to purchase, renovate, and sell properties. This creates the opportunity to generate significant profits in a short period of time.
Check out the video below on Ryan Dossey explaining how he made $47,000 in 90 days by fixing-and-flipping properties.
9 Types of Fix-and-Flip Loans for Real Estate Investors
1. Business line of credit
A line of credit is a flexible financing option that allows you to borrow money up to a predetermined credit limit.
Unlike a traditional loan, you pay interest on the amount you use. This makes it ideal for fix-and-flip projects where you don’t know the exact amount you need.
The biggest advantage of a business line of credit is this flexibility.
There are two main types of business lines of credit:
- Secured Business Line of Credit: This type requires collateral, such as property, equipment, or other assets, to secure the loan.
- Unsecured Business Line of Credit: This type doesn’t require collateral, but lenders will carefully review your credit score, time in business, and financial history to assess your eligibility.
To get a line of credit, you’ll need to have a business, demonstrate consistent revenue, and have a solid credit score.
For beginners or those without a legitimate business, securing a line of credit might not be an option. You’ll need to explore other loan options below.
2. Hard Money Fix and Flip Loans
A hard money fix-and-flip loan is a short-term loan specifically designed for real estate investors.
These loans are offered by private investors, specialized companies, or investment groups rather than traditional banks.
One key benefit is flexible eligibility requirements.
Since the property itself serves as collateral, you don’t need perfect credit or a long financial history to qualify. Additionally, hard money lenders can fund loans quickly—often within 1-2 weeks—making them ideal for time-sensitive deals like foreclosures or auctions.
Repayment terms range from the day of closing to 6-24 months.
While a hard money loan might be flexible and fast, the interest rates are high and range from 12-18%.
3. Conventional Loan
You can get a conventional loan from a bank or credit union to finance your fix-and-flip.
Conventional loans have lower interest rates (usually between 2-6%) but usually have longer repayment terms (typically 15 to 30 years).
Unlike hard money loans or business lines of credit, conventional loans have strict eligibility requirements. This means good credit, a steady income, and a low debt-to-income ratio.
They also lack the speed and flexibility of other options, making them less suitable for fast-moving fix-and-flip deals.
4. Private Lender
A private lender is an individual who offers money from their own resources in exchange for a fixed fee or interest rate.
Some fix-and-flippers turn to friends or family for private loans. (We are not recommending you do this, due to the financial and personal risks involved.)
A better approach is to find private lenders through local real estate networking events.
Another option is joining a mastermind like Ryan Dossey’s Create Cash Flow (CCF), which connects you with hundreds of real estate investors collaborating and financing each other’s projects.
For an example, check out this video of Ryan Dossey sharing a deal he personally financed for someone in CCF.
5. Home Equity Loans (HELs) and Home Equity Lines of Credit (HELOCs)
Home equity loans and HELOCs let you access capital based on the value of your home.
A home equity loan (HEL) gives you a lump sum upfront, while a home equity line of credit (HELOC) allows you to borrow as needed, up to a set limit.
To qualify, you usually need at least 15% equity in your home, good credit, and enough income to cover both your mortgage and the payments on the loan or credit line.
Home equity loans usually have terms between 5 and 20 years. HELOCs, on the other hand, often have a 10-year “draw period” where you can borrow money, followed by a 20-year repayment period.
While home equity loans and HELOCs offer low interest rates, they come with risks.
You’ll need to own a home and be willing to use it as collateral, which could put your personal finances on the line if something goes wrong.
6. Cash-out Refinance
A cash-out refinance allows you to take out a new mortgage on a property—whether or not it currently has a loan—for a larger amount, giving you the difference in cash.
This can provide funds to purchase and renovate a new property.
(NOTE: Unlike a HEL or HELOC, a cash-out refinance replaces your existing mortgage with a new one.)
Cash-out refinancing ties directly into the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method of real estate investing. In this strategy, investors refinance a property after increasing its value through renovations, pulling out equity to fund their next deal.
Check out the video below, where Ryan Dossey explains how he used this method to close over $8 million in assets within just two years.
7. Crowdfunding
Flippers can use crowdfunding platforms to finance their projects by accessing funds from multiple investors who pool their money.
Some platforms offer hard money loans, where each investor funds a small percentage of the loan and earns interest in return.
But there are some downsides.
The process can be slower compared to private or hard money lenders, as evaluating and committing to a deal often takes more time.
Crowdfunding platforms also usually have fixed terms for each deal so there’s little room for negotiation.
8. Seller financing
Seller financing, or owner financing, is when the seller acts as the lender.
The terms can include a balloon payment at the end, and if you can’t pay, the seller may repossess the property.
This option can be fast and accessible if you can’t qualify for other loans. But it’s rare since most sellers prefer an upfront payment. You also need to enter a negotiation with a seller before you even know if it’s viable.
9. Traditional Mortgage
Getting a traditional mortgage from a bank is possible.
But it’s not practical.
Banks have stricter requirements (such as higher credit scores and larger down payments) which can be challenging for many fix-and-flippers.
Additionally, a long approval process doesn’t align well with the fast-paced nature of flipping.
How Do You Find Good Fix-and-Flip Deals?
Fix-and-flipping is a highly profitable real estate investment strategy and a great starting point for beginners.
But often the hardest part is not getting funding.
It’s finding distressed properties to purchase at a low price.
That’s where Ryan Dossey stands out. Ryan is well-known for his effective real estate direct mail tactics, helping investors generate high-quality seller leads.
However, even with great marketing, handling and qualifying all those leads is overwhelming.
To solve this, Ryan co-founded Call Porter—a call-answering service for real estate investors.
Call Porter provides expertly trained, U.S.-based reps who answer calls in your company name, qualify leads, and schedule appointments directly on your calendar.
By combining Call Porter’s services with Ryan’s direct mail tips and the supportive CCF community, you’ll have everything you need to generate leads, find private lenders, and successfully start your fix-and-flip journey.