What Is a Fix and Flip Loan?

A fix and flip loan is short-term financing that covers the purchase and renovation costs of a distressed property, structured so an investor can buy, renovate, and sell within months rather than years. Payments are interest-only, the term usually runs 6 to 24 months, and the loan is based on the deal itself along with the borrower's personal income. For investors who move on tight timelines, this type of loan exists so a slow bank process never costs them a deal.

This guide covers what these loans are called, who uses them, how lenders determine a loan amount, what the process looks like from contract to payoff, and what the financing actually costs. If you already know what kind of loan you are looking for, visit Dominion Financial's Fix and Flip Loans.

Other Names for a Fix and Flip Loan

Lenders and investors use several naming conventions for the same product, and the overlap causes real confusion for newer investors researching financing.

Hard money loan is the traditional industry term, referring to financing secured by the property's value and the deal's economics rather than the borrower's W2 income or credit alone. Residential transition loan, or RTL, is a more formal industry label used in capital markets, describing the same short-term, property-backed loan. Short-term bridge loan is another common label, since the financing bridges the gap between purchasing a distressed property and selling it once renovated. All three terms generally point to the same product: fix and flip loans

These labels describe the same core structure with minor differences in how a lender underwrites and prices the loan. For a full breakdown of how hard money lending works and how it differs from a bank loan, see Dominion Financial's Complete Guide to Hard Money Loans. For the distinction between a bridge loan and a hard money loan specifically, see our guide to understanding Bridge Loan vs. Hard Money.

Who Uses Fix and Flip Loans

Fix and flip loans serve real estate investors buying property to renovate and resell for a profit, not owner-occupants buying a primary residence. Borrowers range from someone completing their first flip to operators running 50 or more projects a year.

Investor purchase activity has stayed meaningful across the housing market. Real estate investors accounted for roughly 30% of single-family home purchases in the U.S. in 2025, according to Cotality's Home Investor Report, and small and medium investors, not large institutions, drove most of that activity. Fix and flip financing exists specifically to serve that segment, since these buyers need capital that moves as fast as their deals do and does not depend on their personal debt-to-income ratio the way a conventional mortgage does.

How Loan Size Is Calculated: LTC and ARV

A fix and flip loan amount is not set by the purchase price alone. Two main figures work together, and the lower of the two typically caps the loan.

Loan to cost, or LTC, measures the loan against the total cost of the deal, meaning the purchase price plus the rehab budget. A lender offering 100% LTC will finance the full purchase price and the full renovation cost, so the investor brings little to no cash to closing beyond closing costs. To understand how 100% LTC financing actually works in practice, see What "100% LTC" Really Means.

After repair value, or ARV, measures the loan against the property's projected value once renovations are complete, typically capped around 70%. This protects the lender if the finished value comes in lower than projected.

Here is an example showing how the lower of the two caps applies.

In this example, even though 100% LTC would support a $310,000 loan, the 70% ARV cap limits the loan to $280,000, so the investor covers the $30,000 difference out of pocket. On a deal with a lower rehab budget or higher ARV, the LTC cap can end up being the binding constraint instead. Lenders run both calculations on every deal, and the borrower needs to know which number is actually driving their loan amount before they make an offer.

The Fix and Flip Loan Process: 5 Steps

The process moves in a fairly consistent order across lenders, though speed and documentation requirements vary widely.

1. Identify and underwrite the deal. The investor finds a property, builds a scope of work and rehab budget, and estimates ARV using comparable sales.

2. Submit the loan application. The investor submits the purchase contract, budget, and basic financial documentation to the lender.

3. Close on the loan. The lender reviews the deal, confirms the LTC and ARV numbers, and funds the loan. This step is where lenders differentiate most on speed, since some require a full appraisal and others do not.

4. Complete the rehab and draw funds. As work finishes in stages, the investor requests draws against the rehab budget to reimburse completed work.

5. Sell or refinance to pay off the loan. The investor lists and sells the finished property, using the sale proceeds to pay off the loan, or refinances into a longer-term loan if the plan shifts to holding the property as a rental.

What a Fix and Flip Loan Costs

Pricing on fix and flip loans runs higher than a conventional mortgage because the loan is short-term, asset-based, and funded faster with less documentation. Investors should expect the following cost components.

The interest rate typically runs in the high single-digit, low double-digit range, quoted as an annual rate even though the loan term is measured in months. Origination points usually run 1 to 3 points, charged as a percentage of the loan amount at closing, though some lenders offer a no origination point option at a slightly higher rate. Extension fees apply if the project runs past the original term and the investor needs additional time before the exit.

Rate and points matter because they eat directly into flip margin on a timeline where every additional month adds carrying cost. National flip profitability shows why. According to ATTOM's Q1 2026 U.S. Home Flipping Report, the typical U.S. home flip generated a 25.4% gross profit margin in the first quarter of 2026, with a typical gross profit of $66,000 before financing and renovation costs. That gross figure only becomes real profit after the cost of capital comes out of it, which is why the rate, the points, and how fast the loan closes all affect whether a deal is worth doing in the first place.

Dominion Financial's Fix and Flip Loan Program

Dominion Financial built its fix and flip program around the way investors actually operate, not around a bank's internal process.

No appraisal is required. Instead of ordering a formal appraisal, Dominion Financial has an in-house valuation team that uses proprietary tools and market data to determine property value and ARV, which removes one of the biggest bottlenecks in a conventional closing timeline. Closings can happen in as little as 48 hours once a deal is underwritten, fast enough to compete with cash buyers. Up to 100% of purchase and rehab costs can be financed, so investors preserve personal capital for their next deal instead of tying it up in one project. Draws are funded in days, not weeks or months like many other lenders, which keeps the renovation on schedule instead of stalling for paperwork. On certain loans, Dominion Financial also lends from its own balance sheet rather than routing every decision through a third-party investor, which allows more flexibility on deals that fall outside a standard box. And there is no prepayment penalty, so investors can sell or refinance the moment the project is done without an early payoff cost working against them.

Compare that against a conventional mortgage timeline, where the average purchase loan still takes roughly 42 days to close according to ICE Mortgage Technology data cited by Rocket Mortgage. A 42-day close is a workable timeline for a primary residence purchase. It is not workable for an investor competing against cash buyers on a distressed property. Full program details are on the Fix and Flip Loans & Financing page.

Fix and Flip Loans vs Other Financing Options

Investors weigh several options to fund a flip, and each comes with a different speed, cost, and flexibility profile.

Each option trades speed against cost differently, and the right choice depends on how much capital an investor wants tied up in a single deal versus how many deals they want running at once. For a full side-by-side breakdown of every financing path available to flippers, see How to Finance a House Flip: Every Option Compared.

What Happens After the Flip: Sell or Refinance

Most fix and flip loans assume the investor will sell the finished property and pay off the loan with the proceeds. That said, plans change mid-project, and a growing number of investors decide to hold the property as a rental instead of selling once the rehab is finished.

In that case, the investor refinances the fix and flip loan into a long-term rental loan rather than listing the property. This approach, often called the BRRRR method, lets an investor recycle the same capital across multiple properties instead of leaving it parked in one deal. It also gives an investor a second exit path if the sale market softens before the project wraps. For a full breakdown of how that strategy works, see The BRRRR Method Guide. And for the underlying math on why holding time affects returns as much as the interest rate does, see Why Selling Speed Matters More Than Cost of Capital.

Takeaways

A fix and flip loan gives real estate investors short-term, interest-only financing sized off a deal's total cost and projected after-repair value, closing in days rather than the 30 to 45 days a conventional mortgage typically requires. The tradeoff for that speed is a higher rate, but for investors competing on distressed properties, the ability to close fast and preserve cash for the next deal usually outweighs the cost difference.

If you are ready to see what a fix and flip loan looks like on your next deal, get a quote from Dominion Financial or explore the full Fix and Flip Loans & Financing program.