A fix and flip loan funds an acquisition and renovation on an investor timeline.
The two things that matter most are ARV credibility and a rehab plan that can actually be executed.
Most draw problems come from vague scopes, missing photos, and unclear milestones.
Your budget should be line-item and built around inspections and draw releases.
Underwrite your flip like a business: timeline, holding costs, exit price realism, and contingency.
Use this guide to structure your deal so the money flows and the project finishes on schedule.
At a glance
- Fix and flip loans are short-term and asset-based
- Draw schedules depend on verified completed work
- ARV must be supported by comps
- Line-item budgets reduce draw delays
- Holding costs destroy profits when timelines slip
- A backup exit protects you if the market shifts
How fix and flip loans are typically structured
Most fix-and-flip structures combine purchase financing with renovation funds released in draws. Terms depend on leverage, property condition, and deal risk. Rehab funding is usually staged, not given in a lump sum.
What lenders look at in a flip
- Purchase basis vs market value
- ARV support (comps + scope alignment)
- Scope realism (work matches budget and timeline)
- Execution plan (contractor, permits, sequencing)
- Exit plan (listing strategy, buyer demand, days on market expectations)
Rehab draws without drama: keep funds moving
- Write milestones that match inspections (demo, rough-in, finishes, punch)
- Photograph before and after each milestone
- Submit draw requests with documentation and invoices
- Avoid scope creep; communicate changes early
- Build contingency into your budget
The 5 mistakes that kill flip profits
- Overstating ARV and underestimating days on market
- Underestimating holding costs (interest, utilities, insurance, taxes)
- Ignoring permitting delays in your timeline
- Contractor capacity mismatched to project complexity
- No backup exit (rent/refi) if resale demand softens
Next step
Fix & Flip program: https://ambitionlending.co/fix-flip-loans/
Submit a deal: https://ambitionlending.co/
Frequently Asked Questions
Do fix and flip loans fund rehab?
Many fix-and-flip loans include rehab funds released through draws as work is completed. Structure depends on the deal and risk profile.
What is ARV and why does it matter?
ARV is the estimated value after renovation. It drives underwriting because it affects leverage and the lender’s risk on the exit.
How do rehab draws work?
Draws are released in stages tied to completed work. Progress is verified through photos and/or inspections before funds are released.
Can a first-time investor get a fix and flip loan?
Yes, depending on deal strength, leverage, and the execution plan. Strong contractors and a detailed scope help.
What should be in my rehab budget?
A line-item scope of work with materials, labor, and contingency, tied to milestones that can be inspected.
What is the best exit strategy?
The best exit is the one you can execute on time. A primary exit (sell) plus a backup exit (rent/refi) reduces risk.
