Fix-and-Flip Financing: How Project Lenders Read a Deal

Fix-and-flip financing is underwritten on the project, not mainly on you. The lender is asking whether the numbers on this specific property work, and whether you can execute the renovation and exit. That makes the deal package the whole conversation.

The three numbers that matter

• Purchase price — what you're paying, under contract.
• Rehab budget — scope of work, itemized, with contractor bids where possible.
• After-repair value — supported by comparable sales, not optimism.

Project lenders typically lend against a percentage of these figures rather than the full amount, which means equity from you. Budgets that come in as a single round number, or after-repair values without comparables, are the fastest way to lose credibility.

Money usually arrives in draws

Renovation funds are commonly released in stages as work is completed and inspected, not as a lump sum at closing. That means you need cash to start each phase and get reimbursed after. Plan working capital for the gap — it's the most common cause of a stalled project.

The exit is part of the underwriting

Short-term project financing expects to be repaid by a defined event: a sale, or a refinance into a longer-term loan. Be specific about which, and what happens if the sale takes longer than planned. If your exit is a refinance, understand those requirements before you start — see commercial real estate financing and owner-occupied vs investment property.

What experience does

Completed projects strengthen a file substantially. If this is your first, expect more equity required and more scrutiny of your contractor and scope. Bringing an experienced general contractor with a track record helps address it.

Related: bridge financing and the longer-term paths overview.