Requirements at a Glance
Lenders evaluate qualification across three independent boxes: the property fundamentals, the borrower and sponsorship profile, and the business plan or use of proceeds. A single failure in any box can derail a deal even when the other two are strong.
| Category | Requirement | Detail |
|---|---|---|
| Property | LTC constraint | Total loan proceeds cannot exceed 85% of total project cost (acquisition plus hard and soft renovation costs) |
| Property | LTARV constraint | Loan proceeds cannot exceed 75% of the independently appraised after-repair value |
| Property | Appraisal with ARV | As-is and as-completed (ARV) appraisal ordered by or acceptable to the lender, dated within 6 months |
| Property | Asset type and market | Multifamily, mixed-use, and commercial value-add in primary or strong secondary markets preferred; tertiary and hospitality priced wider |
| Business Plan | Detailed renovation budget | Line-item hard cost schedule with division-level breakdowns; soft costs (permits, architecture, contingency) itemized separately |
| Business Plan | Scope of work | Written scope tied to the budget, sufficient for lender draw inspector to verify completion milestones |
| Business Plan | Exit strategy | Signed purchase contract, active listing comparables, or letter of interest from a permanent refinance lender at projected ARV |
| Business Plan | Renovation timeline | Credible month-by-month construction schedule that fits within the loan term with buffer |
| Borrower | Sponsor track record | Minimum 2 comparable fix and flip or value-add executions completed, with documented acquisition cost, renovation cost, sale or refinance proceeds |
| Borrower | Net worth and liquidity | Net worth roughly equal to loan amount; 10% to 15% of loan amount in liquid reserves post-close |
| Borrower | Credit score | 680+ FICO from primary guarantor; hard-money exceptions possible at 620+ with significant equity |
| Contractor | General contractor credentials | Licensed, bonded, and insured GC with verified comparable project experience; lender may require financial statements on contracts over $1M |
| Contractor | Executed construction contract | Fixed-price or guaranteed maximum price contract between sponsor entity and GC prior to first draw |
Documentation You Will Need
Sponsors who arrive at term sheet stage with these documents in hand close 1 to 2 weeks faster than those who scramble during due diligence.
- Borrower personal financial statement (PFS), dated within 60 days
- Schedule of real estate owned including acquisition cost, renovation cost, exit proceeds, and current equity on each project
- 2 years of personal and entity tax returns
- Trailing 12 months bank statements for sponsor entities demonstrating liquidity
- Executed purchase contract for the subject property
- Line-item renovation budget with hard costs, soft costs, and contingency
- Written scope of work tied to the budget
- Month-by-month construction and draw schedule
- Contractor license, insurance certificates, and relevant comparable project list
- As-is and as-completed (ARV) appraisal (lender will typically order independently)
- Phase I environmental site assessment
- Property condition assessment for significant structural or mechanical scope
- Exit strategy documentation: sale comps with broker opinion of value, or letter of interest from permanent lender at ARV
- Entity formation documents (operating agreement, certificate of good standing) for the borrowing entity
What Qualifies You
These are the factors that materially improve qualification odds and pricing.
Proven sponsor track record with documented exits
Lenders require a track record of at least 2 comparable completed executions. Sponsors who can show acquisition cost, total renovation spend, timeline, and exit proceeds on prior deals get tighter pricing and higher proceeds. First-time sponsors typically need an experienced co-sponsor or operating partner to qualify.
Conservative spread between all-in cost and ARV
The wider the margin between total project cost and after-repair value, the more room the lender has if the renovation runs over or the market softens. Deals with 30%+ gross spread between all-in cost and ARV are the easiest to underwrite and command the most aggressive terms.
Credible, licensed general contractor under contract
Lenders fund construction draws against completed work, so the GC's execution capability is a direct underwriting variable. A licensed and bonded GC with a fixed-price contract on comparable prior projects materially reduces lender risk and accelerates draw approvals.
Detailed, line-item renovation budget with adequate contingency
Generic renovation budgets get declined or heavily haircut. Lenders want division-level line items, permits and soft costs broken out, and a contingency line of at least 10% of hard costs. Budgets that clearly match the scope of work reduce draw friction throughout the loan term.
Clear and near-term exit strategy
Fix and flip lenders underwrite exit aggressively because their term is only 12 to 24 months. A signed listing agreement with a broker opinion of value, active comparable sales within the last 90 days, or a letter of interest from a take-out lender all materially strengthen the credit story.
Sufficient liquidity and equity contribution
Sponsors bringing 20% or more of total project cost as equity demonstrate alignment and reduce lender loss exposure. Post-close liquidity covering at least 10% to 15% of the loan amount signals the sponsor can absorb overruns without derailing the project or the exit.
Property in a liquid resale or refinance market
Fix and flip lenders need confidence that the ARV is achievable in the current market. Projects in primary and strong secondary markets with active comparable transactions command the highest LTC and LTARV. Properties in thin or illiquid markets get sized more conservatively regardless of sponsor quality.
What Disqualifies You
Common decline reasons that surface during underwriting. Most can be addressed with structuring or by routing the deal to a different program.
No comparable completed executions on sponsor record
Fix and flip lenders almost universally require at least 2 prior comparable executions. Sponsors without a documented track record on similar property type, renovation scope, and deal size are declined or required to bring on an experienced co-sponsor who guarantees the debt. Track record is not negotiable at most institutional debt funds.
ARV not supported by current market comparables
If the appraiser cannot support the projected after-repair value with closed comparable sales within 90 days and a half-mile radius, the loan sizes back to the LTARV limit on a lower ARV. Deals underwritten to aspirational ARVs rather than current market data are the most common source of sizing disputes and declined term sheets.
Unlicensed contractor or vague scope of work
A lender cannot fund construction draws without a licensed, bonded GC and a scope tied to a line-item budget. Sponsors who plan to self-perform material portions of the work or who present a single-page renovation estimate rather than a detailed budget will be declined at most debt funds and declined or heavily conditioned at hard-money lenders.
Renovation budget with no contingency and timeline that fills the entire loan term
Construction projects run over. A budget with zero contingency and a schedule that consumes the full 12 or 24 month term leaves no room for permit delays, material cost increases, or contractor issues. Lenders will either decline, require a funded contingency reserve, or shorten proceeds to account for the risk.
Recent bankruptcy or active material litigation
Most fix and flip lenders require 7 or more years since any personal or entity bankruptcy. Active litigation against the sponsor, especially involving prior construction projects or real estate partnerships, creates title and judgment lien risk that most lenders will not underwrite around.
Typical Qualified Borrower
If your situation matches one of these profiles, the program is likely a strong fit.
- Experienced multifamily value-add sponsor repositioning a Class C apartment building through a full gut renovation and re-lease
- Commercial real estate investor acquiring a distressed retail or mixed-use building for subdivision and re-tenanting ahead of a refinance or sale
- Residential-to-commercial or commercial conversion sponsor with a detailed architectural plan and municipal entitlement in hand
- Serial fix and flip operator running 3 to 10 projects per year across a defined geographic market, using a debt fund revolving credit facility
- Joint venture partnership where an equity partner brings capital and a seasoned operating partner brings the track record and manages the GC
- Ground-up infill developer bridging a completed but unstabilized asset to a permanent agency or bank take-out after lease-up
Timeline
Fix and flip loans typically close in 21 to 45 days from term sheet acceptance. The critical path items are the as-is and as-completed appraisal (2 to 3 weeks), Phase I environmental (2 to 3 weeks run in parallel), and legal documentation (1 to 2 weeks). Sponsors who arrive at term sheet with a signed purchase contract, a complete line-item budget, an executed GC contract, and a current PFS shave 1 to 2 weeks off the cycle. Hard-money fix and flip lenders can close in 7 to 14 days on clean, lower-complexity deals with strong equity cushion.
Frequently Asked Questions
What is the maximum LTC and LTARV for a fix and flip loan?
Most fix and flip lenders will go up to 85% of total loan-to-cost and 75% of loan-to-after-repair value, with the lower of the two constraints governing loan sizing. A project with a $10M all-in cost and a $13M ARV would be sized at the lesser of $8.5M (85% LTC) and $9.75M (75% LTARV), so proceeds cap at $8.5M in this example.
How many completed projects do I need on my track record to qualify?
Most institutional fix and flip lenders require at least 2 comparable completed executions with documented acquisition cost, renovation spend, timeline, and exit. Track record must be on similar property type and renovation scope, not just any real estate transaction. Sponsors without qualifying track records typically need an experienced co-sponsor or operating partner to guarantee the loan.
Can I use a fix and flip loan to finance the renovation costs as well as the acquisition?
Yes. Fix and flip loans are specifically structured to fund both acquisition and renovation through a single facility. Acquisition proceeds fund at close; renovation costs fund through a draw schedule tied to completed construction milestones verified by a third-party inspector. Total proceeds are capped at the lesser of 85% LTC or 75% LTARV.
What happens if my renovation runs over budget or over the loan term?
Cost overruns are the borrower's responsibility. Lenders fund only to the approved budget; any overrun requires the sponsor to inject additional equity before draws resume. Timeline overruns can be addressed through loan extensions, typically available for 3 to 6 months at 0.25% to 0.50% extension fees, but extensions require lender approval and are not guaranteed.
Do I need a licensed general contractor or can I self-perform the renovation?
Virtually all institutional fix and flip lenders require a licensed, bonded, and insured general contractor under a written contract before closing. Self-performed work is not fundable through the draw process because lenders cannot independently verify completion. Hard-money lenders may allow experienced sponsors to self-perform minor scopes, but a GC is required for any material structural or mechanical work.
What exit strategies do fix and flip lenders accept?
The two primary exits are an outright sale at or near ARV or a permanent refinance once the property is stabilized. Lenders prefer to see active comparable sales within 90 days and a broker opinion of value for sale exits, or a letter of interest from a permanent lender for refinance exits. A clear, near-term exit is underwritten as aggressively as the deal math itself.
What does a fix and flip loan cost all-in?
Typical pricing in May 2026 runs 2 to 3 origination points at close plus a drawn interest rate of 10% to 13% depending on sponsor quality, LTC, and lender type. Debt funds and hard-money lenders sit at the higher end; institutional bridge lenders on cleaner deals price tighter. Add third-party report costs of $5,000 to $15,000 and monthly draw inspection fees of $500 to $1,500 per draw.
Can I qualify for a fix and flip loan with a 620 credit score?
A 620 FICO is below the 680 threshold most institutional fix and flip lenders require, but hard-money and asset-based lenders will go to 620 on deals with strong equity cushion, a proven sponsor track record, and a conservative LTARV. Expect wider pricing, lower proceeds, and full recourse at sub-680 credit. Improving the score above 680 before application meaningfully expands lender options.
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