Are you dreaming of flipping your first property but don’t have the cash to get started? A fix-and-flip loan might be your golden ticket.
House flipping has become one of the most popular real estate investment strategies in recent years. At the heart of this profitable venture is a powerful financing tool known as the fix-and-flip Loan. Whether you’re just starting out or are a seasoned investor looking to scale your real estate portfolio, understanding how fix-and-flip loans work can make or break your success.
In this guide, we’ll explain precisely how a fix-and-flip loan works, who it’s for, why it’s better than using personal cash, and how Trentium Capital can fund your next flip faster than the competition.
What Is a Fix-and-Flip Loan?
A fix-and-flip loan is a short-term real estate loan explicitly designed for investors who buy undervalued or distressed properties, renovate them, and then sell them quickly for a profit.
Unlike traditional mortgages, private or hard money lenders typically offer fix-and-flip loans. These loans are based more on the property’s potential after-repair value (ARV) than the borrower’s income or long credit history. That means you can get financing even if you’re self-employed or don’t have perfect credit.
In short, it’s fast, flexible financing for investors who know how to turn rough properties into real estate gold.
How Does a Fix-and-Flip Loan Work?
1. Apply for the Loan
You start by submitting a loan application to a lender like Trentium Capital. You’ll need to provide key information about the property, such as the purchase price, estimated renovation costs, expected ARV, and your plan to sell or refinance once it’s done.
2. Review and Approval
If the numbers make sense, you’ll receive loan terms. Most fix-and-flip loans offer up to 85-90% of the purchase price and 100% of the rehab costs, depending on your experience and the deal’s strength. These are usually interest-only loans with terms between 6 and 12 months.
The best part? Approval can happen in as little as 24 to 48 hours.
3. Closing the Deal
Once approved, Trentium Capital wires the funds for closing. This is where fix-and-flip loans shine. They close fast, often faster than all-cash offers, giving you a competitive edge in hot markets.
4. Renovate the Property
As you begin renovations, funds for the rehab are distributed in draws, meaning you get money as milestones are completed. This keeps the project funded without dipping into your savings.
5. Sell or Refinance
Once the property is flipped, you either sell it for a profit, repay the Loan, and pocket the difference, or refinance into a long-term rental loan if you choose to keep it as a rental.
Why Use a Fix and Flip Loan Instead of Your Cash?
| Fix and Flip Loan | Personal Funds |
|---|---|
| Leverage more projects | Limited by your cash |
| Preserves liquidity | Ties up capital |
| Fast closings | May slow deal speed |
| Tax-deductible interest | No financial leverage |
Types of Fix-and-Flip Financing
Not all fix-and-flip loans are created equal. Depending on your budget, credit, experience, and project goals, several types of financing are available to fund your flip. Understanding the options can help you choose the best one for your specific deal.
Here are the most common types of fix-and-flip financing:
1. Hard Money Loans
Hard money loans are the most popular financing option for fix-and-flip investors. These short-term loans are provided by private lenders or lending companies (like Trentium Capital) based primarily on the property’s after-repair value (ARV) rather than the borrower’s income or credit history.
Key Features:
- Fast funding (as little as 48 hours)
- High loan-to-value (LTV) ratios
- Interest-only payments
- Terms are usually between 6 to 12 months
Best For: Investors who need fast access to capital and want to leverage the deal, not personal credit.
2. Private Money Loans
Private loans are similar to hard money loans but typically come from individuals rather than companies, such as friends, family members, or personal investors.
Key Features:
- Flexible terms based on your relationship
- Negotiable interest rates and repayment plans
- Fewer formal requirements
Best For: Investors with access to a personal network who are willing to fund deals.
3. Home Equity Line of Credit (HELOC)
If you already own a property with equity, you can tap into that through a HELOC. This revolving line of credit allows you to borrow against your home and use the funds for fix-and-flip projects.
Key Features:
- Lower interest rates (compared to hard money)
- Reusable credit line
- Tied to the equity in your home
Best For: Homeowners with substantial equity who want a low-cost funding option for flipping.
4. Bridge Loans
Bridge loans are short-term financing solutions that “bridge” the gap between buying and selling properties. They can be used to purchase and quickly renovate a property while waiting for the final sale.
Key Features:
- Short terms (typically 6–12 months)
- Fast approvals
- Can cover down payments or carry costs
Best For: Investors who must act quickly on new deals while waiting for cash from a previous sale.
5. Cash-Out Refinance
If you own rental properties or other real estate, a cash-out refinance lets you use the equity in those assets to fund a new fix-and-flip project.
Key Features:
- Lower interest rates than hard money loans
- Based on property value and equity
- Requires good credit and underwriting approval
Best For: Experienced investors with equity-rich properties looking for lower-cost funding.
6. Business Line of Credit
Some investors use a business line of credit from a bank or online lender to fund parts of their fix-and-flip deal, especially for smaller rehabs or materials.
Key Features:
- Flexible draw amounts
- Reusable credit
- Requires business credit and solid financials
Best For: Established investors or LLCs with ongoing flipping operations.
Advantages and Disadvantages of a Fix-and-Flip Loan
Like any financing tool, fix-and-flip loans have benefits and drawbacks. Understanding both sides will help you decide if this strategy fits your real estate investment goals.
Advantages of a Fix-and-Flip Loan
1. Fast Access to Capital
Traditional mortgages can take weeks or even months to close. Fix-and-flip loans are designed for speed, especially from private lenders like Trentium Capital. Many investors get approved within 24 to 48 hours, allowing them to move quickly on competitive deals.
2. Leverage Your Investment
You don’t need to tie up all your cash. These loans typically cover up to 90% of the purchase price and 100% of the rehab costs, giving you the power to take on multiple projects at once and grow your portfolio faster.
3. Flexible Underwriting Criteria
Unlike banks, fix and flip lenders don’t focus solely on your W-2 income or perfect credit. Approval is often based more on the value of the deal and after-repair value (ARV) than your financial history.
4. Interest-Only Payments
Most fix-and-flip loans are interest-only, which keeps monthly payments low during the renovation phase, helping you manage cash flow while increasing property value.
5. Ideal for Short-Term Projects
These loans are purpose-built for 6–12 month projects, making them perfect for quick flips where traditional long-term financing wouldn’t make sense.
Disadvantages of a Fix-and-Flip Loan
1. Higher Interest Rates
Compared to traditional mortgages, fix-and-flip loans have higher interest rates, often 8% to 12% or more. This reflects the short-term nature and higher risk of the Loan.
2. Short Repayment Period
These loans must be repaid quickly, usually within 6 to 12 months. If your project hits delays or the property doesn’t sell as fast as expected, you may need to refinance or extend the Loan (often with added fees).
3. Closing Costs and Fees
Fix and flip loans can include origination fees, points, and draw fees, which add to your project’s cost. While these are standard in the industry, it’s crucial to factor them into your budget.
4. Requires a Strong Exit Strategy
Because the timeline is tight, you need a clear and realistic plan to sell or refinance the property once renovations are complete. Without that, you risk running into financial trouble.
5. Property Must Make Financial Sense
Not every deal qualifies. If the property’s ARV isn’t high enough or the renovation costs outweigh the potential profit, lenders may decline the Loan even if your credit is solid.
Who Qualifies for a Fix and Flip Loan?
You don’t need perfect credit, tons of cash, or years of experience to qualify. Most lenders are more focused on the property deal itself than your finances.
Typical qualifications include:
- A minimum credit score (usually 600+ is fine)
- A solid renovation plan with a realistic budget
- A good deal with strong ARV potential
- Prior experience (preferred but not required)
Tritium Capital works with experienced investors and first-time flippers, offering custom solutions that match your experience level and project needs.
Top 5 FAQs About Fix and Flip Loans
1. What is a fix-and-flip loan?
A fix-and-flip loan is a short-term real estate loan used by investors to purchase, renovate, and resell properties for profit. These loans are typically repaid within 6–12 months.
2. How do I qualify for a fix-and-flip loan?
Most lenders look at your credit score, the strength of the property deal, and your renovation plan. Experience helps but isn’t always required, especially with Trentium Capital.
3. How fast can I get funding for a flip?
Depending on documentation and title, Trentium Capital can issue pre-approvals within 24 hours and fund your deal in as little as 2–5 business days.
4. Do I need experience to qualify?
No. While experienced investors may get better rates, first-time flippers can still qualify with a solid plan and a profitable deal.
5. Can I get a fix and flip Loan with bad credit?
Yes, many lenders, including Trentium, offer options for borrowers with lower credit scores as long as the deal is solid and backed by a strong ARV.
Why Choose Trentium Capital for Your Fix-and-Flip Loan?
Trentium Capital is not your average lender. We specialize in helping real estate investors maximize profits with fast, flexible financing tailored to the unique demands of the fix-and-flip world.
Here’s why more investors are choosing us:
- Up to 100% rehab financing
- Same-day approvals and 48-hour closings
- Investor-friendly terms
- Real estate experts who understand flipping
- Nationwide lending with competitive rates
With Trentium, you don’t just get capital. You get a partner who’s committed to your success.
