Fix & Flip · Florida

How does a fix-and-flip loan work?

A fix-and-flip loan is short-term business-purpose financing to buy and renovate an investment property. The lender typically sizes it on the purchase price, rehab budget and after-repair value, funds the purchase at closing, and releases renovation money in draws as work is completed. You then sell the finished property or refinance into long-term rental financing.

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By Chad Evers, NMLS #2822744 Last reviewed: October 26, 2026

What does a fix-and-flip loan actually pay for?

It can combine two pieces:

  1. Acquisition financing: money toward the purchase.
  2. Rehab financing: money committed for eligible renovation work.

They're delivered differently. Purchase funds are generally advanced at closing; rehab funds are commonly held back and released in draws as work progresses. So a "$250,000 loan" doesn't mean $250,000 in cash on closing day. Part of it may sit in a controlled rehab account until the work it covers is done.

How does the lender decide how much to lend?

Three numbers drive it:

Lenders typically cap the loan using several measures, such as loan-to-purchase-price, loan-to-cost and loan-to-ARV, and the lowest one can set the final commitment. Percentages vary by program. A big ARV doesn't mean the lender will finance the whole purchase and renovation.

Worked scenario: Florida fix-and-flip

An investor finds a Florida single-family property.

Loan-to-cost: $247,000 ÷ $280,000 = 88.2%
Loan-to-ARV: $247,000 ÷ $360,000 = 68.6%

The investor still covers the rest of the purchase price, closing costs, lender fees, and holding costs not in the loan. If the project takes six months and holding costs (taxes, insurance, utilities, loan payments and the like) run $2,500 a month, that's 6 × $2,500 = $15,000, which belongs in the project math even though it isn't in the rehab budget.

ARV minus purchase price isn't your profit. The leverage figures here are illustrative, not program terms.

How do rehab draws work?

The lender generally doesn't release the full renovation budget up front. A common sequence:

  1. The rehab budget is agreed before closing.
  2. You start work with your own initial capital.
  3. A stage of work is completed.
  4. You request a draw.
  5. The lender or its inspector verifies the work.
  6. Eligible funds are released.
  7. The next stage begins.

Many programs reimburse completed work; draw structures vary. That creates a cash-flow gap investors often miss: even when the loan funds the rehab, you may need enough cash to pay contractors between draws. Ask exactly when and how draw funds are released before you close.

What happens during a draw inspection?

The inspector confirms progress: which line items are complete, the percentage done, visible work quality, what's left, and the property's condition. The inspection doesn't replace managing your contractor, and it isn't a certification that the work meets code. Permits and building inspections are separate.

How do points and lender fees work?

A point is a fee equal to 1% of the loan amount. On a $200,000 loan, 1 point is $2,000, so 2 points is $4,000. That's arithmetic, not what any particular loan will charge.

When comparing flip financing, ask separately about origination points, underwriting or processing fees, the appraisal, draw fees, inspection fees, legal or document fees, extension fees, and closing costs. A loan with a lower headline cost can end up more expensive if the project needs many fee-bearing draws or an extension.

How long is a fix-and-flip loan?

Short-term: long enough to cover the purchase, renovation, marketing or leasing, and the sale or refinance. The exact term varies by program.

Don't build a schedule that finishes exactly at maturity. Leave room for permit, contractor and material delays, inspections, listing time, the buyer's financing and refinance underwriting. A six-month construction plan inside a six-month loan leaves no margin.

What if the flip takes longer than the loan term?

An extension may be available, but never treat it as automatic. The lender may require an extension fee, a current loan, updated insurance and project information, more equity, or evidence the project can realistically finish. Terms vary by loan. Read the extension language before you close; an extension written into the contract is very different from hoping a lender will extend a matured loan.

Does a first-time flipper qualify differently?

Some programs consider first-time investors; others favor borrowers with completed projects. A first-time flipper may see lower leverage, more required equity, higher liquidity expectations, stronger credit requirements and closer scrutiny of the rehab plan and contractor.

Make up for limited experience with a conservative project: a clear scope, a realistic contractor bid, an adequate contingency, a straightforward property type and strong exit options. Your first project isn't the place to combine structural work, difficult permitting and an aggressive ARV.

What permits do I need in Florida?

Florida law makes it unlawful to construct, erect, alter, modify, repair or demolish a building without first obtaining a permit from the local enforcement agency, subject to the statute's exceptions. What needs a permit depends on the work and your local building department.

Florida also requires a state license for many kinds of paid construction work. The Department of Business and Professional Regulation lists examples such as structural alterations to a load-bearing wall, roofing, plumbing and central air-conditioning installation.

Before you close, find out:

Don't let the financing timeline assume unpermitted work can start right after closing.

Why does insurance matter more in Florida?

A flip has a different insurance profile from a finished rental. The property may be vacant, under construction, missing systems, in an older building, exposed to wind or flood risk, or uninsurable under a standard landlord policy during renovation. The lender will require acceptable hazard coverage. Get a real insurance quote before closing instead of budgeting from the seller's old premium. A project that works at one insurance number can fail at another.

What changes if the flip is a Florida condo?

A condo adds building-level risk on top of the unit renovation. Before assuming a renovated condo will be easy to sell or refinance, check association approval for the work, rental restrictions, special assessments, insurance, milestone inspection status, structural repairs, reserves and litigation.

Florida law requires milestone structural inspections for condominium and cooperative buildings three habitable stories or more, starting by the year the building turns 30 (25 where the local agency requires). See how Florida condo milestone inspection and reserve rules affect investor financing.

What is the exit from a fix-and-flip loan?

Know your exit before you close. There are two main paths.

Sell. Renovate, list and sell, and the sale proceeds pay off the loan. Your actual profit depends on the purchase, rehab, financing, holding costs, selling costs and surprises, not just the ARV.

Keep and refinance. If the finished property works as a rental, you can refinance the short-term loan into long-term rental financing, underwritten on the completed property under current rules. See can I refinance a hard-money loan into a DSCR loan? and BRRRR method financing. Don't assume the refinance will happen at a particular month or value; seasoning, appraisal, rent and program requirements all have to be met at the time.

Viador Partners reviews both sides, the flip loan and the long-term refinance, so the exit is mapped out before you buy.

What you'll need

For a first project, the scope of work and contractor bid matter most.

When doesn't a fix-and-flip loan work?

Financing can solve a capital problem. It can't fix a bad purchase price or an unrealistic renovation plan.

FAQ

It can finance part of the purchase and an eligible renovation budget. Purchase funds are typically advanced at closing, while rehab funds are often held back and released in draws as completed work is verified. Exact structures vary by program.

Programs typically look at the purchase price, total project cost and expected after-repair value. The lender may apply loan-to-purchase, loan-to-cost and loan-to-ARV limits, and the most restrictive one sets the final commitment. The percentages vary by program.

After-repair value is the property's expected market value once the planned renovation is finished. It isn't simply the purchase price plus rehab cost. The lender or appraiser typically bases it on comparable renovated properties and the proposed scope of work.

Rehab funds are commonly released in stages after work is completed and verified. Depending on the program, you may need to pay contractors before you're reimbursed, so you need enough cash to bridge the gap between contractor invoices and lender draws.

Some programs consider first-time flippers, while others require experience or apply more conservative terms. Credit, liquidity, contractor quality, the rehab scope and the exit plan matter even more when you don't have a completed project behind you.

You may need an extension if the loan matures before the property is sold or refinanced. Extensions depend on the loan contract and can carry fees or conditions. Never assume one will be granted automatically.

Potentially. If the renovated property works as a rental, you may refinance the short-term flip loan into long-term rental financing. That refinance is underwritten separately, on the finished property's current value, rent and program rules.

Educational information only. Not a commitment to lend, and not tax or legal advice. Programs, limits and pricing are set by the lender and vary by borrower, property and state.

Sources

Financing a Florida Flip?

Send the purchase price, the rehab scope and budget, your ARV comps and whether you plan to sell or keep it. You’ll hear how the loan is likely to be sized and how the exit lines up.

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