How a fix and flip loan is structured
A fix and flip loan, also called a rehab or hard money loan, has two parts. An initial advance at closing covers most of the purchase price, often 80% to 90%. A rehab holdback then covers up to 100% of the renovation budget and is released in draws as the work is inspected. Most lenders also cap the total loan at around 70% to 75% of the after-repair value.
Terms are short, typically 6 to 18 months, with interest-only payments and the principal repaid when the property sells or is refinanced. Most lenders charge origination points at closing: one point is 1% of the loan.
Dutch versus non-Dutch interest
This is the biggest difference between fix and flip quotes. With Dutch interest, you pay interest on the whole loan, including the rehab holdback, from closing, even though you receive the rehab money later. With non-Dutch interest, you pay interest only on money actually drawn. Dutch interest is the default at many lenders, so check your term sheet.
Choose Full loan from day one for Dutch interest. Choose Even monthly draws, Front-loaded or Back-loaded for non-Dutch interest; front-loaded draws release more money early and cost more than back-loaded draws.
Loan to cost, loan to ARV and the maximum loan
Lenders limit the loan two ways and use the lower figure. Loan to cost compares the loan with the purchase price plus rehab budget; loan to ARV compares it with the after-repair value. Most the limits allow is the lower of your LTC limit times total cost and your ARV limit times the ARV. Enter the limits from your own term sheet.
Worked example: a nine-month flip
An investor buys a house for $300,000 with an $80,000 rehab budget and an ARV of $500,000. The lender funds 85% of the purchase, $255,000, and 100% of the rehab, $80,000, so the loan is $335,000. That is 88.2% of the $380,000 cost and 67% of ARV. With a 90% cost limit and a 75% ARV limit, the most the limits allow is $342,000.
At 11% a year with Dutch interest, paid monthly over a six-month rehab and three months to sell, interest is $335,000 × 0.11 ÷ 12 × 9 = $27,637.50, or $3,070.83 a month. Two points cost $6,700, so the total cost of financing is $34,337.50. Profit after financing is $85,662.50, or 20.7% on cost, before selling costs and taxes.
With non-Dutch interest and even rehab draws instead, interest falls to $25,804.17, a saving of $1,833.33 on the same loan.
What this calculator does not decide
This is a cost estimate for terms you already have, not a loan approval. Lenders also review your experience, credit, scope of work and appraisal, and may charge draw, inspection, extension or exit fees. Enter any of these you know about under Other finance costs or Exit fee.
For ground-up building rather than renovation, use the US construction loan calculator .
For a value-add commercial property without a rehab holdback, try the US commercial bridge loan calculator .
Bridge loan for renovation: when this calculator fits
For an investment property bought for repair and resale, a bridge loan for renovation is commonly structured as fix and flip or rehab financing. Use this page when the quote includes an initial purchase advance and a renovation holdback released in draws. The rehab draw schedule, points and Dutch or non-Dutch interest choice determine the cost; a standard repayment-loan calculation misses those differences.
This page does not calculate owner-occupied renovation mortgage programs such as FHA 203(k) or HomeStyle Renovation. Those combine rehabilitation with different mortgage and program requirements and need their own calculator.
Use the right country page
This page stays in US dollars and uses US fix and flip terms: an annual rate, origination points, Dutch or non-Dutch interest and loan to ARV on the loan amount. The country choices above the inputs open separate local pages. Choosing United Kingdom opens the UK refurbishment loan calculator, which uses a monthly rate, works funded in arrears and loan to GDV on the gross balance. The inputs reset and amounts are not converted.
Inputs for the fix and flip loan calculator
Purchase price
What you pay for the property, before closing costs and financing.
Rehab budget
The full renovation budget, including materials, labor, permits and a contingency.
After-repair value (ARV)
The appraised value once the rehab is finished.
Purchase advance
The share of the purchase price the lender funds at closing, often 80% to 90%.
Works funded
The share of the rehab budget the lender funds through draws, often up to 100%.
Quoted interest rate
The note rate on your term sheet, not the APR. Fix and flip loans are usually quoted per year.
Rate quoted per
Year (nominal) divides the annual rate by 12. Choose Month for a monthly rate.
Works period
Months of rehab. One draw is made at the start of each month.
Sale or refinance period
Months after the rehab while the property is listed or refinanced. Enter zero if you repay at completion.
Draw pattern
Full loan from day one is Dutch interest. Even, front-loaded or back-loaded draws are non-Dutch: interest only on funds drawn.
How interest is paid
Paid monthly is usual for hard money loans. Rolled up adds the interest to the payoff, simple or compounded monthly.
Origination fee (points)
One point is 1% of the total loan, paid at closing. Many lenders charge 1 to 3 points.
Exit fee
A percentage some lenders charge at payoff. Enter zero if your term sheet has none.
Exit fee based on
Whether any exit fee is a percentage of the total loan or of the ARV.
Other finance costs
Draw and inspection fees, appraisal, title and legal costs you pay separately.
Lender loan-to-cost limit
The highest loan as a share of purchase price plus rehab budget.
Lender ARV limit
The highest loan the lender allows as a share of ARV, compared with the loan amount.
CALCULATOR QUESTIONS
US fix and flip loan calculator questions
What is Dutch interest on a fix and flip loan?
Interest charged on the whole loan, including the rehab money held back, from closing. Non-Dutch interest is charged only on money actually drawn, so it costs less at the same rate.
How much will a lender fund on a flip?
Commonly 80% to 90% of the purchase price and up to 100% of the rehab, as long as the total loan stays under about 70% to 75% of the ARV.
How is fix and flip loan interest calculated?
Monthly interest is the balance being charged times the annual rate divided by 12. Over the loan, add up each month's interest.
Are points included in the total cost?
Yes. Points are a one-time fee at closing, a percentage of the loan, and are added to the interest and other costs in the total.
What happens when I change country?
The United Kingdom option opens the separate UK refurbishment loan page, in pounds, with its own defaults and terms. Your inputs are reset rather than converted.
Can I use this for a bridge loan for renovation?
Yes, for an investment-property bridge or rehab quote that funds the purchase and renovation through a holdback. Choose the actual draw and interest method. It does not implement owner-occupied renovation mortgage program rules.