Fix and Flip Loans: A Pathway to Property Investment

In the third quarter of 2023, home flipping accounted for7.2% of home sales nationwide – with profits continuing to rise for flippers.1 If you’re thinking of staying or getting in the game – but lack the funds to buy, renovate and re-sell a property – a “fix and flip” loan can be your path forward. With a fix and flip loan, qualified borrowers can get the capital they need to make the initial purchase and cover repairs and upgrades to attract purchasers when the project is done.

A fix and flip loan offers short-term financing to help real estate investors buy and renovate property – typically at a higher interest rate than a traditional mortgage.2 Those traits make it critical you understand your needs and the big picture before deciding to take on a project.

Know your needs – know your property

Your history, both financial and as a real estate investor/flipper, and the type of property you’re considering are key factors in selecting and getting approved for the right loan. Aside from knowing your credit score and having all your financials in order, you should thoroughly evaluate the property you’re considering and create a solid appraisal for labor, materials and other costs. Even more importantly, you need an honest timeline for getting the project from purchase and renovation to resale with an eye to meeting the loan’s repayment term.

Financial qualification calculations

Ultimately, it’s the before-and-after value of the property that lenders consider when applying three formulas to determine how much financing you can get for your project: loan-to-value ratio, loan-to-cost ratio and after-repair value.

  • The loan-to-value ratio (LTV) is most often used in commercial real estate loans and compares your loan amount to the property’s value
  • The loan-to-cost ratio (LTC) compares the loan amount to project’s total cost
  • The after-repair value (ARV) is based on an appraiser’s estimate of the property’s value after renovations are done3

Types of fix and flip loans

There are a variety of fix and flip loans from which to choose – but you need to pick one that best suits your financial picture and your project’s scope. Some options include:

  • Hard money loans – Borrow funds from a private investor or company, not a traditional lending institution
  • Home equity loans and home equity lines of credit (HELOCs) – Use the equity in an existing property as collateral to secure a loan
  • 401(k) loans – Take out a loan against your 401(k) retirement savings account
  • Personal loan – Work with a traditional financial institution or online lender for financing
  • Seller financing – Have the property seller act as the lender
  • Business line of credit – Draw funds, as needed, up to a predetermined credit limit4

Barrington Commercial Capital can help when you’re fixing to flip

Barrington Commercial Capital offers specialized lending solutions that can help you unlock your full potential and achieve your financial objectives. Our expert team of qualified professionals can partner with you to identify the fix and flip loan best suited for your unique needs. Contact us today to learn more.


1.     Stricker, Christine, “Tope 10 U.S. Counties with Highest Annual Increases in Home Flipping Returns in Q3 2023,” ATTOM, January5, 2024,

2.     Treece, Kiah, “Fix and Flip Loans: What Are They and How Do They Work?” Forbes Advisor, August 1, 2023,

3.     Kriss, Randy and Anthony, Lisa A., “Fix and Flip Loans: What They Are and Best Options,” NerdWallet, October 17, 2023,

4.     Treece, 2023.

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