Fix and Flip Financing in 2025: LTC, ARV, and How to Get 100% Rehab

A fix-and-flip loan is short-term, asset-based financing that bundles your purchase and your rehab budget into one facility. Used right, it lets you control a property with as little as 10–15% of your own cash in the deal — and recycle that cash quickly across multiple projects per year.

The two numbers that matter: LTC and ARV

Loan-to-cost (LTC) is the percentage of your total project cost the lender funds — purchase plus rehab. Loan-to-after-repair-value (ARV) caps the total loan against the property's projected value once you're done. A typical program lends up to 90% LTC, 100% of rehab, capped at 75% of ARV.

Worked example

• Purchase price: $200,000
• Rehab budget: $50,000
• ARV (after-repair value): $325,000
• 90% LTC = $225,000 toward purchase + rehab
• 75% ARV cap = $243,750
• Loan funded: $225,000 (LTC is the binding constraint)
• Your cash to close: $25,000 + closing costs

How rehab draws work

Lenders don't hand you the rehab budget upfront. They fund draws as work is completed. Typically you'll submit a draw request, a third-party inspector verifies the work, and funds wire within 48 hours. Smart investors use a draw schedule mapped to their scope of work — demo, framing, MEP, drywall, finishes — to keep cash flowing.

Qualifying as a first-time flipper

Lenders price experience. First flip means slightly lower LTC (often 85% vs. 90%) and a rate bump. You'll typically need:

• 660+ credit score (some programs to 620)
• Cash for 10–15% of purchase plus closing and reserves
• A solid scope of work with realistic numbers
• A licensed GC if your local market requires permits

Exit strategies

Two exits dominate. Sell the property at completion (a true flip), or refinance into a long-term DSCR loan and keep the property as a rental — the BRRRR strategy. Either way, your fix-and-flip loan should have no prepayment penalty so you can exit the day the project is done.