Short-term money is the whole game
Flips are financed with short-term, asset-based loans — hard money and purpose-built fix-and-flip loans — that underwrite the deal (purchase price, rehab budget, and after-repair value) rather than your personal income. They close in days, fund both the purchase and the rehab in draws, and run six to twenty-four months.
The cost is real: rates in the low-to-mid teens plus two to four points. That is fine against a healthy flip margin over a six-month timeline, but it makes a long-term loan the wrong tool here — a thirty-year product carries prepayment penalties that punish a quick sale.
Hard money vs. fix-and-flip vs. private money
Traditional hard money comes from smaller private lenders and flexes on unusual deals. Purpose-built fix-and-flip lenders are larger, tech-enabled shops offering higher leverage (up to 90% of purchase and 100% of rehab) and volume pricing for repeat borrowers. Private money — an individual lending their own capital — is the most flexible of all when you have the relationship.
Whichever you use, have your exit nailed down before you close. Build a timeline buffer and a backup plan (sell at a discount, or refinance into a DSCR loan and rent it) so a slow rehab does not trap you past the loan term.
Frequently asked questions
Can I finance a flip with no experience?
Yes, but first-time flippers get lower leverage (often 75–80% instead of 90%) and slightly higher rates. A strong credit score, a detailed scope of work, and a realistic ARV analysis help compensate.
Do flip lenders fund the rehab?
Most do, holding the rehab budget in escrow and releasing it in draws as work is inspected and completed. The combined purchase-plus-rehab loan is typically capped at 65–75% of the after-repair value.