Fix and Flip Loans

What Is a Fix and Flip Loan?

Fix and flip loans are any type of mortgage loan real estate investors can use to buy properties, repair and renovate them, and sell them for profit. Unlike traditional mortgages that span 15-30 years, these loans have shorter loan terms, giving investors just enough time to complete renovations and sell the property.

Fix and flip financing is unique because it considers the property’s potential value after improvements, not just its current condition. Many of these loan options can cover both purchase and renovation costs, making them particularly valuable for investors. The approval process often moves faster than traditional home loans, which helps investors capitalize on opportunities in competitive markets.

Fix and Flip Financing Options

Financing for flipping houses comes in many forms. While there are loans specifically designed for fix and flip projects, real estate investors have several different financing options at their disposal. Each type of fix and flip loan has its own unique advantages and requirements that make it suitable for different situations and needs. Here are a few types of loans you can use for fix and flip investments:

Home Equity Loan

A home equity loan lets you fund your fix and flip project using your home’s equity. With these loans, you get a lump sum and a fixed interest rate. Since they’re secured by your property, interest rates are typically lower than other financing options. Plus, you can usually borrow up to 80-90% of your available equity, providing substantial funding for both purchase and renovation costs.

The fixed interest rate and consistent monthly payments help you calculate total project costs upfront. However, using your primary residence as collateral means significant risk — if the flip doesn’t go as planned and you default on payments, you could lose your home. The approval process also requires good credit and verifiable income, which might not work for all investors.

Home Equity Line of Credit

A home equity line of credit (HELOC) gives borrowers flexibility by letting them borrow against their home’s equity as needed. You can pull money from the line of credit up to your approved limit and only pay interest on what you take out. This flexibility is ideal for managing renovation costs that come in phases, and the revolving nature means you can reuse the credit line as you pay it back.

HELOCs offer lower interest rates than many other fix and flip loan options since they’re secured by your property. However, these rates are usually variable, so your payments may increase over time.

Like home equity loans, you’re putting your primary residence on the line as collateral, making careful project planning essential. Most HELOCs also have a draw period followed by a repayment period, which could affect your long-term fix and flip strategy.

Residential Transition Loans (RTL)

Residential transition loans (RTLs) are a specialized financing option designed for real estate investors engaged in fix and flip projects. These loans provide short-term funding to purchase, renovate, and sell properties quickly, making them an ideal solution for investors looking to maximize returns on distressed or undervalued properties.

RTLs offer competitive leverage, with loan amounts typically ranging from $100,000 to $10 million and maximum loan-to-value (LTV) ratios of up to 80% of the “as-is” property value. Additionally, these loans can cover up to 90% of the purchase price and up to 100% of renovation costs, ensuring investors have the capital needed to complete their projects efficiently.

One of the key benefits of RTL financing is its flexible underwriting criteria, which focuses more on the value and profitability of the project rather than the borrower’s personal financial history. Investors with a strong track record in flipping houses can qualify for higher leverage and better terms. RTLs typically feature interest-only payments with fixed interest rates, making them a predictable and manageable financing option.

Since RTLs are designed specifically for investment properties, borrowers must structure their loans under a business entity and cannot use them for owner-occupied properties. Loan terms generally range from 12 to 24 months, with potential extensions based on project progress. Additionally, these loans do not have prepayment penalties, allowing investors to exit early when their projects sell quickly.

For fix and flip investors seeking fast funding, high leverage, and flexible underwriting, residential transition loans provide a powerful alternative to traditional financing methods, ensuring the ability to act quickly in competitive real estate markets.​

Hard Money Loan

Hard money loans are popular among experienced house flippers because they focus on your property’s potential rather than your personal finances. These loans for flipping houses look primarily at the property’s after-repair value, making them accessible even if you don’t meet traditional lending requirements. They’re especially useful for properties that need significant renovation work and wouldn’t qualify for conventional financing due to their condition.

While hard money loans have higher interest rates, they offer several advantages that can justify the cost. For instance, they can close in as little as two weeks, giving you an edge in competitive markets. Many hard money lenders will also finance a portion of your renovation costs in addition to the purchase price.

Conventional Loan

Conventional loans are common fix and flip loans for beginners and properties that need minimal repairs. These loans offer competitive interest rates and have longer repayment types, which can help keep monthly payments manageable during your renovation period. Conventional loans are suitable for properties in relatively good condition but need mainly cosmetic updates.

However, conventional mortgage loans have distinct challenges for fix and flip projects. The approval process typically takes anywhere from 30-60 days, which can put you at a disadvantage against cash buyers or hard money borrowers in competitive markets. Additionally, these loans require excellent credit scores, significant down payments, and extensive income documentation.

Many conventional lenders also have strict property condition requirements, limiting your ability to purchase homes needing substantial work.

Why Choose a Fix and Flip Loan?

Here’s why fix and flip loans often make sense for property investors:

• Speed to close: Many fix and flip lenders can approve and fund loans within days, helping you beat out competing offers.
• Renovation costs included: Unlike traditional mortgages, these loans often cover both purchase and repair costs.
• Short-term commitment: The brief loan term means you’re not stuck with long-term debt if you want to pursue other investments or try the BRRRR method, where you buy, rehab, rent, refinance, and repeat the process again with another property for long-term wealth-building.
• Experienced-based approval: Some fix and flip lenders focus more on your real estate investment experience than traditional financial metrics.

RTL Financing vs. Hard Money: Which Is Better?

Both residential transition loans (RTL) and hard money loans serve as crucial financing tools for fix and flip investors, offering short-term funding for property acquisition and renovations. While they share similarities, they have key differences that can impact which option is best for your project.

• Speed and Flexibility: Both RTL and hard money loans provide quick access to capital, often closing in as little as 7-14 days. However, RTLs tend to offer slightly more structured underwriting guidelines, making them more predictable for experienced investors. Hard money loans, on the other hand, may have more flexible approval criteria based on the property’s potential rather than borrower experience or credit history.
• Loan Amounts & Leverage:
• RTL Financing
  • Up to 80% LTV (as-is value)
  • Up to 90% of purchase price
  • Up to 100% of renovation costs
  • Loan amounts from $100K – $10MM
• Hard Money Loans
  • Typically 65-75% LTV
  • Lower leverage on renovations (usually 75-90% of total costs)
  • Loan amounts vary, but some private lenders cap at $3-5MM

  With higher leverage and better loan-to-cost ratios, RTLs are often the better option for experienced investors who need maximum financing to scale their fix and flip operations​​.

• Interest Rates & Costs:While both options have higher interest rates than conventional loans, RTL financing typically offers lower interest rates and origination fees than hard money loans, especially for experienced investors.

• Loan Terms & Repayment:
  • RTLs: 12-24 months, interest-only payments
  • Hard Money Loans: 6-18 months, interest-only payments
    Both options are designed for short-term projects, but RTL loans often come with slightly longer terms and fewer prepayment restrictions, allowing investors more flexibility.
• Underwriting & Borrower Requirements:
• • RTLs: Favor borrowers with at least 3+ completed projects and may require stronger financials or a business entity structure.
  • Hard Money: Often less strict, making them ideal for first-time flippers or those with lower credit scores.

Which One is Better?

• Choose RTL financing if you’re an experienced investor looking for higher leverage, lower rates, and structured underwriting.
• Choose hard money if you need fast, flexible approval with minimal documentation, even if it comes at a higher cost.

For serious fix and flip investors aiming to scale, RTL financing often provides better terms, lower costs, and more capital to execute projects efficiently.

Partner With an Experienced Fix and Flip Lender

Choosing an experienced lender can make all the difference in your success. The best fix and flip lenders bring more than just funding to the table — they understand local markets, renovation timelines, and the unique challenges that come with property flips.

Griffin Funding specializes in helping new and experienced investors achieve their fix and flip goals. Our team understands the importance of quick closings and reliable renovation funding schedules. Whether you’re planning your first flip or expanding your investment portfolio, we offer personalized lending solutions to match your project needs. Reach out today to get started and download the Griffin Gold app to streamline the lending process.