Understanding the structure of a fix and flip loan helps you plan your project budget, timeline, and cash flow accurately.

Loan Components

A typical fix and flip loan has two components:

• Acquisition portion: The amount funded at closing to purchase the property — typically 80%–90% of the purchase price
• Rehab portion (hold-back): The renovation budget held in a draw account and released as work is completed — typically up to 100% of renovation costs, subject to the overall LTV/ARV limits

Draw Schedule

Rehab funds are not released all at once. The lender establishes a draw schedule tied to project milestones — foundation work, rough plumbing and electrical, insulation and drywall, finishes and fixtures, and so on. After each phase is complete, you request a draw. The lender sends an inspector to verify the work, and funds are released — typically within 2–5 business days of an approved inspection.

Interest During the Project

Interest accrues only on the outstanding balance — not on the full loan amount. In the early stages when only the acquisition portion is drawn, interest is charged only on that amount. As rehab draws are taken, interest increases accordingly.

Maturity and Payoff

At the end of the loan term (typically 12 months), the full outstanding balance is due. This is repaid from the proceeds of the property sale at closing.