House flipping requires two things most investors underestimate: the right financing structure and an accurate picture of what the deal actually costs. The loan you choose determines how much cash you need at closing, when renovation funds become available, and what happens if the property takes longer to sell than planned.
LendSure Home Loans offers fix-and-flip financing that covers both the purchase and the renovation budget, with no tax returns, no income analysis, and leverage that scales with your experience. If you have a property in mind, our team can review the deal before you submit a full application.
What Loans Can You Use to Flip a House?
Not every renovation loan works for house flipping. Fannie Mae’s HomeStyle Renovation program and Freddie Mac’s CHOICERenovation allow certain investment property renovations, but these are agency programs designed for long-term property holders, not short-term resale. A buyer who acquires a property with the intent to renovate and immediately resell is generally not the profile these programs are built for.
Fix-and-flip loans, by contrast, are purpose-built for the acquisition-renovation-resale cycle. Here is how the main options compare:
| Financing Type | Main Use | Key Consideration |
| Fix-and-flip loan | Short-term purchase and renovation for resale | Based on project cost, ARV, and exit strategy |
| Hard money loan | Time-sensitive or unconventional transactions | Fees and rates can be less favorable |
| Private money loan | Financing from private investors | Terms and protections vary widely |
| Conventional investment renovation loan | Long-term investment property improvements | Occupancy rules and program eligibility apply |
| Home equity loan or HELOC | Access equity in another property | Places collateral property at risk |
How Fix-and-Flip Financing Works
A fix-and-flip loan covers both the acquisition cost and the renovation budget in a single loan. The loan closes in an LLC or S-Corp and is underwritten on the deal itself: the purchase price, renovation scope, estimated after-repair value, and the borrower’s experience and liquidity. No tax returns, no W-2s, and no personal debt-to-income calculation are required.
LendSure’s Fix and Flip program runs on a 12-18 month interest-only term with no prepayment penalty. Renovation funds are held in a lender-controlled holdback at closing and released in draws as work is completed.
Can One Loan Cover the Purchase and Renovation?
Yes. The loan amount is calculated against the total project cost (purchase price plus renovation budget) and capped against the property’s estimated after-repair value. Both limits apply simultaneously — the lower of the two controls the loan amount. Renovation funds are not disbursed at closing; they are released in draws after a third-party inspector confirms each phase of work is complete.
LTC vs. ARV: How Lenders Size a Fix-and-Flip Loan
This is the most important calculation to understand before you make an offer. Investors frequently see a lender advertising high leverage and assume it means minimal cash upfront. Two separate limits apply simultaneously, and both matter.
Loan-to-Cost (LTC) compares the loan to total project cost: purchase price plus renovation budget.
Loan-to-ARV compares the loan to the property’s estimated value after renovations are complete.
Worked Example
| Purchase price | $200,000 |
| Renovation budget | $60,000 |
| Total project cost | $260,000 |
| Estimated ARV | $340,000 |
| At 85% of project cost | $221,000 |
| At 70% of ARV | $238,000 |
| Illustrative maximum loan | $221,000 |
| Minimum equity before other costs | $39,000 |
Both limits apply and the lower figure controls. These numbers are illustrative, not LendSure program terms. Fees, reserves, appraisal results, and draw structures increase the total cash required.
The ARV is established by a licensed appraiser using comparable sales of renovated properties in the same area. It is an appraiser’s supported conclusion, not a seller’s estimate or a projected market appreciation figure.
Leverage by Experience Level
LendSure’s available leverage scales with your verified track record. Experience is confirmed through public records under the borrower’s own name or LLC. Only flips completed within the last 36 months count.
| Experience | Max LTC | ||
| 0 – 2 flips | Up to 80% | ||
| 3–5 flips in last 36 months | Up to 90% | ||
| 6+ flips in last 36 months | Up to 95% | ||
How Renovation Draws Work
All renovation funds are held in holdback at closing. Zero rehab dollars are disbursed on day one. As each phase of work is completed, you submit a draw request. LendSure dispatches a third-party inspector within 24 to 48 hours, and funds are wired the next business day after sign-off — directly to you, not to your contractors. Interest accrues only on drawn funds, not the full holdback balance.
Do You Need Working Capital During the Renovation?
Yes. Draws are funded on a pro-rated basis: if LendSure finances 90% of the renovation budget, each draw is funded at 90% of the approved amount, with the investor covering the remaining 10%. Contractors typically require payment as work progresses. The gap between when you pay and when the draw is released requires working capital. Building that buffer into your cash-to-close planning is not optional.
LendSure also offers a split origination fee structure: one half collected at closing, a second half deferred to payoff. On a project with a tight upfront cash position, deferring half origination meaningfully reduces what you need at closing.
What Happens if the Flip Takes Longer to Sell?
This is the most important downside scenario to model before borrowing. Interest accrues on drawn funds for the full hold period. A renovation completed in 60 days but unsold at 180 days carries four additional months of interest on the full drawn balance, plus ongoing insurance, property taxes, and utilities.
Stress-Testing the Sale Price
The FHFA House Price Index tracks price trends at the national, state, metro, county, and ZIP code level. Local market trends can inform ARV assumptions, but the ARV for a specific property is established by comparable sales, not by index averages. Before finalizing a deal, stress-test the resale price:
If your $340,000 ARV comes in at $315,000, what happens to the profit margin after financing costs, commissions, and holding expenses? If the answer leaves little room, the acquisition price needs to be lower, not the renovation scope.
Flipping Older Homes: Lead Paint Rules Apply
This is one of the most overlooked legal requirements in house flipping. The EPA confirms that individuals who purchase, renovate, and sell pre-1978 homes for profit can be subject to the Lead Renovation, Repair and Painting (RRP) Rule. This applies even when the work is performed by the flipper themselves.
Investors who hire outside firms for all covered renovation work generally do not need their own certification, but the renovation firm must satisfy applicable certification requirements. Lead-safe work practices can affect contractor selection, project timelines, and renovation budgets. For homes built before 1978, confirm RRP compliance during due diligence, not after the financing is in place.
Are Flipping Profits Taxed as Capital Gains?
Not automatically. IRS Publication 544 establishes that real estate held primarily for sale to customers in the ordinary course of business is generally not a capital asset. Flipping profits may be treated as ordinary income rather than capital gains — regardless of how long you hold the property. Holding a flip for more than one year does not automatically establish long-term capital gains treatment if the property was acquired for resale.
Additionally, IRS Publication 334 clarifies that Section 1031 like-kind exchange treatment generally applies to qualifying property held for investment or productive use, not property held primarily for sale. Exchanging one flip for another does not automatically defer tax liability. Consult a tax professional before assuming a particular tax treatment applies to your situation.
Ready to Finance Your Next Flip?
LendSure offers Fix and Flip financing program in Alabama, Arizona, California, Colorado, the District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, Tennessee, Texas, Utah, and Virginia. For investment transactions, share the acquisition cost, renovation budget, estimated ARV, and your flip experience with our team before submitting a full application.
Frequently Asked Questions
Can one loan cover both the purchase and renovation costs?
Yes. LendSure’s Fix and Flip program finances both the acquisition and the renovation budget in a single loan. Renovation funds are held in holdback at closing and released in draws as work is completed and verified by a third-party inspector. No renovation dollars are disbursed on day one.
How much cash do I need to flip a house?
The cash required at closing includes the equity contribution (the portion of project cost not financed), closing costs, and required reserves. For first-time flippers, LendSure finances up to 80% of both the purchase price and the renovation budget, meaning at least 20% of total project cost must come from the investor. Additional working capital is needed during renovation to cover the investor’s share of each draw before reimbursement.
What is ARV and why does it matter?
After-repair value (ARV) is the appraised value of the property after renovations are complete, based on comparable sales of renovated homes in the same area. Lenders use ARV to cap the loan as a percentage of completed value. Overestimating ARV is the most common reason fix-and-flip loans come in lower than expected, leaving investors short of the cash needed to close.
Can first-time flippers qualify for a fix-and-flip loan?
Yes. LendSure accepts first-time flippers, with leverage set at up to 80% of the overall cost. Rates and terms are experience-dependent, and the first deal establishes the track record that unlocks better pricing on subsequent projects.
What happens if the property doesn’t sell before the loan matures?
LendSure borrowers may consider refinancing the property into a DSCR loan, subject to borrower qualification, program eligibility, and applicable lending guidelines. A DSCR refinance is not guaranteed, and approval is based on factors including the property’s rental income, borrower qualifications, credit profile, and other requirements. If the fix-and-flip loan was also with LendSure, no seasoning may be required, and the construction-phase appraisal can typically be reused, subject to applicable guidelines.
Are flipping profits taxed as capital gains?
Not necessarily. IRS Publication 544 establishes that property held primarily for sale in the ordinary course of business is generally not a capital asset, meaning profits may be taxed as ordinary income rather than capital gains. Holding a property for more than one year does not automatically establish long-term capital gains treatment for a house-flipping business. Consult a tax professional for guidance on your specific situation.
Do lead paint rules apply to house flippers?
Yes. The EPA confirms that the Lead Renovation, Repair and Painting Rule can apply to individuals who purchase, renovate, and resell pre-1978 homes for profit, including when the flipper performs the work themselves. Investors should confirm RRP compliance requirements during property due diligence, before finalizing the renovation scope and budget.
