How do fix and flip loans work?

By Danté M. Shackelford, Founder and Managing Principal of EMx Lending
Updated November 5, 2026

Short answer

A fix and flip loan is a short-term, interest-only bridge loan. The lender advances most of the purchase price at closing, holds the rehab budget back, and releases it in draws as the work gets done. You pay interest monthly, then pay the loan off when you sell or refinance, usually within 12 months.

How the money moves

Say you buy a house for $100,000 with a $50,000 rehab budget, and you qualify for 90% of purchase and 100% of rehab.

At closing: the loan advances $90,000. You bring the other $10,000 plus closing costs.
The holdback: the $50,000 rehab budget is set aside, not paid out at closing.
Draws: as you finish work line by line, you request a draw in the app. If the kitchen line is $10,000 and it is a quarter done, you can draw $2,500 once it's verified.

That's why flippers and builders like the structure. You might only need to cycle $5,000 of your own cash through a $50,000 project.

Leverage

Up to 90% of the purchase price and 100% of the rehab
Up to 75% of the after-repair value
Loans from $50,000, on 1 to 4 unit homes

Experience drives leverage more than credit on these loans. Most of our flip loans land between 80% and 90% of purchase, and investors with three completed projects in the last three years can usually reach 90%.

Monthly payments

You pay interest every month. Depending on loan size, interest is charged either on the full loan amount from day one or only on what has been drawn so far. On the second method, your payment rises as you draw rehab money.

The term, and what happens at month 13

The standard term is 12 months (18 to 24 months for expansions, additions, conversions and ADUs). If you haven't sold or refinanced by the end, you request an extension. Extensions carry a fee, often around one point, which is usually added to the payoff rather than paid out of pocket.

Getting out

You exit by selling, or by refinancing into a 30-year rental loan. That second path is the BRRR refinance.

Right now, late in the cycle, we'd keep rehabs light to moderate and plan for a sale within six months. A long project means guessing what buyers will pay a year from now.

This is general education, not investment, legal or tax advice. Loan terms are general guidelines, depend on credit, experience and the property, are subject to change and are not a commitment to lend. EMx Lending makes business-purpose loans on non-owner-occupied investment property in all states except Vermont, North Carolina, North Dakota, South Dakota, Idaho, California, Arizona and Nevada.