Fix and flip loans

Most quotes land in 10% to 12%, with fix-and-flip paper generally 9.0% to 14.0% and first-time borrowers or unusual collateral running up toward 18.0%. Ranges reflect pricing lenders and industry write-ups publicly advertised as of August 2026. They are advertised ranges, not transaction data - unlike conventional mortgages, private lending has no public loan-level dataset, so nobody can honestly claim to know the true national average. Treat them as a sanity check on a quote, not a benchmark you are entitled to.

But the interest rate is the least useful number on the term sheet. A loan at 10% with 3 points, a $1,495 doc fee, six months of guaranteed interest and interest charged on the undrawn rehab holdback is substantially more expensive than a loan at 12% without those terms. Compare all-in cost, never rates.

See above - 10% to 12% is the common band. The more useful question is what the loan costs in total dollars over the months you will actually hold it, which is what the true-cost calculator computes.

One point is one percent of the loan amount, charged up front. Two points on a $300,000 loan is $6,000, usually deducted from your proceeds at closing rather than billed.

The detail that costs people money: ask whether points are charged on the total loan facility or on the initial funding. If you are borrowing $240,000 for the purchase and $60,000 for rehab, two points on the $300,000 facility is $6,000 - but you only receive $240,000 at closing, so you paid 2.5% on the money you actually got. That gap is standard and rarely volunteered.

$1,000. Points are simply a percentage of the loan amount, so two points is 2% - and on a small loan the flat fees matter far more than the points. A $50,000 loan with 2 points ($1,000) plus a $1,495 doc fee and a $750 underwriting fee carries $3,245 of closing cost, which is 6.5% of the loan before a day of interest. Flat fees are why small hard money loans are disproportionately expensive.

There are usually nine, and a term sheet typically leads with two. The full stack is origination points, underwriting or processing, document preparation, valuation, per-draw inspection, wire and servicing, extension, exit or back-end, and minimum or guaranteed interest. The fee stack, line by line walks through each one with the range you should expect and the question to ask about it.

Not the way most calculators do it. The typical online hard money calculator multiplies loan amount by rate by months and adds points. That undercounts real cost, often badly, because it ignores five things: interest charged on the undrawn rehab holdback, minimum-interest clauses, per-draw fees, extension fees on the months you run over, and the flat fees that dominate on smaller loans.

The honest calculation is: (all interest actually charged under the lender's accrual method) + (points on the basis the lender uses) + (every flat fee) + (draw fees x draws) + (exit fee) + (extension fees if you run long), then expressed as an annualised rate on the money you actually had use of. Ours does that: true-cost calculator.

A hard money loan structured for a buy-renovate-sell project: a purchase piece funded at closing, a rehab piece held back and released against completed work, interest-only payments, and a 12-month term timed to your renovation and resale.

Whichever one has the lowest all-in cost for the months you will actually hold it, given the leverage you need. That is genuinely the answer, and it is not the same lender for every deal.

The structural things that decide it: whether interest accrues on the drawn balance or the full facility, whether there is a minimum-interest period, how many draws and at what fee, and what the extension costs. A lender quoting 11.5% on drawn balance with no minimum interest routinely beats one quoting 9.99% on the full facility with six months guaranteed.

They are worth it when the leverage lets you run more deals than your cash would, and the spread survives the financing cost with room left for the rehab running over. They are not worth it when the financing cost consumes a spread that was thin to begin with - which is most deals bought at retail. The financing is rarely what kills a flip; the purchase price usually already did.

Plan on the down payment (10%-20% of purchase), plus points and flat fees, plus buy-side closing costs, plus the first rehab draw funded out of pocket, plus carrying costs for the whole hold, plus a genuine contingency. On a $250,000 purchase with $50,000 of rehab that is commonly $60,000-$80,000 of real cash, not the $25,000 the down payment alone implies.

"Rehab loan" and "renovation loan" are umbrella terms for any loan that funds the purchase or refinance of a property plus the cost of the work. The money for the work is held back and released in draws as it is completed, rather than handed over at closing.

The term covers two very different families of product, and mixing them up is the single most common mistake on this topic. There are agency renovation mortgages - FHA 203(k), Fannie Mae HomeStyle - which are slow, cheap and income-underwritten. And there is private rehab money, which is hard money: fast, expensive, and underwritten against the property. See which one you can actually use.

It depends entirely which kind you mean, and the answers are opposite.

Agency renovation mortgages are hard to qualify for and slow: full income documentation, debt-to-income limits, credit minimums, an appraisal, an approved contractor and 30-60 days. Private rehab loans are comparatively easy and fast - the property qualifies rather than you, and funding takes about a week - but you pay 8.0% to 15.0% plus points for that.

For an investment property, the constraint is usually not difficulty - it is eligibility. FHA 203(k) is primary residence only, so it is simply unavailable for a flip or a rental. Fannie Mae HomeStyle does allow a one-unit investment property, with a larger down payment, but it is a fully underwritten conventional mortgage on a conventional timeline. If you need to close in ten days on a house with no kitchen, neither will work and hard money is the answer. The comparison in full.

For an investor the decisive one is that you cannot use it: 203(k) is restricted to owner-occupied primary residences. If you intend to flip the property or rent it out, that is the end of the conversation.

Even for an owner-occupant the trade-offs are real: mortgage insurance, an approved contractor requirement, a consultant on larger projects, tight rules on what the money may be spent on, and a timeline measured in weeks rather than days. What you get in return is a rate no private lender can come close to.