Fix and Flip Loans: How 100% Financing Works for Real Estate Investors
If you've ever found a great deal and watched it slip away because your cash wasn't ready, you already know the real cost of slow money. Fix and flip loans exist to solve that problem. And when a lender offers 100% financing, the math on your next flip can change in a big way.
I started in real estate back in 1991 with no money, bad credit, and a layoff on my record. Over the years I've been on both sides of the table as an investor and as a lender. We launched Chaja Lending Services in 2018 to fund the kind of investors I used to be. This guide breaks down how fix and flip loans work, what 100% financing really means, and how to put one to work on your next project.
What Is a Fix and Flip Loan?
A fix and flip loan is a short-term, business-purpose loan built for investors who buy a distressed property, renovate it, and sell it for a profit. These loans are also called rehab loans or hard money fix and flip loans. They're designed for speed and flexibility instead of the slow, paperwork-heavy process you'd face at a traditional bank.
Most fix and flip loans run 6 to 18 months. They're interest-only in many cases, so your monthly payment stays low while the work gets done. You repay the loan when you sell the property or refinance it into long-term financing.
How Fix and Flip Lenders Look at a Deal
A private lender cares most about the property and the plan. Your credit still matters, but the deal carries the weight. Here's what we look at on a typical file:
- The purchase price and the scope of work, so we know what the project really costs.
- The after repair value (ARV), which is what the property should be worth once it's finished.
- Your experience level and your team, including your contractor and your exit plan.
- Your liquidity and how much you're bringing to the table.
This is why investors with a solid deal and a clear plan can get funded even when a bank would say no.
How Fix and Flip Loan Amounts Are Calculated
Lenders usually size a flip loan using two numbers. The first is loan-to-cost (LTC), which compares the loan to your purchase price plus rehab budget. The second is loan-to-ARV, which compares the total loan to the finished value of the property. Most programs cap the loan at around 70 to 75 percent of ARV so there's a cushion built in for everyone.
Here's a simple example. Say you buy a house for $150,000 and plan to put $50,000 into repairs. The ARV is $300,000. A lender who funds up to 75 percent of ARV could go as high as $225,000 in total loan proceeds. That's more than your total project cost of $200,000. In a deal like that, a strong borrower may be able to cover the purchase and the rehab with little or no cash out of pocket. That's the idea behind 100% financing.
What Does 100% Financing Mean for Flippers?
100% financing means the loan covers the full purchase price and the full renovation budget. You aren't writing a big down payment check. Instead, the lender is comfortable because the numbers on the deal are strong enough to support it.
It sounds too good to be true to some investors, so let me be plain about it. 100% financing isn't free money, and it isn't for every borrower or every deal. It works when the discount on the purchase is deep, the ARV is well supported by comparable sales, and the borrower has a track record or a strong team behind the project. Some programs also use additional collateral or a blended structure to get the deal to 100%.
Why Investors Use 100% Financing
- You keep your cash free for the next deal, which means you can run more than one project at a time.
- Your return on cash invested goes up because you have little or nothing tied up in the property.
- You can move quickly on good deals without waiting to raise a down payment.
The tradeoff is cost. Higher leverage usually means a higher rate or more points, so you have to make sure the profit on the flip still makes sense after every fee and every month of interest.
What to Expect From the Fix and Flip Process
Working with a private lender is simpler than most first-time flippers expect. Here's how a typical deal moves.
Step 1: Submit Your Deal
You send us the property address, purchase contract, rehab budget, and a short summary of your experience. We review the numbers and tell you quickly if the deal fits.
Step 2: Get Your Terms
We give you a clear term sheet with the loan amount, rate, points, and timeline. No surprises, and no runaround. I believe clear communication solves most problems in this business, and that starts here.
Step 3: Close and Fund the Purchase
Once your appraisal, title, and insurance are in order, we close. Because we're a private lender, closings can happen in days instead of weeks. That speed is often what wins you the deal over a cash buyer.
Step 4: Draw Funds as the Work Gets Done
Rehab money is typically released in draws. You complete a phase of the work, an inspection confirms it, and the next draw is released. This keeps the project on track and protects both of us.
Step 5: Sell or Refinance
When the work is finished you sell the property and pay off the loan. If you decide to hold it as a rental instead, you can refinance into a DSCR or long-term rental loan.
Common Mistakes That Cost Flippers Money
After years of funding and investing in deals, I see the same mistakes over and over. Avoid these and you're already ahead of most new flippers.
- Underestimating the rehab budget. Always build in a cushion for surprises behind the walls.
- Overestimating the ARV. Use real comparable sales, not hopeful numbers.
- Ignoring holding costs. Interest, insurance, taxes, and utilities add up every month the property sits.
- Working with an unproven contractor. Your team can make or break the timeline.
- Waiting too long to line up financing. The best deals don't wait on you.
Is a Fix and Flip Loan Right for You?
If you have a deal with real margin, a realistic plan, and a team you trust, a fix and flip loan can be one of the fastest ways to build wealth in real estate. If you're newer, we can talk through your first deal and help you structure it the right way. If you're experienced, we can help you scale with financing that keeps up with your pace.
Chaja Lending Services funds business-purpose fix and flip loans to investors nationwide. We also offer ground-up construction, DSCR rental loans, bridge loans, and 100% financing programs, so you have options as your business grows.
Ready to Fund Your Next Flip?
Thank you for taking the time to read this. If you have a deal on the table, don't wait. Visit www.chajalending.com to apply or submit your scenario today, and a member of our team will get back to you quickly with your options. You bring the deal, and we'll bring the funding.