Here is the 70% rule with the arithmetic done, how rehab draws actually work, and what the money costs from offer to resale.
Why a bank will not fund a flip
A conventional mortgage is written on the assumption that the property is habitable, that you will live in it or rent it, and that you will still own it in thirty years. A flip breaks all three assumptions on day one. Banks rarely finance heavy repairs, and even when one would, the approval takes longer than the seller of a distressed property will wait.
Fix and flip loans exist to fill that gap. They are short-term, interest-only, and underwritten on the property's after-repair value rather than on your income, which is why a first-time flipper with a good deal can be financed the same way as somebody on their twentieth.
The 70% rule, with the arithmetic done
This is the single discipline that separates flippers who stay in business from those who do one deal and stop. The maximum you pay is 70% of the after-repair value, minus what the repairs will cost.
Three deals, screened
| ARV $300,000, repairs $50,000 | Max offer $160,000 |
| ARV $320,000, repairs $60,000 | Max offer $164,000 |
| ARV $400,000, repairs $50,000 | Max offer $230,000 |
Multiply the ARV by 0.70, then subtract the repair budget. That is the number you do not go above.
The thirty percent you are leaving on the table is not profit you are giving away. It covers your financing costs, your holding costs while you own it, agent commission and closing costs on the sale, and the things that go wrong. ATTOM, which tracks flips from recorded deeds, notes that renovation and other costs commonly run 20% to 33% of a property's value. Take that margin out and a deal that looked fine on a spreadsheet loses money in the real world.
Adjust it to the market, not to your optimism. Gross flipping margins swing widely between metros: in ATTOM's second-quarter 2026 report the typical flip earned 81.5% over its purchase price in Pittsburgh and lost 0.3% in San Antonio, before any renovation or financing cost. In slower or thinner markets, a 65% screen is the safer one. What you should not do is stretch the rule because you want a particular deal to work.
How much you can actually borrow
Leverage scales with your track record, and lenders publish tiers that show it.
| Experience | Common market leverage | What you bring |
|---|---|---|
| First flip | Around 80 to 85% of purchase 100% of rehab | The rest of the purchase, closing costs, points, and enough cash to fund the first phase of work before the first draw lands. |
| Several completed flips | 90% of purchase or more at some lenders 100% of rehab | Materially less. Documented completed deals over the past three years are worth real money at the term sheet. |
| The ceiling above both | Commonly 70 to 80% of ARV | Whatever the purchase and rehab percentages say, the total loan is capped against the finished value. This is the number that usually binds. |
Through our lending partners: standard pricing starts at 12.99% interest plus 2.99 points, with loans from $50,000, a minimum credit score of 600, and up to 100% of cost (purchase plus rehab) or 70% of after-repair value, whichever limit binds first. How much of that leverage you get depends on the experience you can document over the past three years. Borrowers who have paid off two loans with the lending partner in good standing can qualify for loyalty pricing of 10.99% plus 1.99 points. The property must be a non-owner-occupied investment, and the loan is made to an LLC or corporation.
Have a flip under contract?
Send the address, the purchase price, the rehab budget and your after-repair value. Our lending partner's team reviews the numbers and tells you whether it fits. The lender makes every credit decision.
How draws work, and why it matters
You do not receive the renovation budget on day one. It is released in stages as work is completed and verified. Most first-time flippers underestimate how much this shapes their cash flow.
- You complete a phase. Demolition, framing, plumbing, electrical, finishes: whatever the agreed milestones are.
- You submit a draw request with photographs and invoices showing the work is done and paid for.
- The lender verifies it, usually by sending an inspector. Inspection fees commonly run about $150 to $250 per draw, and some lenders charge more.
- Funds release, often within three to five business days of an approved inspection.
The practical consequence: you fund each phase out of your own pocket first and get reimbursed. If you have budgeted to the last dollar, the gap between paying your framer and the draw landing is where projects stall. Build your scope of work in phases that align with the draw schedule, and hold cash to cover at least one phase ahead.
The upside of the same structure is that on many loans you are not paying interest on renovation money you have not yet drawn. Ask whether interest accrues on the full commitment or only on funds disbursed: on a slow project the difference is real money.
What a flip actually costs to finance
Do this arithmetic before you make an offer, not at the closing table. On a $200,000 loan at the lending partner's standard 12.99% plus 2.99 points, the points are about $5,980 at closing and interest is about $2,165 a month. Held six months, that is roughly $18,970, or 9.5% of the loan. Held nine months, roughly $25,470, or 12.7%. Every extra month adds about 1.1%.
- Interest is paid monthly on an interest-only loan, so it scales directly with how long you hold.
- Points are paid once at closing, whatever your timeline turns out to be.
- Draw inspection fees recur on every draw, and there will be several.
- Extension fees, commonly 0.5% to 2% of the loan per extension, if you run past term. Extensions are at the lender's discretion.
- Prepayment terms. Short-term flip loans generally should not carry a prepayment penalty, because you want to repay the moment it sells. Some lenders add an exit fee instead. Confirm it in writing rather than assuming.
Speed is the cheapest thing you can buy. ATTOM's second-quarter 2026 report put the typical flip at 161 days from purchase to resale, about five and a half months. Every month beyond your plan is another month of interest, taxes, insurance and utilities.
The mistakes that kill deals
Lenders see the same handful over and over, and every one is avoidable.
- An ARV built on optimistic comps. A common reason an application is declined or downsized. Use real comparable sales from that neighborhood in the last six months, not the best sale in the zip code.
- A rehab budget that has never met a contractor. Get line-item bids. Underwriting will test the number, and a budget that collapses under scrutiny costs you the deal.
- Underestimating carrying costs. Interest, taxes, insurance, utilities and lawn care for every month you own it, including the months it sits on the market.
- No cash between draws. Covered above, and it stalls more projects than anything else.
- One exit only. If it does not sell, can you refinance and rent it? Model both before you close: a flip that becomes a rental is a setback, and a flip with no second exit can end in default.
What to have ready before you apply
Having these in order shortens underwriting, because the lender is not waiting on you.
First deal? Read the rules that apply to beginners, with a first flip worked to the dollar. Where the house sits can change the loan too: the location questions every flip has to answer. Want to keep it instead? See DSCR rental loans.
Get your deal reviewed
Answer these and your deal goes to our lending partner's team, who will contact you about whether it is fundable and on what terms. By sending it you agree to your details being shared with them. Investment property only: our lending partners do not finance a home you will live in.
Got it.
Thank you. Your details are on their way to our lending partner's team, who will contact you shortly.
Fix and flip questions
What is the 70% rule in house flipping?
Pay no more than 70% of the after-repair value minus repair costs. On a property with a $300,000 ARV needing $50,000 of work, that is a $160,000 maximum offer. The remaining margin covers financing, holding costs, selling costs and the things that go wrong.
Can I get a fix and flip loan with no experience?
Yes. Lenders underwrite the deal as well as the borrower, so a first-timer with strong numbers and a clear exit can be financed. Experience changes your leverage and pricing rather than your eligibility, and the lender makes the final decision.
How much money do I need to bring to my first flip?
The part of the purchase and rehab the loan does not cover, plus points, closing costs, monthly interest, and enough cash to fund the first phase of work before the first draw is released. Experienced flippers with documented deals usually bring less.
How do rehab draws work on a flip loan?
You complete a phase, submit photographs and invoices, the lender inspects, and funds are often released within a few business days. You pay for each phase first and are reimbursed, so hold cash to cover at least one phase ahead.
What credit score do I need for a fix and flip loan?
Minimums vary by lender. Our lending partners' fix and flip program starts at a 600 score. Higher scores and a documented track record improve leverage and pricing, and the lender decides each file.
What happens if my flip does not sell before the loan is due?
You ask for an extension, which is at the lender's discretion and usually costs a fee, or you refinance. Refinancing into a DSCR rental loan converts the flip into a hold, which is a setback rather than a disaster. Model both exits before you close.
Sources
- ATTOM, Q2 2026 U.S. Home Flipping Report (released Oct 1, 2026), Pittsburgh and San Antonio margins and the 161-day typical flip (accessed Oct 2026)
- ATTOM, Q1 2026 U.S. Home Flipping Report, renovation and other costs of 20% to 33% of property value (accessed Oct 2026)
- Stormfield Capital, Fix and flip funding: lender requirements in 2026, example of leverage tiers by experience across lenders, from about 85% of purchase with no experience to 90% or more for experienced borrowers (accessed Oct 2026)
- Kiavi, fix and flip loans, example of up to 100% of rehab and an ARV ceiling for experienced borrowers (accessed Oct 2026)
- Kiavi, how the fix and flip draw process works, reimbursement draws, inspection fees and release timing (accessed Oct 2026)
- BiggerPockets, 10 important terms to know when applying for a hard money loan, extension fees and prepayment terms (accessed Oct 2026)
Dominion Hard Money does not lend its own funds; it arranges financing through third-party lending partners. All financing is arranged for business purposes only and secured by non-owner-occupied investment property. Not a commitment to lend. All loans subject to underwriting, property review, and approval by the lender. Terms vary by property, borrower experience, and exit strategy.