Many investors assume any hard money loan will work for a flip. Both loan types close quickly, both are asset-backed, and both are short-term. That makes them appear interchangeable.
Here is the truth:
A fix and flip loan is a specialized type of hard money loan. It is designed around renovation schedules, predictable draw releases, and construction milestones. Most general hard money loans are not built for these requirements.
This difference directly affects cash flow, contractor timelines, and overall profit. Delays, slow draws, and unclear inspection timing usually arise because a general hard money loan was used for a project that required a structured fix and flip product.
What Is a Fix & Flip Loan?
A fix and flip loan is created specifically for acquiring, renovating, and reselling a property. The structure aligns with the complete project lifecycle from purchase to construction to final sale.
A typical fix and flip loan includes:
- Acquisition + rehab funding in one loan
- Predictable draw schedules
- Fast underwriting
- Project-aligned milestones
- Clear timelines for inspections and releases
- Designed to support active real estate investors
Flipping involves coordinated steps that must work in sequence. Planning, contracting, permits, delays, material delivery timelines, and inspections all require financing that moves with the project. Fix and flip loans are designed to support this exact rhythm.
Example: Fix & Flip Loan in Action
Consider a distressed property listed at 240,000 dollars. It requires both cosmetic and structural updates including new flooring, a new kitchen, electrical work, and framing adjustments. After reviewing the scope with your contractor, you estimate the rehab budget at 65,000 dollars.
Your objectives in this scenario are clear:
- Secure the property before another investor purchases it
- Renovate efficiently and position the property for a higher resale price
A fix and flip lender structures financing around these needs.
Typical loan terms may include:
- Up to 85 percent of the purchase price
- 100 percent of the rehab budget
- Draws released in stages as work is completed
- Milestone-based inspections such as demolition, framing, rough-in, and finishes
What this structure gives you:
- Lower upfront cash requirements
- Reliable contractor payments
- Better control of construction timelines
- Reduced delays
- A lender who understands common renovation challenges
If the project takes longer or you uncover unexpected issues, these lenders tend to be more accommodating because they work with renovation timelines on a regular basis.
See which loan actually fits your flip.
Flipping succeeds when money flows at the same pace as the work. A structured fix & flip loan keeps your project moving, while generic hard money often slows it down.
What Is a Hard Money Loan
A traditional hard money loan is broader and is primarily focused on the current value of the property rather than the renovation plan or timing of the budget.
A typical hard money loan may include:
- Approval based mainly on collateral
- Partial or inconsistent rehab funding
- Draw schedules that vary significantly
- More documentation and back and forth
- A transactional lender relationship
- Unpredictable timing for inspections and disbursements
Example: Hard Money Loan in Action
Using the same 240,000 dollar property:
A hard money lender may:
- Lend only 70 percent of the purchase price
- Provide limited or loosely structured rehab funding
- Release draws only after multiple inspections
- Require substantial documentation before each draw
This can result in higher cash requirements at closing and the need to self-fund portions of the renovation until reimbursement. That slows down the project and increases risk.
Understanding the Hierarchy of Loan Types
Investors often confuse the terminology. Here is the correct relationship:
Fix and Flip Loan
- The most specific category
- Purpose-built for purchasing, renovating, and reselling
- Includes rehab funding and milestone-based draws
Hard Money Loan
- Broader short-term lending category
- Rehab support varies widely
- Not always built for construction workflows
Bridge Loan
- Broadest category
- Used both inside and outside real estate
The core issue is not which loan type is better. The core issue is alignment. Most hard money loans are not structured for renovation-heavy projects. If you are flipping, you need financing that matches the pace and sequence of construction.
How to Spot a True Fix & Flip Loan vs. a Generic Hard Money Loan
| Factor | Fix & Flip Loan | Hard Money Loan |
|---|---|---|
| Purpose | Built specifically for renovation and resale | General asset-based lending with no real focus on rehab |
| Funding Structure | One loan that covers both purchase and rehab | Primarily for acquisition, rehab support is hit or miss |
| Draw Schedule | Clear, predictable, and tied to actual project milestones | Can be slow or inconsistent |
| Reliability | Reliable draw and inspection timelines | Timing depends heavily on the lender |
| Investor Support | More relationship-driven and familiar with construction needs | More transactional with limited project involvement |
| Ideal For | Flippers juggling real renovation steps and timelines | Straightforward deals or situations where you just need quick capital |
When to Go for a Fix & Flip Loan
Choose a fix and flip loan if:
- You have a defined renovation plan
- Your project includes multiple phases
- Predictable draw releases matter to your schedule
- You want to minimize upfront cash requirements
- Timelines directly affect profitability
- You prefer a lender familiar with construction needs
Choose a hard money loan if:
- The project requires little or no rehab
- You only need short-term capital
- You do not need structured draws
- You are comfortable covering more cash upfront
A Helpful Way to Think About It
Flipping works like a relay race.
A fix and flip loan functions like a trained relay team where every handoff is coordinated and predictable.
Using a generic hard money loan for a renovation project is similar to running the relay with teammates who have never practiced together. The project may reach completion, but the timing becomes unpredictable and much harder to control.
In flipping, predictable movement often leads to predictable profit.
Final Thoughts
Successful flipping depends on momentum. You need financing that moves at the same pace as the project itself. Most hard money loans are not structured to support detailed renovation timelines. Fix and flip loans are built around the actual flow of construction from demolition to finishing work.
When evaluating lenders, focus on one core question:
Will this loan help keep the project on track
If the answer is yes, you are already protecting your time, your cash flow, and your eventual profit.
Smooth progress is one of the most important advantages you can create in a flip.
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Stormfield Capital is a direct balance-sheet lender offering financing solutions for residential investment projects, including fix and flip, bridge, and new construction loans. With fast decisions, consistent draw processes, and reliable funding, Stormfield supports investors across the Northeast and other key U.S. markets.
If you’re evaluating financing for an upcoming flip, Stormfield’s team can help you compare your options and understand the best structure for your project. Contact us to discuss your deal or get a quick quote.
Frequently Asked Questions
1 Are fix and flip loans the same as hard money loans?
Fix and flip loans are a type of hard money loan, but they are more specialized and structured for renovation-heavy projects.
2 Which loan is easier to get approved for?
Hard money loans are often simpler because they are asset-focused. Fix and flip loans require a renovation plan but offer better structure.
3 Do both loans offer rehab funding?
Not always. Fix and flip loans almost always include rehab funding. Hard money loans may not or the draw system may be inconsistent.
4 Which loan is faster to close?
Most modern fix and flip lenders close very quickly. Hard money loans can also be fast, but timing varies more.
