In a fix-and-flip, the lender you choose can make or break the deal.
Any of the following can negate a great purchase price: if your funding stalls, draws get delayed, or surprises arise after closing. Picking the right lender is not about chasing the lowest rate.
Let us take a look at how to pick the right lender.
Short Answer
It depends on your context. Select a lender whose process fits your deal. The following points matter:
- Timelines to close
- Draw mechanics
- Rates, options, and fees
- State coverage
- Servicing model
Fast closing means little if draws get stalled. Map the loan to your rehab schedule and cash flow before you sign.
Let us take a look at what a fix-and-flip loan really funds to answer the question in detail.
What is a fix-and-flip loan?
A fix-and-flip loan typically finances two components: the purchase and the rehab. The rehab dollars are released through a draw schedule as work milestones are completed and verified via inspections. Staged disbursements take place every 2-4 weeks.
Core selection criteria
Look for the following while selecting a Private Lender:
- Speed and certainty of close: Typical timelines are 7 to 14 days. Faster completion is also possible when the title, appraisal, and inspections align. Ask for recent examples and conditions.
- Total cost of capital: There are multiple components to consider, not just the interest rate percentage. Compare rate, points, underwriting, and inspection fees, extensions, and whether interest accrues only on drawn rehab funds. Price the entire loan period, not just the percentage rate.
- Leverage and structure: Ask and confirm caps for After Repair Value (ARV), Loan to Value (LTV), and Loan to Cost (LTC). Check how rehab progress is monitored, how contingencies are handled, and whether scope changes trigger re-underwriting or fee resets.
- Servicing and draws: Clarify who services the loan. Check what the typical inspection SLAs are, whether partial draws are supported, and whether there are any reinspection fees. Seek clarity about the escalation paths. Remember, slow or rigid draws can erase any rate advantage.
- Geography and eligibility: Verify whether there are any restrictions on the type of property supported. Additionally, note any specific requirements for credit, experience, and reserves. Check whether they serve the state you are looking in.
What the private lenders are looking for
Private lenders evaluate two broad buckets:
- Deal Economics – “Is this a safe, profitable loan?”
- Borrower Strength – “Can this investor execute the plan without issues?
Deal Economics
For fix-and-flip loans, the foremost criteria is the deal economics. They are looking at:
- Strength of After Repair Value (ARV)
- They check the projected ARV against the comparables. You could take a look at websites like Zillow, which provide the data.
- They look for reasonable ARVs. A big gap between the AIV and ARV needs justification.
- LTV/LTC guidelines
- As-Is LTV: Are they overexposed on the purchase?
- LTC (Loan-to-Cost): Are the total costs reasonable and account for contingencies?
Strong LTC/LTV helps offset weak borrower experience.
- Rehab scope and Budget feasibility
- Is a clear itemized rehab budget available?
- Are the costs aligned with local market norms?
- Timeline and Market
- Are the rehab timelines realistic?
- Properties that won’t need a long market time to resell.
- The nature of the sub-market.
Borrower Strength
The lenders look for:
- Experience Level: First timers might face lower leverage, higher reserves, more scrutiny on the budget, and GC selection.
- Credit profile: Lenders don’t need perfect credit, just evidence of responsibility and stability.
- Liquidity and Reserves: Lenders check for the availability of cash to handle any delays and the ability to cover interest payments.
Draw schedule essentials
The following are a few important points to consider for smooth draw management:
- Frequency and size: The draws would be scheduled every 2-4 weeks. The maximum amount is typically capped per disbursement. Plan for multiple draws if the rehab budget is large and allow time for re‑inspections.
- Documentation: Lenders verify completion before disbursing. Photo logs, invoices, and clear scopes reduce back‑and‑forth.
- Cash flow tip: Sequence work so early draws unlock high-value inspections. Align milestones with vendor lead times to avoid idle crews.
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.
How balance‑sheet vs. brokered capital affects you
When funding and servicing remain in-house, a lender can provide you with the most flexible and responsive service. Put yourself in the shoes of the lender who lends from its own balance sheet and also services the loan in-house. What would be their key focus areas during loan origination?
They should recognize that their responsibilities don’t end at closing; the linkages across the full loan lifecycle matter just as much.
Such a lender will have your interests close to heart. The credit, funding, and administration align, shortening feedback loops on inspections and change orders.
On the other hand, third-party servicing can add handoffs and delays during rehab. These delays begin to count when timelines are already compressed, as is the case in a typical fix-and-flip project.
How Brokers Differ from Direct Lenders
Both brokers and direct lenders play important roles in fix-and-flip financing. Most experienced investors use both depending on the situation.
Where Brokers Add Value
- Access to multiple programs: Brokers can compare different lenders’ programs. They could point you to the one whose guidelines best match your credit, experience, or rehab complexity.
- Extra guidance for newer investors: Many brokers help organize scopes, budgets, and expectations. They add to your experience and reduce guesswork on your first few projects.
Where Direct Lenders Add Value
- Faster decisions: Credit, funding, and draw management are consolidated within one team. This means fewer handoffs and quicker yes/no calls.
- Predictability: Processes, SLAs, and expectations remain stable across multiple projects, reducing surprises during rehab.
Pick Based on the Deal
Brokers are great when you want optionality. Direct lenders shine when you need speed, alignment, and reliable draw execution.
Where Lenders Differ in Practice
Some national lenders prioritize digital intake and standardized timelines. In comparison, others emphasize broader program menus and higher leverage. Both models are effective, but you should match their strengths to your experience, scope, and market. Regardless of brand, programs, and pricing shifts occur in markets. You should re‑verify terms, coverage, and draw management rules before signing up for the loan.
Putting it together: a simple selection flow
If you already have a trusted lender, work with them. Linkages allow you speed, flexibility, and certainty. If you are looking for a new lending partner, then first list down the nature of your project. Is it more complex than the last one? If the rehab is heavy, optimize for flexible partial draws and quick reinspection. If you are relatively inexperienced, consider accepting lower leverage for clearer onboarding and predictable draws. Your first win is finishing on budget and on time.
Diligence Checklist
As we have seen, choosing the right lender is important for your success. Overall, you need to validate the following:
- Confirm the Lender Is a Fit for Your Deal
- Understand the Real Cost of Capital
- Make Sure They Can Actually Execute
- Get Clarity on the Entire Process
Use the following checklist before you finalize your next loan:
| Diligence Checklist to select a Fix and Flip Lender | ||
|---|---|---|
| What to Verify | Met? (Y/N) | |
| Eligibility & Fit | ||
| Is the state covered and the property type eligible? | | |
| Does the lender support the scope of rehab (cosmetic/heavy/structural)? | | |
| Has the lender clearly stated their credit score and experience requirements? | | |
| Economics & Transparency | ||
| Do you have visibility into the full fee stack: points, underwriting, inspection, administration, extension, and prepayment terms? | | |
| Has the lender shared the loan details with you, including the rates, and not just the rates? | | |
| Are ARV / LTV / LTC caps clearly documented? | | |
| Has the lender shared with you the required reserves? | | |
| Draw Process & Cash Flow Impact | ||
| Do you have lender disclosures for inspections, draws, and re-inspections? | | |
| How frictionless is the draw management? Is the lender using a digital platform? | | |
| Are partial draws supported? | | |
| Are reinspection fees disclosed upfront? | | |
| What is the maximum disbursement per draw? | | |
| Do they provide a named draw manager? | | |
| Has the lender shared typical actual turnaround times for the last 30 days (not theoretical SLAs)? | | |
| Have the named escalation contacts been shared? | | |
| Closing Process & Reliability | ||
| Have you reviewed the sample conditions list and required documents? | | |
| What was their average close time for similar deals in the past 60 days? | | |
| Are there known bottlenecks (title, appraisal scheduling, inspections)? | | |
| Loan Servicing & Communication | ||
| Who services the loan, the lender’s team or a third party? | | |
| Has the escalation path been shared with actual names + contact details? | | |
| Source of Capital | | |
| Is the lender funding the loan from its own balance sheet or brokering the loan? | | |
| If capital is brokered or serviced by a third party, are the servicing steps clearly mapped? | | |
The Bottom Line
A good Fix & Flip lender gives you speed, clarity, and reliability. The cheapest lender on paper often becomes the most expensive once delays, draw issues, or hidden fees show up. Choosing the right partner upfront protects both your timeline and your profit.
Would you like to learn how we at Stormfield are enabling speed with clarity and reliability?
Try our Platform to get an Instant Quote.
Know how our in-house servicing makes all the difference.
Table of Contents
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.
