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Conventional lenders won't finance a property mid-renovation. Asset-based flip funding covers the acquisition and the rehab budget, priced on the deal rather than your tax returns.
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A conventional mortgage lender wants a property that is habitable, stabilized, and appraises on its current condition. A flip is the opposite of all three by definition — you are buying something that needs work precisely because that is where the margin is.
Fix and flip funding solves this with a different structure. Rather than lending against the property as it sits, these facilities underwrite the purchase price and the renovation budget together, often against the after-repair value. The rehab funds release in draws as work is completed, so you are not carrying interest on capital you have not deployed yet.
The practical effect: you can buy the property that needs work, fund the work, and get paid on the exit — without needing to bring the entire project cost in cash.
Vacant, distressed, or mid-renovation properties fall outside conventional programs. Asset-based lending evaluates the asset and the plan instead.
One facility covering acquisition and renovation budget, rather than sourcing two separate pools of capital.
Rehab funds release in stages as work completes, so carrying cost tracks actual progress rather than the full budget from day one.
Distressed and off-market properties move fast. Investor-paced underwriting is built for those timelines.
Close in your LLC, which is how nearly every active flipper structures acquisitions.
Underwriting focuses on the deal, the budget, and the exit rather than your personal debt-to-income ratio.
Flip underwriting looks at a different set of things than a rental loan. The four that carry the most weight:
The draw structure is the part newer investors most often underestimate, and it affects your project more than the rate does.
Rather than releasing the full renovation budget at closing, the lender holds it and releases funds in stages as work is completed and verified. This protects the lender, but it also means you need working capital to front each phase before reimbursement.
Two questions worth asking any flip lender before you commit:
Speed on draws is a real cost factor that never appears in a rate comparison.
The most common way a good flip becomes a bad one is an exit that takes longer than the loan term. Short-term financing plus a slow market is an expensive combination.
If you intend to sell, be realistic about days on market in your area rather than the best case. If you intend to hold and refinance, confirm the stabilized property will actually qualify for long-term financing before you buy — run the projected rent and payment through our DSCR calculator to check the coverage ratio works.
Investors following the buy, renovate, rent, refinance pattern often move from flip funding into a DSCR loan once the property is producing income. Knowing that path works before you acquire removes most of the risk from the transaction.
For deeper background on this product, see our fix and flip loans service page and our guide to what drives fix and flip rates.
| Fix & Flip Funding | Conventional Mortgage | |
|---|---|---|
| Property condition | Distressed or mid-renovation | Must be habitable and stabilized |
| Renovation budget | Funded via draws | Not covered |
| Qualifies on | Deal numbers and exit plan | Personal income and DTI |
| Close in an LLC | Standard | Often not permitted |
| Typical term | Short-term | 15 to 30 years |
| Best for | Renovation projects | Move-in ready purchases |
Purchase price, rehab budget, after-repair value, and your exit plan. We'll come back with a real quote — usually within 24 hours, no credit pull to start.
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