Most fix and flip loans get quoted the same two ways: 90% of the purchase price, 100% of the rehab budget. Both numbers are easy to compare across lenders, and on a thin deal neither one is what gets funded.
Total proceeds are tested against what the finished house is worth. When that test is tighter than the two percentages, the percentages lose. The loan comes back smaller than the quote implied, and the difference arrives as cash you did not plan to bring to closing.
The margin on a flip does not leave much room for that kind of surprise. The typical flip returned a 25.4% gross gain in the first quarter of 2026, about $66,000 on the median deal[1]. That figure is measured before rehab and before carry, so the real spread is thinner than it reads. A $20,000 resizing at underwriting is not a rounding error against $66,000.
Three Limits Size the Loan
- Purchase leverage. The share of the price the lender will fund. At Conventus that runs up to 90%.
- Rehab coverage. The share of the renovation budget the loan carries, up to 100%, released against completed work rather than advanced at closing.
- The after repair value test. Both pieces added together, held to a share of what the property is worth once the work is done.
The first two are fixed policy and you can get them on the phone in a minute. The third depends on the deal, and it gets settled in underwriting once there is an appraisal. That sequencing is the whole problem. The constraint most likely to change your cash position is the one you learn about last.
Run the Cash to Close Before You Go Under Contract
The arithmetic is quick and worth doing before an offer goes in. Take an illustrative purchase at $400,000 with an $80,000 rehab budget, and assume for the example that total proceeds are held to 70% of after repair value.
If the finished value appraises at $600,000: ninety percent of purchase is $360,000, all of the rehab is $80,000, and the loan you asked for is $440,000. But 70% of LTARV is $420,000. So you fund at $420,000 against $480,000 of total project cost, which puts you in for $60,000 plus closing costs instead of the $40,000 the two percentages implied.
Now change one input. Same purchase, same budget, finished value of $700,000. The LTARV is $490,000, which is above the $440,000 you asked for, so the percentages bind and the loan funds at $440,000. Your cash drops back to $40,000.
Nothing about the lender changed between those two deals. The quote was identical. What changed was the spread, which means the number to underwrite first is your own margin, not the term sheet.
That 70% is illustrative and the real figure moves by lender and by deal. Ask what share of after repair value a lender will go to, and ask before you are under contract rather than after the appraisal lands.
The Terms That Cost More Than the Rate
Rate is the easiest term to compare and rarely the most expensive one. Conventus fix and flip loans start at 7.99%, and half a point of spread against another quote is worth less than any of the following.
- How rehab money moves. Reimbursement after completed work is standard, so the real question is the cycle time between requesting a draw and having the funds. That timing is a carry cost and it compounds across a long project.
- Whether interest is paid monthly or reserved. An interest reserve holds the payments inside the loan, which protects cash while the property earns nothing.
- Term, and what follows it. Conventus writes 6 to 24 months. A 6 month term on a project that realistically runs 165 days leaves almost no margin, and extension terms are cheaper to negotiate at origination than at month five.
- When a resizing gets communicated. A loan that comes back smaller two days before closing is a different problem from the same loan resized a week after the appraisal.
Those four terms decide what the loan costs and whether it closes. The rate decides the monthly payment. Vetting the lender itself, references and red flags, is a separate exercise.
What the Hard Money Label Tells You, and What It Does Not
Plenty of investors search for a hard money loan for a house flip and mean exactly the product described above. The label is accurate about one thing, underwriting leans on the asset and its finished value rather than on the client’s tax returns. That is how these loans work, and it is why they fund in days rather than weeks.
What the label says nothing about is where the money comes from. A collateral-first underwriting method can sit on top of one investor’s account or on top of institutional capital, and the two behave differently on the day you need the wire. Conventus has funded over $10B across 44 states and underwrites with people rather than an algorithm, which is the part that determines whether a close holds.
Pick the Exit Before You Sign
A 6 to 24 month term forces the decision at purchase rather than at completion. Sell, or refinance into a long-term hold.
The second path is not automatic. A property priced to sell profitably can still fail the coverage test a rental loan applies, because the rent has to carry the payment on its own. Conventus DSCR loans start at 6.00% and are underwritten on the property’s income rather than yours, which makes the refinance a real option when the numbers clear and a dead end when they do not. Investors running the full buy, rehab, rent, refinance loop are underwriting both exits at once, which is the more demanding version of the same decision.
Deciding which exit you are building toward before the rehab scope is final changes the scope.
What to Do With This
Three things, on the next deal.
- Ask what share of after repair value the lender will fund to, and get the answer before you go under contract.
- Run cash to close against that number instead of against 90 and 100. If the answer breaks the deal, you found out for free.
- Pick the exit before the scope is final, because a sale and a refinance want different finishes and different timelines.
The quote is the easiest part of a fix and flip loan to compare and the least useful. Talk to a Relationship Manager about how a specific deal sizes, and get the number that decides your cash before the contract decides it for you.
Sources
- ATTOM, Q1 2026 U.S. Home Flipping Report. Published July 2026.
