In competitive real estate markets, investors need fast, flexible funding to buy, renovate, and sell properties on tight timelines.

Traditional bank loans are slow, they require full documentation, and lengthy underwriting that can delay closings for weeks.

Hard money fix and flip loans solve that problem. These short-term loans are funded based on a property’s after-repair value (ARV), not the borrower’s income, allowing real estate investors to close quickly and keep projects moving.

What Is a Hard Money Fix and Flip Loan?

A hard money fix and flip loan is asset-based short-term financing for real estate investors to buy and renovate properties. These loans are secured by the property itself and based on its after-repair value (ARV), not the borrower’s personal income.

Hard money lending works because investors can buy, renovate, and sell a property within a short window. When the deal is structured correctly, the investor uses a relatively small down payment to control a larger asset, complete the rehab, sell for a profit, and pay back the lender - all within a single project cycle.

Most hard money fix and flip loan programs have a term of six to eighteen months (average is 12 months) and are repaid once the property sells or is refinanced. Terms and rates depend on loan-to-value, renovation scope, and investor experience.

How Hard Money Fix and Flip Loans Work?

Hard money fix and flip loans only make sense when the investor can turn a profit. Because of this, every loan decision centers around whether the underlying project is likely to succeed. To simplify this analysis, Ridge Street uses the “4 Pillars of Fix and Flip Projects” to evaluate both profitability and feasibility.

Understanding the 4 Pillars of Hard Money Fix and Flip Loans

These four pillars act as a practical checklist for investors to make sure a project is profitable and fundable with a hard money fix and flip loan.

1. Profitability 

Profit is the foundation of every fix and flip deal. If there isn’t a clear profit margin, the investor shouldn’t pursue the project—and the lender shouldn’t fund it.

To evaluate profitability, lenders look at:

1. The After Repair Value: By reviewing recent comparable sales, the lender estimates the property’s value after renovations.
2. Fix and Flip Profit Calculation: Once the ARV is validated and the local market supports a clean exit, the lender calculates expected profit by factoring in purchase price, rehab budget, loan costs, and closing costs.

If the numbers show a profit (or at minimum, a break-even), the deal moves to the next step.

2. Rehab Feasibility

Rehab feasibility measures whether the scope of work matches the investor’s experience level. Heavy rehabs come with more risks—longer timelines, higher budgets, and more surprises. These are best suited for seasoned investors.

Quick Guide: Experience Level vs. Rehab Heaviness

3. Credit Score

Although hard money loans are primarily asset-based, credit still matters. Since no income documentation is required, credit score becomes a proxy for financial reliability.

Higher credit scores generally allow higher leverage.

4. Market Liquidity

Market liquidity measures how quickly renovated properties in your price range sell. The exit strategy must align with what buyers in that area actually purchase.

Example:
If most renovated homes nearby are 4-bed/3-bath properties selling around $400,000, trying to sell a 7-bed/4-bath for $1,000,000 is a mismatch. The market isn’t liquid at that target price, and the project becomes riskier for both the investor and the lender.

Hard Money Fix and Flip Loan Process

Below is the full lifecycle of a hard money fix and flip loan, from start to finish:

1. Deal Evaluation

In this stage, the real estate investor will submit their deal and will receive a Term Sheet for the proposed hard money fix and flip loan on the property.

During this stage, the lender evaluates the 4 Pillars—profitability, rehab feasibility, borrower profile, and market liquidity—to determine if the project is fundable.

2. Loan Processing

Documents supporting the hard money loan will be collected. These documents include:

3. Property Acquisition (Closing)

Once underwriting is complete, the investor closes at a title company or with a remote notary and acquires the property. The closing lifecycle, from application to closing, is 14 days on average.

4. Renovation Phase

The investor completes the renovation according to the approved scope of work. As work is finished, the borrower submits photos and funds are released in “rehab draws” per the loan terms.

5. Exit strategy

Once renovations are complete, the loan is repaid through the property sale or refinanced into long-term rental financing.

Benefits of Hard Money Fix and Flip Loans

Hard money financing gives real estate investors the speed and flexibility necessary to complete profitable projects quickly.

• Speed and flexibility: Approvals for hard money fix and flip loans can occur within 1 day and closing can happen as soon as 7-10 days. This fast timeline allows investors to compete for off-market properties which is not possible with traditional lenders.
• Leverage: Loans cover up to 90% of purchase and 100% of renovation costs, helping investors maximize their leverage and put less money down.
• Expertise: Work with lenders who understand construction draws and local market dynamics keeps projects on schedule and makes accessing rehab funds painless.
• Financing Distressed Properties: Most traditional lenders cannot finance distressed properties. Whereas, hard money lenders are specifically set up to finance distressed real estate assets.

Risks and Drawbacks to Consider

Hard money loans trade higher costs for faster closings. Investors should weigh these factors before starting a project.

• Higher costs: Interest rates and origination fees are higher than traditional loans, reflecting the short-term nature and speed of funding.
• Short terms: Fix and flip loans are repaid within 6–18 months. Investors need a defined exit strategy to avoid extensions or default.
• Project risk: Underestimating renovation costs or timelines can quickly reduce profit margins.

Comparing Fix and Flip Financing Options

Hard money loans strike a balance between speed and structure. They may not offer the lowest rates, but for professionals focused on fast execution and predictable timelines, they remain the most practical financing option for fix and flip projects.

How to Choose the Right Fix and Flip Hard Money Lender

Choosing the right hard money lender is important for project success. Look for lenders that value transparency, experience, and underwriting discipline.

• Transparency: Reputable lenders outline fees, loan terms, and draw schedules upfront. Avoid hidden costs or unclear rate structures.
• Experience: Lenders who understand renovation timelines and local market values provide more accurate funding and faster approvals.
• Underwriting discipline: A lender who verifies credit, budgets, and exit strategy is protecting both sides of the deal.

Ridge Street Capital follows these principles through our direct private lending underwriting standard. We require a 660+ credit score, defined renovation plan, and clear exit strategy while offering competitive ARV-based leverage.

Getting Started with Ridge Street Capital

Securing financing for your next fix and flip project is straightforward:

1. Submit your property details and renovation budget: Provide basic information about the property, purchase price, estimated after-repair value (ARV), and planned improvements.
2. Receive a same-day term sheet: Ridge Street reviews your submission promptly and outlines clear terms, loan amounts, and draw structures based on your project scope.
3. Close in as few as 7–10 days: Once approved, funding can be completed within a week, allowing investors to act quickly on time-sensitive opportunities.

Ridge Street gives investors the speed and flexibility needed to compete in fast-moving real estate markets. When used responsibly, our hard money fix and flip loans unlock capital that keeps projects on schedule and portfolios growing.

Apply here to get pre-approved.

Hard Money Fix and Flip Loan FAQs

How are payments structured on a hard money fix and flip loan?

Hard money fix and flip loans use interest-only monthly payments, which keeps cash flow predictable during renovations. The principal balance is repaid in full once the property is sold or refinanced at the end of the loan term. Payments are made on a monthly basis.

Can I use a hard money fix and flip loan for my primary residence?

No. Hard money and fix and flip loans are strictly for investment real estate projects. Borrowers must demonstrate that the property is being purchased for resale or rental income, not as an owner-occupied home.

Are there prepayment penalties or extension options?

Most hard money lenders do not charge pre-payment penalties. If a project runs longer than expected, most lenders offer short extension options (typically 30 to 90 days) for an additional fee to help investors complete renovations before resale.