Loan programs → Fix and flip loans
Fix and flip loans
A fix and flip loan is short-term financing to buy an investment property, renovate it, and sell it. Capstone Connectors is an Asheville private money broker: we connect you with lending partners who fund that loan. We do not lend.
In short
- →Up to 100% loan-to-cost on purchase plus rehab when the deal pencils. Closing costs and reserves stay with you.
- →The same loan is capped at 70% of after-repair value. The lower number is the one that funds.
- →6 months, plus 3-month extensions at 1 point each, 12 months total. Rehab funds come out in draws.
- →Business-purpose, non-owner-occupied investment property only. Not a primary residence. Not North Dakota or South Dakota.
Reviewed by Derek Simkins, an Asheville private money broker. He matches investor deals with lending partners. He does not lend. Last updated October 21, 2026.
The sequence
How a fix and flip loan actually moves.
Hard money, in this use, is short-term and asset-based. The partner underwrites the property, the equity, the after-repair value, and the exit more than a W-2. Your job is a deal that can be checked. Capstone’s job is to read it and introduce it to a partner whose box it fits, then stay on the file through close. The partner approves or declines. We do not.
- 01
Price the purchase, the rehab, and the exit.
Address, condition, contract price, a line-item rehab budget, and an after-repair value taken from real comparable sales. Name the exit: sell to a retail buyer, or refinance into a DSCR loan and hold. “I’ll figure it out” is not an exit a partner can underwrite.
- 02
Send the deal. Derek reads it before anyone else does.
The inquiry asks what the property is, what the numbers are, what the exit is, and what you have done before. First-time flippers are welcome. The deal has to be cleaner: more margin, more cash in the project, a contractor with a track record. Repeat operators move faster because the partner already knows the file.
- 03
The introduction goes to one partner, not a blast.
Capstone sits across more than one lending relationship and picks the one the deal fits. We do not name those partners on this site. The partner underwrites. Approval is theirs. Compensation Capstone earns is paid by the funding lender at closing and disclosed in writing before you close.
- 04
Close, then draw the rehab.
On a clean file, closing is days, not weeks. Slow points are appraisal scheduling, title on a distressed property, and entity paperwork. Purchase money wires to title. Rehab money stays in escrow. You pay for work, document it with pictures against the scope you filed at the start, and the partner releases that line. Draws often go out within 48 hours of an approved request. Many files are reviewed from photos and a desktop valuation rather than a full appraisal. The partner decides which.
- 05
Sell, or refinance, and pay the loan off.
The sale pays off principal, interest, and any remaining fees. Profit is what is left after that, after your cash in, and after the rehab you actually spent. If the exit is a rental, the next loan is a DSCR cash-out refinance, qualified on the rent. That is a second underwriting, not an automatic conversion of this one.
Plain terms
The words partners use, and what they change.
Loan-to-cost (LTC). Loan amount divided by purchase plus rehab. On a fix and flip that pencils, partners can fund up to 100% of that all-in number. Up to 100% loan-to-cost is not 100% financing. Closing costs and reserves stay with you. You also need cash to start work before the first draw reimburses you.
After-repair value, and the 70% cap. After-repair value is the comp-supported value once the work is done. Loan-to-value on this product runs against that future value, not against what the house is worth the day you buy it. Total loan divided by after-repair value needs to come in under 70% for most partners. If your number sits 10–20% above what an appraiser would support, the loan drops and the deal often dies.
The loan is the lower cap, not the higher one. A partner does not hand you whichever percentage sounds larger. They fund the smaller of the cost cap and the after-repair cap. The example below is the whole point of running both before you go under contract.
Draws. Rehab is held in escrow and released as work completes, often within 48 hours of an approved request. The scope and budget you file at the start are the draw lines. You can draw a line more than once. This is reimbursement: the work is in place, then the money follows. If you do not have the cash to front a trade, say so early. Partial draws or materials delivered on site are sometimes arranged. They are not the default, and the partner’s underwriter decides.
Term, points, and extensions. The published term is 6 months. Each extension is 3 months and costs 1 point, and the total stops at 12 months. A point is 1% of the loan amount, paid as a fee. Origination points on top of that vary by partner and are not a single published number. Do not treat an extension as a plan. It is a paid option if the partner agrees.
Dutch interest. Most hard-money partners charge interest on the entire loan, including rehab funds still sitting in escrow. That keeps the draw money available. It also means the effective cost is higher than the headline rate for as long as you hold, because you are paying interest on money you have not spent yet. Model the hold. The rates page states this in the same words. Final rate, points, and term are the partner’s.
What we do not publish as a Capstone rate. There is no Capstone rate sheet with a single interest percent, because Capstone is not the lender. Observed structure — the 100% cost cap, the 70% after-repair cap, the 6-month term, the extension price — is on the rates page. Anything else you read as “typical 2026 hard-money rates” on another site is not a number we are willing to repeat.
Example
Example: two caps, one loan.
Example only. These prices are made up so the arithmetic is easy to see. This is not a Capstone deal, not a client, and not a quote. The percentages are the ones on the rates page. A real partner can come in tighter.
| Purchase price | $200,000 |
|---|---|
| Rehab budget | $50,000 |
| All-in cost | $250,000 |
| 100% of cost | $250,000 |
| After-repair value | $400,000 |
| 70% of that value | $280,000 |
| Loan at the lower cap | $250,000 |
Cost is the binding cap here. The after-repair room would have allowed $280,000, and the partner still stops at the $250,000 of cost. Flip the rehab to $80,000 and the cost cap becomes $280,000, which now ties the after-repair cap. One more dollar of budget and the after-repair cap binds: you bring the extra cash, or you cut the scope.
Cash to close is not zero in the first version either. Title, attorney, recording, and appraisal sit outside the loan. So does the reserve that carries interest, taxes, and insurance if the project runs long. Dutch interest is accruing on the full $250,000, including the $50,000 still in escrow, from the day you close.
Fit
Who a fix and flip loan is for.
It fits an investor buying a property to renovate and resell, or to renovate and refinance into a rental loan. The property is business-purpose and non-owner-occupied. You can say what it is, what it costs, what it should be worth finished, and how you get out. Newer investors are a normal file here when the margin is real. Rural and Western North Carolina property is considered, not only metro Asheville. Capstone is based in Asheville. We do not publish a page for every city.
It does not fit a primary residence, a second home, or any loan you would live in for more than a short stay. It does not fit raw land or a new building — that is a ground-up construction loan. It does not fit a stabilized rental you simply want to buy and hold with no rehab — that is a DSCR purchase loan. Capstone does not place fix and flip loans on property in North Dakota or South Dakota.
Business-purpose, non-owner-occupied investment property loans only. Not for primary residences, second homes, or consumer loans.
Underwriting
What the lending partner actually weighs.
This is the order on the how it works page, which is the order Derek uses before an introduction goes out. It is not a promise that any one partner uses the identical checklist.
- Loan-to-value against after-repair value. Does the total loan sit under about 70% of a value the comps support?
- Loan-to-cost. Purchase plus rehab against the loan. Up to 100% of cost still leaves closing costs and reserves with you.
- Whether the after-repair value is real. Aspirational comps are the fastest way to watch the loan amount fall.
- Whether the exit can happen on that timeline. A sale in that market, or a refinance whose rent actually covers a DSCR payment.
- Whether you can carry it if it runs long. Experience helps. Cash helps more when something in the walls is worse than the inspection.
Credit score is lighter here than at a bank. It is not ignored. If the project was underwritten with room under the 70% cap and a real problem shows up, a partner may raise the budget only up to that cap. Past the cap, the extra dollars are yours.
Documents
What to have ready before underwriting starts.
- —Purchase contract, or a signed offer.
- —Scope of work and rehab budget, line by line. Those lines become the draws.
- —Comparable sales that support the after-repair value.
- —Proof of funds for closing costs and reserves, not for a fantasy down payment you do not have.
- —Entity documents when the buyer is an LLC: operating agreement and EIN. Most of these loans are made to an entity, not to you personally.
- —A short track record if you have flipped before. First files do not need a fake résumé.
- —Government-issued ID once the file is in motion. The partner may add a personal guarantee, insurance, and a title commitment. Read those. This page is not a substitute for the documents or for your own attorney.
The broker
What Capstone does with the file, and what it does not.
Derek Simkins is the broker. He is in Asheville. He has worked investor transactions for years: pricing, walking property, and watching which introductions close. Eleven years in the Air Force before that. None of that makes Capstone a lender, a bank, or a fund.
The work is specific. He checks whether the after-repair value comps, whether cost and the 70% cap can live in the same loan, whether you can carry a longer hold, and which partner’s box the deal actually fits. One introduction, not an application sprayed across a list. He coordinates the file so title, entity papers, and the partner’s conditions do not sit. He does not set the rate, he does not approve the loan, and he does not fund it.
If the math is wrong, the useful outcome is a no before the introduction, not a file that collapses in month seven. Send the address and the numbers on the inquiry. The call is where the scope and the exit get pressure-tested. Paperwork follows the conversation. It does not replace it.
Mistakes
Where fix and flip loans break.
The after-repair value does not comp.
The investor’s number is 10–20% over what the appraiser supports. The loan shrinks. The cash you did not plan to bring is now the down payment.
The rehab budget was a wish.
Real bids land about 30% over the scope, and there was no contingency. The project runs out of money in the middle, and the 70% cap does not stretch to cover it.
The exit was a sentence, not a plan.
“I’ll refinance” assumes a rent that does not cover a DSCR payment at the partner’s ratio. The short-term loan matures anyway.
The hold costs more than the reserve.
Five months becomes nine. Dutch interest, taxes, and insurance keep running. Extensions, if the partner allows them, cost a point each and still end at 12 months.
Compared
Fix and flip loans next to the other ways to pay for a project.
Same investor, different job. The rates page is the structure we actually publish. This table is the decision, not a second rate sheet.
| Fix and flip | Bank | DSCR | Ground-up | |
|---|---|---|---|---|
| Job | Buy, renovate, sell or refinance | Long-term loan on a habitable property | Buy or refinance a rental | Build new, from land |
| What qualifies | The deal and the exit | Your income and credit | The rent versus the payment | Land control and a shovel-ready budget |
| Leverage we publish | Up to 100% of cost, 70% of after-repair value | Not our product | Set by the partner from the rent and the value | Up to 70% of cost |
| Term we publish | 6 months, extensions to 12 | Decades | Long-term hold | Sized to the build |
A bridge loan, when you need short-term capital and there is no rehab escrow, is a separate match. It is described on how it works and on the rates page (3–12 months, loan-to-value case by case). It is not a rename of this loan.
Questions
Fix and flip loans, answered.
What is a fix and flip loan?
A fix and flip loan is short-term financing to buy an investment property, pay for the renovation, and sell. It is not a 30-year mortgage and it is not for a home you will live in. The lending partner Capstone matches you with sets the approval, the rate, and the term. We do not lend.
How does a fix and flip loan work?
You price the purchase, the rehab, and a comp-supported after-repair value, then send the deal. If a partner’s box fits, they fund the purchase at closing and hold the rehab in escrow. You do the work, document it, and draw the rehab money as it is completed. You exit by selling, or by refinancing into a DSCR loan if the plan is to hold. A clean closing is days, not weeks, when title is clear and the documents move.
How much of the project can the loan cover?
Up to 100% loan-to-cost — purchase plus rehab — on a deal that pencils. That is not 100% financing: closing costs and reserves stay with you. Most partners also cap the loan at 70% of after-repair value. The loan is the lower of those two limits. The matched lending partner sets the final number.
What is after-repair value?
After-repair value is what the property should be worth once the renovation is done, supported by comparable sales, not by a hope. On a fix and flip, loan-to-value runs against that number. If the total loan is more than about 70% of a value an appraiser would support, the loan shrinks or the deal stops.
What is loan-to-cost?
Loan-to-cost is the loan divided by purchase price plus rehab. Up to 100% of that all-in cost is what partners can fund when the deal pencils. Closing costs, interest while you hold, and cash reserves are not inside that 100%.
How long is a fix and flip loan?
The term published on the rates page is 6 months, with 3-month extensions at 1 point each, up to 12 months total. A point is 1% of the loan amount. The partner does not promise that an extension will be granted. Model the hold before you sign, including a month or two longer than the optimistic plan.
What are points, and what is Dutch interest?
A point is an upfront origination fee equal to 1% of the loan. The rates page does not publish one origination-point number for every partner. It does publish the extension price: 1 point per extra 3 months. Dutch interest means interest accrues on the entire loan, including rehab funds still in escrow. Most hard-money partners charge it. The headline rate is not the full cost of holding the loan.
Do I need a large down payment or a high credit score?
There is no single down-payment percent. Even at 100% of cost you still bring closing costs and reserves, and the 70% after-repair cap can force more cash in. Credit matters less than it does at a bank, and it is not zero. Active bankruptcy, a recent foreclosure, and unresolved fraud claims are factored in. The partner decides.
Can I use a fix and flip loan on my primary residence?
No. These are business-purpose, non-owner-occupied investment property loans only. Not for a primary residence, a second home, or a consumer loan. Capstone also does not place these loans on property in North Dakota or South Dakota.
How is this different from a bank loan, a DSCR loan, or new construction?
A bank underwrites your income and takes longer, which is a poor fit for a distressed house you need to close and resell. A DSCR loan is the long-term rental loan, qualified on rent, and it is the usual refinance if you decide to hold instead of sell. New construction on vacant land is a ground-up construction loan, capped at 70% of cost, not this product. A bridge loan is short-term capital between deals, without a rehab escrow.
What documents should I have ready?
Purchase contract or signed offer, a line-item scope of work and rehab budget, comparable sales for the after-repair value, proof of funds for closing costs and reserves, entity documents if you are buying in an LLC, and a short track record if you have flipped before. Government-issued ID comes up once a file is moving. The partner’s list can add to this. It does not subtract the underwriting.
What if the plan changes and I want to keep the house as a rental?
That exit is a DSCR loan, usually a cash-out refinance once the property is repaired and rented, not an extension of the flip loan into a 30-year hold. The rent has to cover the new payment at the partner’s ratio. Say that on the first call if it is even a maybe. An exit you invent in month seven is how these files stall.
Have a flip under contract?
Talk to Derek. Start with the inquiry: address, purchase, rehab, after-repair value, and the exit. Paperwork comes after the conversation. If the math works, we match you to a lending partner. If it does not, you hear that before anyone else spends a week on it.
Talk to Derek