Fix and Flip Loans for Beginners: A Clear, Safe Way to Fund Your First Flip (Without Getting Crushed)

What this article will teach you

• What fix and flip loans (aka a hard money loan) actually are

• The basic structure: interest, points, terms, and payoffs

• The underwriting numbers beginners must understand (ARV, LTV, LTC)

• The deal-killers that wipe out new flippers—and how to avoid them

• A beginner-friendly checklist to get funded without getting sloppy

If you’re new to flipping houses, your first real bottleneck usually isn’t finding a property.

It’s funding it—fast, confidently, and in a way that doesn’t put your family balance sheet on the chopping block.

That’s exactly why fix and flip loans exist. In the private-lending world, these are short-term, real-estate-backed loans designed for investor-operators who buy, renovate, and resell. The key is they’re typically secured by the property and structured around After Repair Value (ARV), not the borrower’s W-2 income. In other words: the deal matters. A lot.

What are fix and flip loans?

A fix and flip loan is a short-term, high-touch loan used to purchase and/or renovate an investment property with the intent to resell. In private lending, that’s essentially the definition of a hard money loan: a lender funds a flipper, secured by the property, expecting repayment when the home sells.

The simplest way to understand the ecosystem is the “6 Fs” of real estate:

1. Find the deal

2. Figure it (due diligence + numbers)

3. Fund it

4. Fix it

5. Fill it (if rental/turnkey)

6. Flip it (exit)

If you’re flipping, you’re doing all six. If you’re the private lender, you do one: Fund it.

That difference matters because it explains why private lenders are strict: they’re buying paper (the note), not chasing flip glory.

How a hard money loan for a flip is typically structured

Every lender and market is different, but the basic economic engine is consistent:

• Upfront origination fees (“points”)

• Monthly interest payments

• Principal repaid at the end when the property sells (or refinances)

A simple example from the JBB materials: a lender funds a flip at a stated annual interest rate, the borrower makes monthly interest payments, and then repays the principal at sale—often in ~6 months for quicker projects.

Common term ranges beginners should expect

• Short duration (often months, not years)

• Extensions may exist, but smart lenders structure them so delays cost money (because delays are risk)

The “beginner lesson” here is not the exact rate or fee. It’s that time is a risk multiplier for flips—holding costs rise, markets change, and your margin gets chewed up.

The 3 numbers beginners must understand: ARV, LTV, and LTC

This is where most new flippers get hurt: they focus on “getting the money” instead of “being fundable.”

1) ARV (After Repair Value)

ARV is what the property should sell for after renovation—and in flipping, everything hinges on ARV. If ARV is wrong, your exit is wrong, and your payoff is wrong.

2) LTV (Loan-to-Value) on ARV

In JBB’s framework, the “golden ratio” is LTV—and the target is commonly 60–70% of ARV in today’s market (meaning the total loan amount should be no more than ~70% of the fully-rehabbed value).

That’s not a magic number. It’s a cushion.

3) LTC (Loan-to-Cost) and “skin in the game”

Loan-to-Cost focuses on how much cash the borrower has on the line. Typical max LTC discussed is 85% (meaning ~15% down payment), though stronger repeat borrowers might get more flexible terms.

Beginners should assume: you’ll need meaningful skin in the game.

The deal document beginners can’t skip: the Scope of Work

If you’re new, you might be tempted to pitch the deal with a few photos and a rough rehab guess.

That’s backwards.

A flip isn’t even worth reviewing without a Scope of Work (SOW)—a line-item plan for what gets done, why it supports ARV, and how the borrower will execute it. JBB calls it a red flag if a borrower pitches a flip without one, and emphasizes that rehab unpredictability requires a contingency buffer.

Why lenders care: rehab overruns stretch timelines and compress profits—which directly threatens repayment.

Underwriting for beginners: how to “figure the deal” without being an appraiser

You don’t need to be an appraiser to underwrite a deal, but you do need a repeatable process.

In the workshop case study training, the emphasis is on learning to underwrite the two biggest variables—ARV and scope of work—efficiently, even from your desk.

As a beginner flipper (or a beginner lender), your job is to get disciplined at:

• Comps that actually match

• A rehab scope that’s specific, not vibes-based

• A timeline that’s realistic (construction + resale DOM)

One practical rule-of-thumb from the case study: estimate construction timeline using a daily pacing heuristic, then add resale timeline based on days-on-market comps to model “check to check.”

The “deal killers” that crush beginner flips (and make lenders say no)

Beginner flips don’t usually fail because someone is evil or dumb.

They fail because the math was fragile.

Deal killer: rehab budget with no cushion

If the rehab budget is tight and there’s no contingency, one surprise behind the wall turns a “good deal” into a mess. JBB’s framing is blunt: budget overruns stretch timelines and erase profit, which can jeopardize repayment.

Deal killer: ARV is too high

When a flipper overestimates ARV, they erase the margin that protects everyone. JBB calls this the deadliest deal killer because it destroys the exit.

Deal killer: timeline slippage

A real-world example in the book shows how delays (contractor issues, backorders, seasonality) can turn a 4-month plan into a 7-month slog—killing efficiency and putting the lender’s capital at risk longer than expected.

Beginner takeaway: your first flip should not be a complicated “HGTV masterpiece.” You want a clean, financeable project with speed and predictability.

Beginner checklist: how to approach fix and flip loans the “bank” way

Use this as your starting underwriting discipline—whether you’re borrowing or preparing to lend later:

1. Start with ARV comps (tight radius, similar size/condition)

2. Build a real SOW (not a paragraph—line items)

3. Add a contingency buffer to rehab

4. Model timeline from check to check (construction + resale time)

5. Keep LTV conservative (protect the cushion)

6. Bring skin in the game (expect LTC discipline)

7. Have a clean, documented exit plan (sale, refi, backup options)

Belief rewiring: the beginner mistake is thinking the loan is the hard part

Most beginners think the hurdle is “convincing someone to give me money.”

In private lending, the truth is harsher and more empowering:

The hurdle is presenting a deal that deserves money.

A real fix-and-flip loan isn’t a “trust me” product. It’s a “show me” product:

• show me the ARV support

• show me the scope

• show me the cushion

• show me the timeline

• show me the borrower’s commitment

Do that, and funding becomes a process—not a hope.

What to do next

If you want to go deeper (and do this safely), your next step isn’t hunting “the perfect lender.”

It’s building your lending/borrowing standards—the personal credit policy and deal filters that keep you out of the ditch.