The rate is only part of what a fix and flip loan costs. To know whether a flip makes money, you need the whole picture. Here are the pieces to add up.
1. Interest
Most flip loans are interest-only and short term. Interest is typically calculated on the amount you have drawn, so it grows as rehab funds are released. A longer project means more interest.
2. Origination points
A point is one percent of the loan amount, paid to the lender at closing. Lenders commonly charge points for originating the loan. Compare points as well as rates, since a lower rate with higher points can cost more overall on a short loan.
3. Closing and third-party fees
Expect title, appraisal, insurance, legal and recording costs. Ask for an estimate of total closing costs up front.
4. Draw and inspection fees
Rehab funds are released in draws, and some programs charge a fee per draw or per inspection. Ask how many draws are typical and what each one costs.
5. Holding costs
These are the costs of owning the property while you work: taxes, insurance, utilities and interest. They are easy to underestimate. Every extra month on the project adds to them.
6. Selling costs
Agent commissions, closing costs and any concessions come out of your sale proceeds.
Putting it together: an illustration
Imagine a flip with a $200,000 purchase, a $50,000 rehab and a $340,000 sale. These numbers are illustrative only.
| Item | Illustrative amount |
|---|---|
| Purchase | $200,000 |
| Rehab | $50,000 |
| Financing (interest + points + fees) | $14,000 |
| Holding costs | $6,000 |
| Selling costs | $20,000 |
| Total costs | $290,000 |
| Profit at a $340,000 sale | $50,000 |
If the project takes three extra months, the financing and holding lines both grow. Build that cushion into your numbers before you offer.
How to compare offers
- Ask for the all-in cost over your expected timeline, not just the rate.
- Ask what happens if the project runs long: extension fees, rate changes or neither.
- Check whether the lender funds the purchase, the rehab, or both, and what percentage.
Use the fix and flip calculator to run your own numbers, and learn how lenders size loans in our guide to ARV.