What Is a Fix and Flip Loan?
A fix and flip loan is a short-term real estate loan designed for investors who buy distressed properties, renovate them, and sell for a profit. Unlike conventional mortgages, these loans close fast — often in 5 to 10 business days — and are based primarily on the property’s after-repair value (ARV) rather than your personal income or credit score.
In Texas, the most common type of fix and flip financing is a hard money loan — a private, asset-based loan funded by direct lenders rather than banks.
Why Texas Is a Hot Market for Fix and Flip Investors
Texas has been one of the top fix and flip states in the country for years. Here’s why investors keep coming back:
- No state income tax — more profit stays in your pocket
- Strong population growth — Houston, Dallas, Austin, and San Antonio are among the fastest-growing metros in the U.S.
- Aging housing stock — millions of older homes in need of renovation, especially in inner-ring suburbs
- Landlord-friendly laws — if the flip doesn’t sell, converting to a rental is straightforward
How Fix and Flip Loans Work in Texas
Here’s the typical process when you work with a direct hard money lender in Texas:
- Submit your deal — property address, purchase price, estimated rehab cost, and your target ARV
- Get a term sheet — usually within 24 to 48 hours
- Appraisal and title work — the lender orders a fast appraisal based on comparable sales
- Close in as little as 5 days — no bank committees, no 60-day waits
- Draw funds for rehab — many lenders release rehab funds in draws as work is completed
- Sell or refinance — pay off the loan at closing or refi into a 30-year rental loan
Typical Fix and Flip Loan Terms in Texas
Loan terms vary by lender, but here’s what most Texas investors can expect:
- Loan-to-value: Up to 70–75% of ARV (some lenders go higher with experience)
- Loan amounts: $100,000 to $5,000,000+
- Rates: 9% to 13% interest-only
- Terms: 6 to 18 months
- Points: 1 to 3 origination points
- Credit score: Flexible — most hard money lenders focus on the deal, not your score
Do You Need Good Credit to Get a Fix and Flip Loan?
No — and this is one of the biggest advantages of hard money financing. Because the loan is secured by the property itself, lenders care more about the deal than your personal financial history. If the numbers work and the property has strong ARV, most Texas hard money lenders will work with you regardless of past credit issues.
If you’re a first-time flipper, some lenders may require a slightly larger down payment or a co-borrower with experience, but deals still get done. See our stated income loan options if you don’t want to show tax returns.
New Construction vs. Rehab: Which Loan Do You Need?
Fix and flip loans cover rehab projects on existing structures. If you’re building from the ground up, you’ll want a construction loan instead. The application process is similar, but draw schedules and appraisal methods differ.
How to Find the Right Fix and Flip Lender in Texas
Not all hard money lenders are the same. Here’s what separates a quality direct lender from a broker who will slow you down:
- Direct lender vs. broker — a direct lender funds from their own capital; brokers add time and fees by passing your deal to a third party
- Local market knowledge — a Texas-based lender understands neighborhood ARVs better than out-of-state capital
- Speed — if they can’t close in under 2 weeks, find someone who can
- Transparent terms — no junk fees, no surprises at the closing table
At Commercial Loans of Texas, we are a direct lender since 1998 — no brokers, no middlemen. We close most deals in 48 hours to 7 business days.
Get a Fix and Flip Loan Quote Today
Ready to move on your next Texas investment property? Tell us about your deal and we’ll have a term sheet back to you within 24 hours — no credit pull required to get started.
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