How do you calculate flip spread with hard money?

Spread = ARV minus ~8% sale costs minus all-in basis (purchase + rehab + closing) minus IO carry at 8.99%–13.5% during the hold. Stress ARV −10% and +1 month carry before you lock scope or bind bridge terms.

What rate does hard money carry on a fix-and-flip?

Qualified non-owner-occupied bridge files at Jaken Finance Group run 8.99%–13.5% interest-only from funding through sale or DSCR refi. Carry is a line item in spread math — not an afterthought.

When does hard money make sense for flipping?

When speed (7–14 business days), ARV-based leverage up to ~90% LTC, and collateral-first underwriting beat 30–45 day bank timelines on distressed or heavy value-add non-owner-occupied inventory.

Can you refi a flip into DSCR instead of selling?

Yes — BRRRR exits use hard money bridge during rehab, then DSCR at 5.75%–10.5% after executed lease and DSCR ≥1.0. Confirm seasoning before bridge close if refi is the primary exit.

Blog

Flip Spread and Hard Money — Fix-and-Flip Bridge Debt

Published June 12, 2026 · Updated July 18, 2026

By Jason Taken · Principal, Jaken Finance Group

Flip spread math with hard money at 8.99%–13.5% IO — ARV leverage, carry, 8% sale costs, and when bridge beats bank on non-owner-occupied fix-and-flip deals.

Flip spread is what remains after ARV, ~8% sale costs, all-in basis, and IO carry — hard money at 8.99%–13.5% is the lever that funds acquisition and rehab when bank condition lists and personal-guarantee timelines cannot match distressed inventory. Jaken Finance Group finances non-owner-occupied fix-and-flip bridge on collateral and exit, not W-2 DTI. This guide walks spread math, leverage parameters, draw mechanics, and when bridge debt earns its rate premium.

Flip spread formula

Spread (pre-tax) ≈ ARV
                   − ~8% sale costs (commission, transfer, staging, concessions)
                   − purchase price
                   − rehab (actual + contingency)
                   − bridge closing (points, fees)
                   − IO carry at 8.99%–13.5% × months held

Spread is not margin on ARV alone — carry at 11% IO on $220,000 for seven months ≈ $14,000 that never appears on the scope spreadsheet unless you model it.

Fix and flip calculator · What is hard money · Fix and flip requirements.

Hard money vs bank — flip timeline comparison

Factor	Hard money bridge	Bank / agency
Rate	8.99%–13.5% IO	Lower fixed, longer term
Sizing	ARV, LTC	As-is value, limited rehab
Close	7–14 business days	30–45+ days
Rehab draws	Milestone releases	Rare on distressed stock
Collateral	Non-owner-occupied investment	Owner-occ and investment
Credit	Deal-driven, business-purpose	Personal guarantee common

Speed is not free. Bridge only earns its rate when spread after costs and carry clears your minimum return — typically 15%+ gross on all-in basis before tax, or pass.

Worked example — $240K all-in flip

Assumptions: $195,000 purchase + $45,000 rehab = $240,000 all-in. ARV $310,000. Hard money 88% LTC → $211,200 note at 11% IO ≈ $1,936/mo during 6-month hold.

Line	Amount
ARV	$310,000
Sale costs (~8%)	−$24,800
Net sale	$285,200
All-in basis	−$240,000
Carry + bridge closing (approx.)	−$15,000
Spread (pre-tax)	~$30,200

Stress test — ARV −10%: $279,000 ARV → net after 8% costs ≈ $256,680. Spread drops to roughly $1,680 before friction. +1 month carry at 11% IO on $211,200 ≈ $1,936 additional burn. That sensitivity is why experienced flippers model downside before leveraging to 90% LTC.

Benefits of hard money for flipping · Master fix and flip financing guide.

Leverage parameters — ARV and LTC

Hard money sizes on after-repair value (ARV) and loan-to-cost (LTC) — funding purchase plus rehab when sold comps and scope support the exit.

Parameter	Typical qualified range
LTC	Up to ~90% of all-in basis
ARV cap	~70%–75% of ARV
Rate	8.99%–13.5% IO
Term	6–18 months bridge

Higher leverage preserves cash for concurrent projects and reserves — but only when ARV is supported by sold comps within 0.5 miles on matching product, not listing aspirational prices from actives.

Thin deals where ARV minus basis leaves less than 15% gross margin rarely justify bridge leverage regardless of close speed.

IO carry — monthly burn by note size

Note balance	9.5% IO/mo	11% IO/mo	13% IO/mo
$180,000	$1,425	$1,650	$1,950
$220,000	$1,742	$2,017	$2,383
$260,000	$2,058	$2,383	$2,817

Each extra month at 8.99%–13.5% without sale burns spread. Pre-negotiate extension terms at origination — max term, extension fee, partial paydown requirements.

Rehab draws — scope to spread protection

Flippers who self-fund rehab tie up capital for the next acquisition. Hard money holdback accounts release on inspection milestones:

Milestone	Typical release
Closing	Purchase + partial rehab holdback
Rough-in / mechanical	First tranche
Drywall / finishes	Second tranche
Final / CO	Remaining holdback

Plan 3–5 business days per draw after inspection. See fix and flip draw process.

Scope without 10%–15% contingency is the most common reason equity absorbs overruns — underwriters treat contingency as mandatory. Overruns extend hold time and IO carry at 8.99%–13.5%, compressing spread even when ARV holds.

Exit paths — sale vs DSCR refi

Hard money is bridge debt. Spread math assumes a documented exit:

Exit	Hold period	Next product
Resale	4–9 months typical	Payoff from sale proceeds
DSCR refi (BRRRR)	Rehab + lease-up	5.75%–10.5% at DSCR ≥1.0
Sale of other asset	Portfolio rebalance	Bridge until liquidity

Hard money buy-and-hold strategy · Scale portfolio with DSCR.

Confirm DSCR seasoning (6–12 months from note date on many programs) before you close bridge if refi is the primary exit — otherwise model sale backup at ARV − 8% costs.

Collateral-first underwriting on flip files

Bridge lenders on non-owner-occupied flips focus on:

Sold comps — three+ within 0.5 mi supporting ARV
Scope + bids — LTC, draw schedule, 10%–15% contingency
Exit letter — resale pro forma or DSCR path at 5.75%–10.5%
Entity docs — LLC, operating agreement, good standing
Insurance — investor/landlord quote

Checklist for evaluating hard money proposals · Hard money vs conventional.

Deal quality drives approval more than FICO alone on select credit-flexible programs — but thin spread fails regardless of credit score.

Distressed inventory banks reject

Banks decline properties with open permits, code violations, fire damage, or non-functional systems. Hard money accepts those files when scope cures the deficiency and ARV reflects post-rehab market.

The trade-off: 8.99%–13.5% IO and shorter term. Pro forma must show rehab curing the defect and resale or lease-up before bridge maturity.

Fix and flip statistics 2026 · Hard money loan statistics 2026.

When hard money destroys flip spread

Stabilized turnkey with executed lease — start with DSCR, not bridge
Owner-occupied purchase — Jaken Finance Group finances non-owner-occupied investment property only
No sold comps supporting ARV — collateral underwriting has nothing to anchor
Spread under 10% gross after 8% sale costs and modeled carry — pass or renegotiate basis
GC unavailable or scope undefined — draws cannot release; hold extends indefinitely

File package before term sheet

Document	Purpose
Purchase contract / LOI	Timeline and price
Sold comps (3+)	ARV support
Scope + bids	LTC and draw schedule
Entity docs	LLC OA, EIN, good standing
Exit pro forma	Spread at base, −10% ARV, +1 mo carry
Insurance quote	Carry modeling

Incomplete files queue behind complete packages. Gather one submission folder before LOI — spread math belongs in the package, not in your head at closing.