Hard money exists because banks will not fund distressed properties on an investor timeline. You found the deal — now you need capital that closes in days, funds rehab on a draw schedule, and underwrites the after-repair value instead of your W-2.
The Fix-and-Flip Financing Playbook is Jaken Finance Group’s field guide for sponsors who want to stop guessing at leverage and start submitting packages lenders approve on the first pass. Whether this is your first flip or your fiftieth, the framework is the same: accurate ARV, honest scope, structured draws, clean exit.
Inside this guide you’ll learn
-
Understanding Hard Money for Fix-and-Flip — How asset-based lending differs from conventional mortgages, what LTC and ARV mean for your max offer, and why interest-only payments during rehab preserve cash flow.
-
How to Calculate ARV and Max Offer Price — Comp selection rules, adjustment logic, and a worked example you can replicate on your next deal before you write the offer.
-
The Draw Process: How Funds Are Released — Milestone schedules, inspection prep, and how to avoid the cash-flow gap between completed work and wired holdback.
-
Scope of Work Basics for Hard Money Lenders — Line-item templates, contingency benchmarks, contractor documentation, and the mistakes that delay approval.
-
Closing Your First (or Next) Flip Deal — Loan application checklist, entity setup, insurance binders, and coordination with title for a 7–10 day close.
Who this playbook is for
- First-time flippers who need a lender that does not require a long track record
- Experienced sponsors expanding into Illinois, Indiana, North Carolina, Georgia, Florida, South Carolina, or the DC metro
- Investors comparing hard money terms who want a single checklist instead of scattered blog posts
Jaken Finance Group funds fix-and-flip projects statewide from our Hoffman Estates headquarters — brick two-flats, collar-county SFR, and downstate ranch rehabs on programs tuned for how investors actually build. See current terms on our fix and flip loans Illinois program page.
What the 2026 flipping data says
Margins are getting thinner, which makes financing structure matter more. ATTOM’s Q2 2026 U.S. Home Flipping Report, released October 1, 2026, found:
- 77,991 single-family homes and condos were flipped in Q2 2026, or 6.2% of all home sales.
- The typical profit margin was 21.5%, down from 27.6% in Q2 2025.
- Typical gross profit, meaning resale price minus purchase price, was $60,526. That figure doesn’t subtract rehab, financing, or selling costs.
- The typical flip took 161 days from purchase to resale.
- Among metros with more than 1 million people, the highest flipping rates were in Cleveland (10.4%), Columbus, OH (9.5%), Memphis (9.5%), Dallas (9.4%), and Phoenix (8.9%).
ATTOM also found the flipping rate fell from the prior quarter in 162 of the 186 metro areas it could analyze. Flips are a shrinking share of sales in most markets. That can mean less competition for distressed inventory, but it also signals investors are pricing more caution into resale.
Read those numbers as a planning baseline. If the typical gross spread is about $60,000 before rehab and carry, a few extra months of interest or a soft resale price can erase a deal. The chapters below focus on protecting that spread.
Max offer: work backward from the loan
Chapter 2 covers comp selection in detail. Once you trust the ARV, the financing tells you how much you can pay.
Jaken Finance Group sizes fix-and-flip loans to the lower of two numbers: up to 100% of total cost on qualified files, or 75% of ARV. That makes 75% of ARV your hard ceiling for purchase plus rehab if you want the loan to cover everything.
Illustration: a house with a $300,000 ARV and a $45,000 rehab budget. The model assumes a 6-month hold at an illustrative 11% interest-only rate, rehab drawn over four months, $6,000 in closing costs, $4,000 in taxes, insurance, and utilities, and 7% sale costs.
| Line | Offer at 70% rule | Offer at loan ceiling |
|---|---|---|
| Purchase price | $165,000 | $180,000 |
| Rehab | $45,000 | $45,000 |
| Total cost | $210,000 | $225,000 |
| Loan (lower of 100% LTC or $225,000 ARV cap) | $210,000 | $225,000 |
| Interest over 6 months | ~$10,500 | ~$11,300 |
| Sale costs at 7% | $21,000 | $21,000 |
| Profit before tax | ~$48,500 | ~$32,700 |
| Profit as % of ARV | ~16.2% | ~10.9% |
The 70% rule (70% of ARV minus rehab) produced the $165,000 offer. Paying $15,000 more still fits inside the loan, but it cuts profit by about a third. Just because the lender will fund it doesn’t mean you should pay it. Test your numbers in the 70% rule max offer calculator.
What one extra month really costs
Interest-only payments make monthly carry easy to calculate, which makes delays easy to price. Using the fully drawn $210,000 loan from the example above:
| Rate | Monthly interest | Plus ~$667/mo taxes, insurance, utilities |
|---|---|---|
| 8.99% | ~$1,573 | ~$2,240 |
| 11.00% | ~$1,925 | ~$2,592 |
| 13.50% | ~$2,363 | ~$3,030 |
The $667 figure spreads the example’s $4,000 holding budget over six months. A two-month slip from permits, a contractor no-show, or a slow sale costs $4,500 to $6,000 in this example. That’s roughly a tenth of the projected profit. Build at least one buffer month into the schedule and into the loan term you choose.
Lead paint rules on older houses
Many flips are pre-1978 houses, and federal lead rules apply to the work. According to the EPA’s Renovation, Repair and Painting program page, the federal government banned lead-based paint for residential use in 1978. The EPA estimates about three-quarters of U.S. homes built before 1978 still contain some lead-based paint.
The EPA’s RRP guidance for contractors says anyone paid to perform work that disturbs paint in pre-1978 housing generally must be certified. That includes general contractors, trade contractors, and residential rental property owners and managers.
What to do with that in your scope:
- Ask for the firm’s RRP certification before you sign the contract, and keep a copy in the loan file.
- Budget containment and cleanup as their own line items on pre-1978 homes.
- Check your state. Some states run their own authorized lead programs.
How draws really work
Rehab money isn’t wired at closing. It sits in a holdback and releases as work is finished. A typical draw cycle looks like this:
- You finish a milestone on the approved scope, such as demolition, rough-ins, or drywall.
- You request the draw with photos, invoices, and the line items completed.
- An inspector verifies the work against the scope. Partial work usually gets partial funding.
- Funds release for the verified amount, often to you or directly to the contractor.
The gap to plan for is between steps 1 and 4. Contractors usually want to be paid when they finish, not when the inspection clears. Keep enough cash to cover at least one draw cycle. The draw process guide shows how to request draws so they clear on the first inspection.
Scope lines that get approved
A scope a lender can underwrite has three traits: line items, quantities, and a source for every number.
| Weak line | Underwritable line |
|---|---|
| Kitchen — $28,000 | Cabinets 22 LF $9,400 · quartz 48 SF $3,600 · appliances $4,200 · plumbing rough $2,800 · electrical $2,100 · labor $5,900 |
| Roof — TBD | Tear-off and replace 24 squares architectural shingle, contractor bid attached |
| Misc repairs | Remove (lenders treat it as unexplained cost) |
Include a contingency line as well. Material prices have been volatile, and the rehab budget and tariffs guide covers how to size it.
The 7–10 business day closing checklist
Jaken Finance Group fix-and-flip loans close in 7–10 business days on complete files, with terms of 6–12 months. The clock starts when the package is complete. Have these ready on day one:
- Executed purchase contract and any assignment documents
- Scope of work with contractor bids
- Three or more sold comps supporting the ARV
- LLC articles, operating agreement, EIN letter, and good-standing certificate
- Bank statements showing down payment, closing costs, and reserves
- Insurance binder naming the lender, with vacant or builder’s risk coverage as needed
- Title company contact and the seller’s or agent’s contact
Missing entity documents are the most common reason a fast close slips. The fix-and-flip loan requirements page lists program requirements in more detail.
Put the math to work before you apply
Every chapter in this playbook connects to tools on the site:
- Run acquisition, rehab, carry, and profit scenarios in the fix-and-flip calculator
- Build your rehab budget using our scope of work guide
- Understand how draws release after close in the fix-and-flip draw process guide
Related reading
Dig deeper on specific topics with these posts from the Jaken Finance Group blog:
- Master fix-and-flip financing: a complete guide to hard money loans
- Know about fix and flip loans
- Thriving in the fix-and-flip market with Jaken Finance Group
Get the playbook and fund your next deal
The full playbook adds templates and worked comps for each chapter. When you are ready to move from reading to closing, get pre-qualified with Jaken Finance Group — upload your purchase contract, scope of work, and ARV comps. Complete files move fastest.
No experience required for qualified first-time investors. Programs available across all 50 states with core market expertise in the Midwest, Southeast, and DC corridor.
Using the playbook on a live deal
All program figures here come from Jaken Finance Group’s published fix-and-flip and DSCR bands — 8.99%–13.5% interest-only for flips and 5.75%–10.5% if you hold and refinance. They are ranges, not quotes for your file.
- Price the exit first. Pull sold comps, set the ARV, then compute 75% of it before you negotiate.
- Send the full package at once so underwriting never waits on a missing document.
- Keep a hold option open. If resale comps soften mid-rehab, a DSCR refinance may beat a discounted sale.
Next: Investor FAQs · Loan process · Pre-qualify.
Quick reference: rates and leverage
| Product | Rate band | Typical leverage |
|---|---|---|
| Fix-and-flip / hard money | 8.99%–13.5% IO | Up to 100% LTC on qualified files, capped at 75% ARV |
| DSCR rental | 5.75%–10.5% | Up to 85% purchase / 80% cash-out in select markets |
| Bridge | 8.99%–13.5% IO | Up to 90% of purchase |
| New construction | 8.99%–13.5% IO | Up to 100% LTC on qualified files, sized to as-completed value |
Submit a live deal for file-specific terms — submit scenario.