You underwrote the spread, signed the contract, and lined up fix-and-flip financing — then the lender declined the file, slashed LTC after reviewing your scope, or went quiet before wire. Fix-and-flip rescues are common because rehab files have moving parts: ARV, budget, draw schedule, and exit all get stress-tested late.
Why fix-and-flip financing fails
| Failure point | Typical trigger |
|---|---|
| ARV / appraisal | Comps or condition support lower after-repair value |
| Scope review | Budget too thin, missing line items, or scope mismatch |
| Leverage | Loan above 75% of after-repair value, or above what cost support allows |
| Experience | First flip or thin track record with a conservative shop |
| Liquidity | Reserves insufficient for closing costs and interest carry |
| Timeline | Lender cannot close inside your contract window |
The original term sheet shows what leverage and pricing you lost — upload it on the Second Look form.
What can change on a rescue pass
- Lower LTC with more sponsor cash in — still profitable if purchase was right
- Different lender with experience-friendly tiers or alternative comp standards
- Bridge structure if the plan shifted from flip to hold
- Gap or second position when purchase financing works but equity gap remains
Run your numbers at realistic leverage before submitting — rescue lenders still underwrite the deal, not the hope.
When the flip is still saveable
The deal survives when:
- ARV minus purchase, rehab, sale costs, and carry still shows acceptable profit at rescue leverage
- Scope is documented and credible
- You can close within the contract window once the file is complete
See fix-and-flip loan requirements for baseline program parameters.
Submit your flip for Second Look
- Contract and property address
- Scope, budget, and ARV support
- What went wrong with the original financing
- Original approval or term sheet upload
- Closing deadline
How fix-and-flip financing fell through on your file
Fix-and-flip financing fell through when at least one underwriting pillar broke: purchase price vs. ARV, rehab scope credibility, sponsor experience, liquidity, or timeline. Unlike a rental DSCR file, flip loans stress-test exit via sale — so ARV comps and rehab budget get second-guessed late.
Common late-stage triggers:
- Scope review finds missing line items — HVAC, roof, foundation — that shrink net spread after draws
- ARV appraisal comes in below the value the term sheet assumed
- LTC cut after final committee review adds cash the sponsor cannot deploy
- First lender cannot hit your contract close date despite prior assurances
When real estate financing fell through on a flip, the rescue question is whether spread still works at achievable leverage — not at the leverage lender #1 promised.
Asset-based underwriting on rehab deals
Fix-and-flip rescue uses asset-based underwriting: ARV, loan-to-cost, draw schedule, and resale liquidity drive approval. Credit is reviewed; collateral and exit carry the file. Sponsors declined for “experience” at one shop may qualify at another with first-deal-friendly tiers if the numbers work.
Document scope line-by-line. Vague budgets get declined twice. Include contractor bids, photos, and comp support lender #1 already collected — rescue moves fastest when diligence is done.
Draw schedule and carry after rescue
A rescued fix-and-flip file still needs interest carry through rehab. Underwrite:
- Total project cost at rescue LTC
- Interest-only carry months at quoted rate
- Sale costs and holding costs to exit
- Minimum spread after all-in costs
If the spread survives at rescue leverage, submit. If only 95% LTC made the deal work and no shop will exceed 85%, the economics — not the lender — are the problem.
Bridge loan denied as an alternative path
Some sponsors pivot when fix-and-flip leverage fails. A bridge loan denied on a light value-add file may succeed as hold-and-refi if rental income supports DSCR after stabilization. Conversely, a rental bridge that failed DSCR may rescue on true fix-and-flip terms if the exit is sale, not hold.
Second Look routes the file to the product that matches the actual plan — not the product lender #1 assumed.
Speed: 7–10 business days on complete files
Qualified complete rescue files often close in 7–10 business days. Inside 48 hours of contract expiration, call (833) 264-7776 after submitting with contract, scope, ARV support, entity docs, bank statements, and the original term sheet showing what failed.
The first two days after the lender steps back
A declined flip is a calendar problem before it is a pricing problem. Do these in order.
- Read the denial or the revised term sheet and write down the failed test. Value, scope, cash, experience, or the closing date. A vague “we cannot proceed” email is not enough. Ask which number moved.
- Call the seller or the listing agent the same day. Ask whether the closing date can move seven to ten business days, and whether earnest money stays alive if you name a new lender.
- Freeze the scope. Do not add a kitchen upgrade while you shop for a new quote. The next lender will price the budget you can document today.
- Pull the purchase contract, entity documents, two months of bank statements, photos, and any appraisal or broker price opinion the first shop ordered.
- Submit that packet for a Second Look with the original term sheet attached. A complete fix-and-flip file is built to close in 7–10 business days. An incomplete file is not.
If the contract dies in less than five days, say so in the first line of the submission. Speed only helps when the wire instructions and the insurance binder can be ordered in parallel with underwriting.
Illustration: the value cap, not the coupon, breaks the deal
Example. These figures are a teaching model, not a quote.
| Item | Amount |
|---|---|
| Purchase | $310,000 |
| Original rehab | $70,000 |
| All-in cost | $380,000 |
| Value the first term sheet used | $520,000 |
| 75% of that value | $390,000 |
| Appraisal that came back | $440,000 |
| 75% of the appraisal | $330,000 |
Jaken Finance Group can fund up to 100% of cost on a qualified fix-and-flip. The same file is still capped at 75% of after-repair value. Here the appraisal cap is the lower number, so the loan falls to $330,000. The sponsor must bring the other $50,000, or cut the work.
Interest-only at an illustrative 11% (inside the published 8.99%–13.5% band) on $330,000 is $3,025 a month. Five months of carry is $15,125.
Cut the rehab to $55,000. All-in cost becomes $365,000. The value cap still limits the loan to $330,000, so cash into the project, before closing costs, is about $35,000. Sell at $435,000. If selling costs are an assumed 8% ($34,800), profit before tax and before extra closing fees is:
$435,000 − $365,000 − $15,125 − $34,800 = $20,075.
Keep the full $70,000 rehab, hold six months, and sell at the $440,000 appraisal, and the same math is only about $6,650 before tax. That is a walk for many sponsors. The rescue is a smaller scope, not a promise of the old loan amount.
Watch the interest reserve. Six months of that $3,025 payment is $18,150. If the lender holds it back inside the $330,000 loan, almost all of the remaining proceeds go to the $310,000 purchase. Rehab then comes from your cash even though the term sheet “covered the project.” Ask whether the quoted loan amount is gross of the reserve.
A conforming rate does not reopen a dead contract
Freddie Mac’s Primary Mortgage Market Survey showed a 7.28% average 30-year fixed rate as of October 1, 2026. That was up from 7.03% the prior week and 6.34% a year earlier. The 15-year average was 6.60%. The survey covers conventional conforming applications submitted through Loan Product Advisor. It is not a rehab rate.
A buyer or a sponsor who wants that 7.28% loan still needs an appraisal, income paperwork, and a lender that will wait. Fannie Mae’s cash-out rules (Selling Guide B2-1.3-03, updated December 10, 2025) generally require six months on title, and twelve months on an existing first mortgage being paid off. That path cannot fund this Friday’s purchase.
Jaken Finance Group prices the short-term loan at 8.99%–13.5% interest-only. You pay more than the survey average so the file can close in 7–10 business days on collateral and the exit, without a W-2 underwrite. If the spread only works at the old, higher loan amount, the cheaper coupon still does not save it. The value cap does.
When to switch products, and when to release the earnest money
Stay on a fix-and-flip when you will sell and the example still shows a profit at your real appraisal. Move to a bridge loan if the work is light and the exit is a rental refinance. Bridge loans from Jaken Finance Group also close in 7–10 business days, at the same 8.99%–13.5% interest-only range, up to 90% of the purchase price, for 12–24 months.
Use a DSCR rental loan only after the tenant is in place. Those loans close in about 14 business days, not in a week, at 5.75%–10.5%. Purchase leverage can reach 85% in select markets for a qualified borrower. Cash-out is capped at 80%. A DSCR quote will not wire in time for a purchase that needs draws for a gut rehab.
Walk away when every serious lender stops at the same place. If 75% of a credible after-repair value cannot cover purchase plus the repairs the house actually needs, the contract price is the problem. A second lender cannot invent comps. Compare that result with the fix-and-flip versus bridge choice before you rewrite the offer.
What the new file has to prove
Bring these, in this order, if you want a revised term sheet instead of another stall:
- The purchase contract, with the current closing date circled.
- A line-item budget a contractor will sign. Roof, HVAC, electrical, plumbing, and permits each get their own line.
- The appraisal or the comp set the first lender rejected, plus three closed sales you believe are better.
- Photos of the kitchen, baths, panel, roof, and any well or septic head.
- Bank statements that show the cash the lower loan will require, including the interest reserve.
- Insurance contact, so builder’s risk can be bound before the wire.
Program baselines live on the fix-and-flip loan requirements page. If the numbers in your own sheet survive the 75% value test, send the file. If they do not, renegotiate the purchase or cancel while your deposit is still recoverable.
Call (833) 264-7776 after you upload. The phone call does not replace the documents. It tells a reviewer which deadline is real.