What Does a Fix-and-Flip Loan Cost?
By Andrew J. Liersch III — Founder & CIO, Slingshot Investments. 10+ years in private lending, $500M+ funded. Former Wells Fargo Private Mortgage Banking, Bear Stearns, and Deloitte Consulting.
Short answer: A fix-and-flip loan in 2026 generally costs about 9–12% interest (interest-only) plus roughly 1.5–3 points at closing, with some additional fees for appraisal, per-draw inspections, document preparation, and title and escrow. But the headline rate isn’t the number that decides your profit. Because the loan is short-term and interest is often charged only on funds drawn, the real cost is driven by time — how long you hold the loan. The most expensive thing in a flip isn’t the rate; it’s the months you didn’t plan for.
The pieces of the cost
Interest rate. In 2026, roughly 9–12%, almost always interest-only on a flip. Stronger borrowers and lower-leverage deals price toward the bottom of the range; higher leverage and heavier rehabs toward the top.
Points. A one-time origination fee paid at closing, expressed as a percentage of the loan. The 2026 standard is about 1.5–3 points — so 2 points on a $300,000 loan is $6,000.
Other fees. Appraisal (“as-is” and “subject-to” or ARV), per-draw inspection fees, document preparation, and title and escrow. None individually large, but they belong in your budget. Always ask for a full written fee schedule so nothing is a surprise.
Why the rate isn’t the real cost
A flip loan is short-term. On a six-month hold, the difference between 10% and 11% on a $300,000 loan is about $1,500 — real, but small against the deal. What actually moves your bottom line is duration. Every extra month of holding costs interest, plus taxes, insurance, and utilities. A project that runs three months long can quietly erase more margin than any rate negotiation ever saved you.
Two features of private money soften the cost in your favor:
You often pay interest only on what you’ve drawn. Because rehab funds release through a draw schedule, you typically pay interest only on the drawn balance — not the full loan from day one — which lowers your real interest cost.
Many loans carry little or no prepayment penalty. That rewards finishing early. Get in, renovate, sell, and pay off — and you stop the interest clock. (Always confirm in your specific agreement.)
The cost that doesn’t show up on the term sheet
The biggest cost in flipping isn’t on any rate sheet: it’s the deal you lose, or the margin you give up, because your financing was slow or inflexible. A lender who closes in days lets you win the deal at a better price. A lender who is transparent and structures around your project keeps you from bringing in additional unexpected cash at closing. Those outcomes dwarf a point of rate. (See how fast you can close and hard money vs. private money.)
How to actually minimize what a flip loan costs you
- Underwrite a realistic timeline — build in slack, because overruns cost more than rate.
- Draw efficiently — pay interest only on what you need, when you need it.
- Finish and exit fast — the shortest hold is the cheapest loan.
- Keep margin — the best protection against cost is a deal with enough margin to absorb the surprises every project eventually delivers.
Frequently asked questions
What interest rate should I expect on a fix-and-flip loan in 2026?
Roughly 9–12%, interest-only. Stronger borrowers and lower-leverage deals price toward the lower end.
What are points and how much are they?
Points are a one-time origination fee paid at closing, expressed as a percentage of the loan. The 2026 standard is about 1.5–3 points — so 2 points on a $300,000 loan is $6,000.
Are there prepayment penalties?
Many private money loans have little or no prepayment penalty, which rewards finishing early — but always confirm in your specific loan agreement, since terms vary.
Do I pay interest on the full loan from day one?
Often not on the renovation portion. Because rehab funds are released through a draw schedule, you typically pay interest only on what’s been drawn, which lowers your real interest cost.
What other fees should I budget for?
Appraisal, per-draw inspection fees, document preparation, processing, insurance and title and escrow. Ask for a full written fee schedule so nothing is a surprise.
Want a clear, no-games quote on your deal?
Slingshot Investments gives San Diego investors straight pricing tied to the actual risk of the deal — and the speed to close before the opportunity moves. Get the numbers on your project.
Related reading: How do private lenders underwrite a fix-and-flip loan? · Hard money vs. private money: what’s the difference?
