How long is a fix and flip loan term?
Fix and flip loans typically run 6 to 18 months, with 12 months the most common term, interest-only, and extensions of three to six months available for a fee of a half to one point. Choose a term that covers the rehab, the listing period, and the buyer's closing with a cushion; a twelve-month term on a five-month rehab is not too long.
Typical terms
| Project | Typical term |
|---|---|
| Cosmetic flip, 2 to 3 month rehab | 6 to 9 months |
| Moderate rehab, 3 to 5 months | 12 months |
| Heavy rehab, 6 to 9 months | 12 to 18 months |
| Flip in a slow market | 12 to 18 months |
Ranges vary by lender.
What the term has to cover
- Closing to start of work: one to three weeks for permits and contractor mobilization.
- Rehab: the contractor's schedule plus 20 percent.
- Listing and contract: 30 to 60 days in a normal market, longer in a slow one.
- Buyer's closing: 30 to 45 days if the buyer is financing.
A three-month rehab realistically becomes a seven to nine month loan. The twelve-month term exists for that reason.
Extensions
Most flip lenders build in one or two extensions of three to six months at a half to one point each, conditioned on the loan being current and the project progressing. Ask for the extension in writing at least 30 days before maturity. A loan that passes maturity without one is in default and can carry a default rate several points above the note rate.
Minimum interest
Many flip loans have a minimum interest period of three to six months. If you sell in month two, you still owe interest through the minimum. Match the minimum to your realistic timeline; a six-month minimum on a two-month cosmetic flip is a real cost.
The cost of running long
On a $350,000 loan at 11 percent, each extra month is about $3,200 in interest plus taxes, insurance, and utilities. An extension fee of a half point adds $1,750. Three months past plan costs roughly $12,000 to $15,000, which comes straight out of the profit.
The backup exit
If the flip does not sell within the term, the alternative is to rent it and refinance into a DSCR loan, which needs the rent to cover the new payment by about 1.20 and your credit at 660 or better. Check that math before you buy so the term has a real backup.
Choosing the term
Take the longer term when the price difference is small, which it usually is. The cost of an unnecessary extra month never used is zero; the cost of an extension you did need is a point.
How CommFi handles it
Our lending desk sets the term to your schedule with a cushion and confirms the extension and minimum interest terms before you sign. It funds direct when it fits, and when a lender with better term flexibility is the right match, the desk searches a database of 7,000+ lenders and the ones that fit compete for the file. Zero upfront fees.
Related reading
Related questions
- How long is a fix and flip loan?
- Typically 6 to 18 months, with 12 the most common. Extensions of three to six months are usually available for a fee.
- What happens if my flip loan matures before I sell?
- Ask for an extension in writing before maturity, usually a half to one point. Passing maturity without one puts the loan in default.
- Is there a minimum interest period on flip loans?
- Often three to six months. If you sell earlier, you still pay interest through the minimum.
- Should I take a longer term than I need?
- Usually yes. Unused months cost nothing, while an extension costs a point and a default costs more.
- What if the flip does not sell?
- Rent it and refinance into a DSCR loan if the rent covers the new payment by about 1.20. Check that backup before you buy.
Property developer and licensed appraiser. 22+ years in real estate: TIC conversions, multi-unit redevelopments, mixed-use, fix and flips, commercial DSCR.