Fix and Flip Mortgages

What Is a Fix and Flip Loan?

A fix and flip loan is a short-term, asset-backed loan that finances both the purchase and renovation of a distressed property for resale. Unlike conventional investment loans — which require the property to be in habitable condition and the borrower to have strong income — CMRE fix-and-flip loans approve based on the property's After Repair Value (ARV) and the investor's exit strategy. The loan covers the purchase price at closing. As renovation milestones are completed, CMRE releases draw disbursements (typically within 48 hours of inspection sign-off). When the property sells, the loan is paid off and the investor pockets the profit spread.

How the Draw Schedule Works

• •Draw 1: Released at closing to cover the acquisition cost.
• •Subsequent draws: Released upon inspection confirmation that prior milestone is complete. CMRE uses third-party inspectors in most markets.
• •Disbursement timeline: 48 hours from approved inspection report.
• •Draw amounts: Calculated from the approved scope of work budget submitted at origination.
• •Interest: Charged only on drawn funds — not on the undrawn rehab reserve. This reduces interest cost during longer projects.
• •Final draw: Released when renovation is complete and property is listed or under purchase contract.

ARV and Loan Sizing — The Fix and Flip Formula

CMRE sizes fix-and-flip loans using ARV (After Repair Value) as the ceiling. Maximum loan = 70% of ARV. Example: Property purchase price $280K. Approved rehab budget $95K. Total project cost $375K. Estimated ARV from comparable sales = $540K. Maximum CMRE loan = 70% × $540K = $378K. Since $375K is below $378K, CMRE can fund the full project. The investor brings closing costs (typically 2–4% of loan amount). The investor's profit = sale price – loan payoff – carrying costs – closing costs. A $540K sale after $378K loan payoff and $45K costs = approximately $117K gross profit.

Fix and Flip vs. Hard Money vs. HELOC

• •Fix and flip loans: Purpose-built for rehab — includes draw structure, ARV-based sizing, and short-term interest-only.
• •Generic hard money: Asset-based bridge loans — works for acquisitions and bridge scenarios but lacks rehab-specific draw management.
• •HELOC (Home Equity Line): Requires existing equity in a different property. Lower rates but capped draw amounts and depends on personal credit.
• •Conventional investment loan: Requires property in habitable condition, full income docs, and 20–25% down. Cannot finance distressed acquisitions.
• •Best tool for flipping: Fix-and-flip loan from CMRE — ARV-based, draw-managed, no income docs, 7-day close.

Who Qualifies for CMRE Fix and Flip Loans?

• •First-time flippers: 600+ FICO, 20–25% down, documented exit strategy (comparable sales analysis).
• •Experienced investors (3+ flips): Higher LTVs (up to 90% ARV), better rates, reduced origination fees.
• •Self-employed or W-2: Income documentation not required — hard money is asset-based.
• •LLC/Corp/Trust borrowers: Entity vesting accepted with personal guarantee from managing member.
• •Investors with recent credit events: No minimum FICO. Prior bankruptcy, foreclosure, or defaults do not disqualify.
• •Foreign national investors: Available with US-based entity and US bank account for draws.

How to Apply for a Fix and Flip Loan with CMRE

• •Step 1: Submit property address, purchase price, scope of work, and estimated ARV with 2–3 comparable sales.
• •Step 2: CMRE issues a term sheet in 24–48 hours — LTV, rate, origination, close timeline.
• •Step 3: Appraisal or BPO ordered — CMRE uses fast-track providers in most markets (3–5 day turnaround).
• •Step 4: Title and entity documentation reviewed. No income verification.
• •Step 5: Close in 7–14 business days. Draw schedule established. Rehab begins.