Fix-and-flip lenders typically evaluate the project through several lenses at once: cost basis, maximum leverage, after-repair value, scope and budget, experience, liquidity, and exit. A high ARV alone does not eliminate required cash to close or execution risk.
LTC and LTARV are different
Loan-to-cost compares financing with eligible project cost. Loan-to-ARV compares the loan with the expected completed value supported by appraisal. The lender generally applies multiple limits and uses the most restrictive result.
How draws affect cash flow
Rehab money is often reimbursed after work is completed and inspected. Investors should understand whether the first draw requires out-of-pocket spending, how quickly inspections occur, and whether interest is charged on committed or disbursed funds.
Build a lender-ready package
Prepare the purchase contract, scope, line-item budget, contractor information, schedule, entity documents, liquidity, experience, credit authorization, insurance plan, and exit assumptions.
What to do next
Use the numbers and documents from this guide to prepare a complete scenario. Final eligibility and terms depend on the lender’s current program, underwriting, property, borrower, business, and state.