What a 6-Month Flip Loan Actually Costs

Q: What does the whole loan cost me over six months?

Add the points to the carry, not the rate alone. Origination typically runs 1 to 3 points, a point being 1% of the loan amount, paid at closing. Then interest-only payments across the hold, plus title, insurance, appraisal and legal. Our fix and flip term is 6 months, so the carry is bounded, which is what makes the total comparable to a conventional loan you would hold for years.

Q: Do I pay interest on the whole rehab budget from day one?

Usually not. Rehab funds are drawn as work completes, and interest typically accrues on what has been drawn rather than the full commitment. Assuming otherwise overstates your finance cost significantly on a large rehab.

Q: What is the biggest hidden cost on a flip?

Time. Carry runs every month you own the property, and running past your term adds extension fees on top of it. Most flips that lose money lose it on the schedule, not on the purchase price.

Q: How do I compare a flip loan to a lower-rate option?

Add points, origination, and the interest you will actually pay over your real hold, then compare that single number. A lower rate with more points often costs more on a short hold, because points are paid in full regardless of how early you exit.

The short answer

Rate is only part of the bill. A full cost walkthrough on a 6-month flip: points, interest on drawn funds, carry, and what a month of delay really adds.

Flippers compare rates. The rate is rarely what decides the deal. What decides it is total cost of capital over the actual hold, and the two biggest swing factors are points and how long you take.

The pieces

Points — paid at closing, fixed, and unaffected by how fast you exit.
Interest — accrues while the loan is outstanding. On a rehab facility it typically accrues on drawn funds, not the full commitment.
Third-party closing costs — appraisal, title, escrow, recording. See points and origination fees for which are whose.
Carry — taxes, insurance, utilities, and the loan payment, every month you own it.
Exit costs — agent commission and seller-side closing, paid out of the sale.

Why the rehab draw structure matters

On our fix and flip program we fund up to 90% of purchase and up to 100% of rehab. The rehab portion is drawn as work completes, so you are not paying interest on the full rehab budget from day one. A borrower who assumes interest runs on the whole facility from closing will overstate the cost badly.

Run your own numbers in the hard money cost calculator or the fix and flip calculator.

The month that costs the most

It is the one after your term ends. A 6-month term that runs to 8 months means extension fees on top of continued carry, and it lands exactly when your margin is thinnest. Most flips that lose money do not lose it on the purchase price; they lose it on time.

Build the number before you offer

Take purchase, add rehab, add total finance cost over your realistic hold, add carry, add exit costs. Subtract that from a defensible ARV. What is left is the deal. If the answer only works at your best-case timeline, it is not a deal, it is a bet on the timeline.

Estimating a rehab budget and ARV cover the two inputs people get wrong most often.

Typical terms, subject to underwriting. Not a commitment to lend.

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Frequently asked

What does the whole loan cost me over six months?

Add the points to the carry, not the rate alone. Origination typically runs 1 to 3 points, a point being 1% of the loan amount, paid at closing. Then interest-only payments across the hold, plus title, insurance, appraisal and legal. Our fix and flip term is 6 months, so the carry is bounded, which is what makes the total comparable to a conventional loan you would hold for years.

What if I need longer than six months?

Ask early. An extension may be possible, case by case, and it is never guaranteed. The single most useful thing a borrower can do is flag a slipping timeline well before maturity, while options still exist. Budget the hold you expect, then ask what one more month costs before you need the answer rather than after.

Do I pay interest on the whole rehab budget from day one?

Usually not. Rehab funds are drawn as work completes, and interest typically accrues on what has been drawn rather than the full commitment. Assuming otherwise overstates your finance cost significantly on a large rehab.

What is the biggest hidden cost on a flip?

Time. Carry runs every month you own the property, and running past your term adds extension fees on top of it. Most flips that lose money lose it on the schedule, not on the purchase price.

How do I compare a flip loan to a lower-rate option?

Add points, origination, and the interest you will actually pay over your real hold, then compare that single number. A lower rate with more points often costs more on a short hold, because points are paid in full regardless of how early you exit.

Rates, leverage, and timelines mentioned in this guide are typical figures, subject to underwriting and market conditions. Not a commitment to lend. Nothing here is legal, tax, or investment advice.

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