How fix-and-flip loans work
Fix-and-flip loans finance both the purchase price and the rehab budget on investor-owned properties intended for resale after renovation. Most lenders fund 85-90% of purchase price ("LTC" - loan to cost) plus 100% of an approved rehab budget held in escrow, with the total loan capped at 80% of after-repair value ("LTV").
The rehab portion is drawn down in stages as work is completed and inspected — typically 3-5 draws over the rehab period. Interest is typically interest-only during the term, with principal due at exit (sale or refinance).
Typical Chicago fix-and-flip terms
- Interest rates: 9.5%-12.5%
- Origination points: 1-3
- Max LTC: 85-90% of purchase price
- Rehab financing: 100% of approved budget
- Max LTV: 80% of ARV
- Term: 6-18 months
- Close speed: 7-14 days typical
Top fix-and-flip lenders for Chicago
Renovo Financial is the largest Chicago-based hard money lender. Founded 2011, they've closed thousands of loans across the Midwest and have particularly deep penetration in Chicago, Indianapolis, and Milwaukee. Strong relationships with the local broker community make them a default first-call for many Chicago investors.
Kiavi (formerly LendingHome) is one of the largest hard money lenders by volume in the country. Tech-forward platform with online application and fast underwriting for experienced borrowers. Active across Chicago and all major investor markets.
Lima One Capital is one of the deepest non-QM lenders in the country with a full product suite spanning fix-and-flip, BRRRR, rental, and new construction. Particularly strong on the rental refi exit, which makes them a one-stop shop for BRRRR strategies.
Easy Street Capital has one of the more flexible non-QM platforms in the market, with particular strength in short-term rental DSCR underwriting (counting projected nightly revenue rather than long-term lease income).
LendingOne is an established national non-QM lender with deep coverage across hard money and rental products.
RCN Capital is a national non-QM lender with capacity for larger transactions and strong experience on multi-unit and small commercial deals.
Chicago-specific considerations
- Cook County property tax: Investor-classified tax burden is material. Build into underwriting.
- Permit timelines: Standard Chicago permits 6-10 weeks; landmark district permits add 60-120 days.
- Construction era considerations: Pre-1978 properties (most of Chicago) require lead paint compliance.
- Aldermanic dynamics: Some wards are slower than others on permit flow.
Frequently Asked Questions
A short-term real estate loan (typically 6-18 months) financing the acquisition and rehab of an investor-owned property for resale. The loan typically covers up to 85-90% of purchase price plus 100% of the rehab budget held in escrow.
9.5%-12.5% interest with 1-3 points origination. Experienced operators with funded-deals history price toward the low end.
The rehab budget is held in escrow and drawn down in stages as work is completed and inspected. Typical structure: 3-5 draws over the rehab period.
Most fix-and-flip lenders cap at 80% of after-repair value (ARV), with separate caps on purchase price (typically 90% LTC).
7-14 days for most institutional hard money lenders. 5-10 days for established private money relationships.
Many lenders accept first-time flippers on smaller deals with strong credit and reserves. Bigger deals or thinner margins typically require funded-deals history or partnership with an experienced principal.
6-9 months from purchase to resale for typical rehabs. Faster on cosmetic projects; longer on gut rehabs or landmark district projects.
Yes — most fix-and-flip lenders require LLC vesting to maintain business-purpose loan classification.
Most institutional lenders want 660-680+ minimum FICO. Private money operators may be more flexible on credit if the deal economics are strong.
Standard lender practice is to require additional capital from the borrower to complete. Some lenders may approve additional draws for unforeseen issues; reserves of 10-15% above stated rehab budget are recommended.