Fix and Flip Loan Calculator: How to Model Your Deal Before You Apply

Before you apply for a fix-and-flip loan, you need to understand six core numbers: purchase price, rehab budget, after-repair value (ARV), loan amount, carrying costs, and projected profit. Each number affects the others, and lenders evaluate all of them when underwriting your file. A deal that looks attractive on purchase price alone can fail on thin margins once carrying costs are properly accounted for.

Purchase price is the starting point. Rehab budget determines your total cost basis and heavily influences how lenders see the deal — an aggressive rehab budget with weak comps is a red flag. ARV is the most important number because everything — your loan amount, your profit, and the lender's risk — is anchored to it. Loan amount is determined by LTC (loan-to-cost) and LTV/ARV ratios. Carrying costs include monthly interest on the loan, property taxes, insurance, and utilities during the hold period. Profit is what remains after all costs — and a deal with thin profit margins on paper leaves no room for error.

Hard money lenders use two ratios to size your fix-and-flip loan: loan-to-cost (LTC) and loan-to-ARV. LTC is calculated as the total loan amount divided by the total project cost (purchase price plus rehab). LTV/ARV is the total loan amount divided by the projected after-repair value. Lenders typically cap loans at the lower of these two calculations.

Example: Purchase price $250,000, rehab $75,000, ARV $400,000. Total cost = $325,000. At 90% LTC, maximum loan = $292,500. At 70% ARV, maximum loan = $280,000. The loan is capped at $280,000 because the ARV constraint is more restrictive. The borrower brings $45,000 at closing (purchase price minus loan amount), plus closing costs and reserves. This model helps you know your required capital before you make an offer.

Carrying costs are the ongoing expenses of holding the property during renovation and sale, and they are the number investors most consistently underestimate. The primary carrying cost is loan interest — on a $280,000 hard money loan at 10%, monthly interest is $2,333. A 6-month project produces $14,000 in interest alone. Add property taxes ($200-$600/month depending on location), insurance ($100-$200/month for a vacant property policy), and utilities ($100-$300/month if needed), and a 6-month hold can easily cost $18,000 to $22,000 in carrying costs.

Budgeting too little for carrying costs is a leading cause of unexpected losses on fix-and-flip deals. If your rehab scope takes longer than planned or the property sits on the market for 60-90 days after listing, carrying costs compound. Conservative investors budget 7-9 months of holding costs even when planning a 5-month project.

The "70% rule" is a widely used screening tool for fix-and-flip investors: a deal passes the initial screen if the purchase price is at or below 70% of ARV minus the rehab budget. Using the earlier example: 70% of $400,000 ARV = $280,000. Minus $75,000 rehab = $205,000 maximum purchase price. The example purchase price of $250,000 fails this screen, which suggests thin margins.

The 70% rule is not an absolute rule — it is a quick filter. A deal can make financial sense above 70% if you have particularly low rehab costs, a very fast timeline, or unusually strong comps. But if a deal requires significantly more than 70% of ARV just to break even, the margin for error is small. Most experienced investors use the 70% rule to quickly discard deals and spend more time only on those that pass.

When you submit a fix-and-flip deal for hard money financing, lenders are not just checking whether the numbers add up on paper. They are evaluating whether your ARV is defensible with actual comparable sales, whether your rehab budget is realistic for the scope of work you have described, and whether your timeline is achievable given the contractor, market, and deal complexity.

The most common reason a hard money lender reduces loan proceeds from the initial quote is that the appraisal comes in lower than the borrower's ARV, or the lender's valuation team identifies issues with the comp selection. Before submitting your application, verify your ARV with two or three solid comparable sales from the past 90-180 days — not listings, not distressed sales, but renovated properties of similar size and condition that have closed. A well-supported ARV is the single most important thing you can do to get the loan amount you are targeting.