Fix and Flip Loans in California

I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. I’m known as a creative mortgage broker: when a bank says no, I find the lender and the loan structure that can say yes. I arrange fix-and-flip, hard money and bridge financing for California investors. Call (800) 239-1103.

A fix-and-flip loan is short-term, asset-based financing that funds the purchase of an investment property plus its renovation budget, then gets paid off when you sell. Lenders size the loan mainly on the deal — purchase price, rehab budget and after-repair value (ARV) — rather than your tax returns.

Banks rarely lend on a house that needs a new kitchen, a new roof and 60 days of work, and they rarely close fast enough to compete with cash buyers. Private and wholesale hard money lenders do. As a broker, I shop your deal across lenders that fund California flips and match it to the one whose leverage, pricing, draw process and speed fit the project — a first flip in Riverside is a different loan from a $3 million coastal Orange County rebuild.

How a Fix-and-Flip Loan Works

1. Acquisition advance. At closing the lender funds a percentage of the purchase price; you bring the rest plus closing costs.
2. Rehab holdback. The approved renovation budget is held back and released in draws as work is completed.
3. Interest-only payments. Most loans are interest-only, and many charge interest only on the funds actually drawn.
4. Exit. You sell the finished property and the loan is paid off at closing — or you refinance into a long-term rental loan (see BRRRR below).

Typical Fix-and-Flip Terms in 2026

Every lender prices differently, and terms move with the market. These are the ranges I generally see for California non-owner-occupied flips; your term sheet is what counts.

Because these are business-purpose loans on non-owner-occupied property, most consumer mortgage disclosure rules don’t apply. Read the term sheet carefully: extension fees, default interest, draw fees and any prepayment or minimum-interest clause.

ARV and the 70% Rule

After-repair value is the most important number in a flip. Get it wrong and you can lose money on a perfectly executed renovation.

Estimating ARV

• Use 3–5 closed sales of renovated homes, ideally within about ½ mile and the last 6 months (widen the radius and time frame in low-volume areas, with adjustments).
• Match property type, square footage (within roughly 15%), bed/bath count and — in many California markets — school district.
• Adjust each comp for real differences (size, lot, garage, pool, view, busy street) to estimate what your finished property would sell for.
• Don’t rely on pending sales, list prices, online estimates or a single outlier comp. The lender will order its own appraisal of the as-repaired value.

Maximum offer

Maximum purchase price = (ARV × 70%) − rehab cost. Example: ARV $650,000 and rehab $85,000 → ($650,000 × 0.70) − $85,000 = $455,000 − $85,000 = $370,000.

The 30% cushion has to cover financing (points and interest), holding costs (property tax, insurance, utilities), selling costs — agent commissions plus title and escrow typically run several percent of the sale price — and your profit. It’s a rule of thumb, not a guarantee: stress-test the deal at a lower ARV (say 90% of your estimate) and a longer hold. If it only works at the optimistic number, it doesn’t work.

What financing actually costs

Example: a $500,000 loan at 10.5% interest-only costs about $4,375 a month, or about $17,500 over a four-month hold. Add 2 points ($10,000) and financing alone is roughly $27,500 before taxes, insurance and selling costs. Every extra month adds another $4,375 — which is why realistic timelines matter as much as rate.

How Rehab Draws Work

Rehab funds sit in a holdback and are released as work is completed. You (or your contractor) submit a draw request with photos and invoices; the lender’s inspector verifies the work; funds are released, often within a few business days. Most projects use several draws.

• Draws reimburse completed work, so you usually need working capital to start each phase.
• Line up your contractor’s payment schedule with the lender’s draw schedule before you close.
• Ask every lender how fast they turn draws. A lender that takes two weeks per draw can stall a project more than a slightly higher rate ever will.

How Much Cash Do You Really Need?

“100% financing” ads usually mean one of three things: a lender funding purchase and rehab for a borrower with a long track record (at premium pricing), a lender funding most of the purchase plus all of the rehab, or cross-collateralization — pledging equity in another property you own so little or no cash goes into the new deal. Some deals still close with little cash out of pocket, but closing costs and carrying costs are always yours.

For most investors, plan on:

• Down payment: commonly 10–20% of the purchase price, more for a first flip or a riskier property.
• Closing costs: origination points plus title, escrow, appraisal and lender fees.
• Rehab float: cash to start work before the first draw.
• Carrying costs: monthly interest, property tax, insurance and utilities for the whole hold.
• Contingency: first flips commonly run 10–20% over the rehab budget; build it in.

Ways investors reduce cash in: a capital partner who funds the down payment for a share of profit, seller financing on part of the price, or pledging equity in a property you already own.

First Flip? A Practical Checklist

1. Learn one market cold. Pull recent closed comps in your target zip codes and understand what buyers pay up for there.
2. Build the team first: a licensed general contractor (verify at the Contractors State License Board), an investor-savvy agent, a lender with a pre-approval in hand, a title/escrow company and a real estate CPA.
3. Get bids before you’re in contract — not estimates from listing photos. Older California homes often hide outdated electrical panels, galvanized plumbing and unpermitted additions.
4. Pull permits. Unpermitted work can derail the sale or force a price cut.
5. Price to the comps when you sell. A renovated house that sits accumulates interest every month.

First-time flippers can qualify. Expect lower leverage, somewhat higher pricing, and closer scrutiny of your contractor and budget. Terms improve noticeably after two or three completed projects.

Fix and Flip vs. BRRRR

The same short-term loan can fund two different strategies. The difference is the exit.

In high-priced coastal markets, rents often don’t cover a new loan, which pushes investors toward flipping. In lower-priced inland markets, rents are more likely to support a DSCR loan, making BRRRR more viable. I can arrange both the acquisition loan and the DSCR refinance, so the exit is planned before you buy. Tax treatment depends on your facts — talk to a CPA.

California Market Notes

Neighborhood-level knowledge matters more than any statewide ranking. Some patterns I see:

• Inland Empire (Riverside County and San Bernardino County): Riverside, Corona, Moreno Valley, Murrieta and Temecula draw buyers priced out of Orange County, Los Angeles and San Diego. Lower price points mean less capital per deal, and rental demand gives you a fallback exit. Value varies block by block.
• Los Angeles: Large stock of older homes and strong ARVs. Northeast LA (Highland Park, Eagle Rock, Glassell Park, El Sereno) and parts of the San Fernando Valley are active flip areas; high-priced westside neighborhoods work, but margins are thinner.
• Orange County: Higher price points and bigger absolute dollars. Anaheim, Fullerton, Garden Grove, Santa Ana and Westminster are more common flip territory; coastal cities often need longer permitting timelines and more conservative budgets. Condo flips are financeable but the lender pool is narrower, and HOA condition matters.
• San Diego County: North Park, Normal Heights, Kensington and Logan Heights bungalows, plus East County (El Cajon, Santee, Lemon Grove, Spring Valley) at lower entry prices.
• Sacramento and the Central Valley: Lower acquisition and renovation costs, with Bay Area relocation supporting demand in parts of the market.

Before you buy, check local permitting timelines — they vary widely by city and can add months to a coastal project.

What to Bring for a Quote

• Property address and purchase contract (or target purchase price)
• Itemized rehab budget, ideally a licensed contractor’s bid
• Your ARV estimate with the closed comps behind it
• Exit plan: sell, or rent and refinance
• Proof of funds for down payment, closing costs and reserves
• Entity documents if buying in an LLC, and a list of any completed projects

Frequently Asked Questions

Do I need experience to get a fix-and-flip loan in California?

No. Many lenders fund first-time flippers because they underwrite the deal — purchase price, rehab budget, ARV and exit — more than your resume. Expect lower leverage, somewhat higher pricing and closer review of your contractor and budget on a first project. Terms usually improve after two or three completed flips.

How fast can a fix-and-flip loan close?

A clean file often closes in one to two weeks. Speed depends on the appraisal, title and escrow, and how complete your package is at the start: purchase contract, entity documents, rehab budget, contractor information and proof of funds.

What property types qualify?

Non-owner-occupied single-family homes, condos and 2–4 unit properties are the core; some lenders also fund larger multifamily and mixed-use projects. Fix-and-flip loans are for investment property only — a home you’ll live in needs a renovation loan instead.

What credit score do I need?

Many hard money lenders have no strict minimum, but credit affects leverage and pricing. Stronger credit and experience earn better tiers; weaker credit can often be offset with more cash in the deal and a well-documented plan.

Can I use a fix-and-flip loan and then keep the property as a rental?

Yes. That’s the BRRRR approach: renovate, rent it at market rent, then refinance the short-term loan into a long-term loan such as a DSCR loan. Plan the refinance before you buy so the rent, value and seasoning requirements line up.

Can I do a 1031 exchange on a flip?

Generally no. Section 1031 does not apply to real property held primarily for sale, which is how flips are usually treated, so flip profit is generally taxed as ordinary income. Property held for investment, such as a long-term rental, can qualify. Confirm your situation with a tax professional.

Related Resources

• Hard Money Loans in California
• Bridge Loans in California
• DSCR Loans in California
• Renovation Loans (Owner-Occupied)
• Construction Loans in California
• Buying Property in an LLC
• Commercial Real Estate Loans