A fix-and-flip loan is a specialized investment property loan product designed to finance the entire buy-renovate-sell cycle covering both the property purchase and the renovation budget in a single loan with a structured draw process. A hard money loan is a pure bridge loan that provides acquisition financing quickly but typically does not include a renovation draw component. The key differences: fix-and-flip loans are specifically designed for the fix-and-flip project cycle (6–18 months), charge interest on the drawn renovation balance rather than the full commitment, and are offered by institutional lenders (Kiavi, Lima One, RCN Capital) with standardized underwriting. Hard money loans close faster (7–10 days vs. 14–21 days) and have more flexible underwriting but require the investor to manage renovation funding separately.

LTC (Loan-to-Cost) in a fix-and-flip loan is the ratio of the loan amount to the total project cost (purchase price + renovation budget). 90% LTC means the lender will finance 90% of the total project cost; the investor funds the remaining 10% plus origination points and closing costs. On a Maryland fix-and-flip with a $210,000 purchase price and $68,000 renovation budget ($278,000 total cost): 90% LTC = $250,200 maximum loan amount. The investor funds $27,800 (10% of total cost) + $7,506 (3 origination points on $250,200) + $5,000 (estimated closing costs) = approximately $40,306 out of pocket. LTC is always evaluated alongside LTV the maximum loan is the lower of (ARV × LTV%) and (Total Cost × LTC%).

Draw inspections are on-site verifications by the lender’s inspector (typically a licensed contractor or property inspector contracted by the lender) that the work claimed in a draw request has been completed to the standard required before the next tranche of renovation funds is released. The process: (1) Investor submits a draw request documenting work completed with photos, receipts and contractor invoices; (2) Lender schedules an inspection within 1–3 business days; (3) Inspector visits the property and verifies work against the approved renovation scope; (4) If work is verified as complete, the lender releases the draw amount within 1–3 business days of the inspection report. Draw inspection fees ($100–$300 per inspection) are typically charged to the borrower’s loan account. For Maryland projects with 4 draws: $400–$1,200 in total draw inspection fees.

When a Maryland fix-and-flip loan reaches its expiration date before the property sells, the investor has three options: (1) Extension most fix-and-flip lenders offer 2–3 month term extensions for a fee of 0.5%–1.5% of the outstanding loan balance plus continued interest; the extension buys time to complete the sale. (2) Refinance to DSCR rental loan if the investor decides to hold the property as a rental rather than sell, most institutional fix-and-flip lenders offer a conversion to a 30-year DSCR loan at the current rental market rate, which would eliminate the flip profit but produce a performing rental asset. (3) Distressed sale selling below ARV to retire the loan before default. The optimal strategy is prevention: accurate timeline modeling during deal underwriting and proactive communication with the lender if the project is running long.