What Is ARV in Fix & Flip Loans? (How Lenders Calculate It)
- Mar 24
- 1 min read
If you're financing a renovation project, ARV may be the most important number in your deal.
ARV stands for After Repair Value.
It represents the projected value of a property after renovations are complete.
Why ARV Matters
Most fix & flip loans are structured around:
• Purchase price
• Renovation budget
• ARV
Lenders often cap leverage at:
• 70–75% of ARV
This protects against market risk.
How Lenders Calculate ARV
Lenders rely on:
• Comparable sales
• Neighborhood trends
• Scope of renovation
• Appraiser projections (if appraisal is required by the lender)
• Market absorption rates
In strong Texas markets like Dallas and Houston, ARV accuracy is critical due to pricing volatility.
Example ARV Structure
Purchase: $200,000
Rehab: $50,000
ARV: $350,000
Lender may allow:
• 90% of purchase
• 100% of rehab
• 75% of ARV
ARV drives maximum loan size.
Evaluating your next flip?
Review current ARV-based lending guidelines.
Common ARV Mistakes
• Using outdated comps
• Ignoring market softening
• Over-improving property
• Inflated contractor estimates
Conservative ARV modeling protects your profit.
ARV vs As-Is Value
As-Is Value = Current property value
ARV = Future projected value
Fix & flip leverage depends on the ARV number — not current value alone.
Bottom Line
ARV determines leverage.
If your ARV is wrong, your profit model is wrong.
Smart investors validate ARV before closing — not after renovation begins.
Planning a renovation project?
Get a structured review before you submit an offer.
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