Does Grafton Funding offer DSCR loans for rental properties?

Yes — DSCR (Debt Service Coverage Ratio) loans are our most popular product. We lend on single-family rentals, 2–4 unit properties, short-term rentals (like Airbnb and VRBO), and small multifamily up to 10 units. We qualify the property on its rental income rather than your personal income or tax returns. Minimum DSCR is typically 1.0x, and we lend in TX, FL, GA, NC, SC, and other states.

Does Grafton Funding do fix and flip loans or bridge loans?

Yes. We provide fix and flip loans and bridge loans for non-owner occupied investment properties. Our programs cover the purchase price plus rehab costs, with fast closings. Loan terms are short-term (typically 12–18 months) and are designed around the investor's exit strategy — either sale or refinance.

Can I get a DSCR loan for an Airbnb or short-term rental property?

Yes — we specialize in short-term rental (STR) financing. We use either the property's actual Airbnb or VRBO income history or a market-rate STR income estimate to qualify the loan. You don't need W-2s or tax returns.

Does Grafton Funding offer new construction loans for investment properties?

Yes. We offer new construction loans for non-owner occupied residential investment properties, including spec builds, ground-up construction, and lot + build projects. These are short-term loans that fund in draws as construction progresses.

Does Grafton Funding lend in North Carolina?

Yes — we actively lend in North Carolina, including the Charlotte metro, the Triangle (Raleigh/Durham/Chapel Hill), Wilmington, and Asheville. We offer DSCR rental loans, fix and flip loans, and new construction financing for NC investment properties. Local NC line: (910) 218-1286.

Can I qualify for a loan without showing tax returns or personal income?

Yes — our DSCR loans are underwritten based on the property's rental income, not your personal income or tax returns. This makes them ideal for self-employed investors and business owners. We do require a credit check and down payment, but there's no traditional income verification.

What credit score do I need to get a loan from Grafton Funding?

For most DSCR rental loan programs, we generally look for a minimum credit score in the 660–680 range, though this can vary by program and loan-to-value. Fix and flip loans may have different requirements depending on experience and deal strength.

How much do I need to put down for a DSCR loan?

For DSCR rental loans, we typically lend up to 75–80% loan-to-value (LTV), meaning you'd need 20–25% as a down payment. The exact LTV depends on the property type, DSCR ratio, and your credit profile. We lend exclusively on non-owner occupied investment real estate.

How quickly can Grafton Funding close a loan?

Many of our transactions close in 2–4 weeks depending on the loan type, property, and how quickly documentation is provided. We prioritize responsive communication and efficient underwriting for investors who need to move fast on deals.

Does Grafton Funding work with first-time real estate investors?

Yes — we work with both new and experienced investors. For DSCR rental loans, first-time investors are welcome as long as the property cash flows and the borrower meets our credit and down payment requirements. For fix and flip loans, some experience is preferred but not always required.

Fix and Flip Loans for First-Time Investors (2026 Guide)

Jul 7
6 min read

Your first fix and flip is the one where you learn the most — and where the most money is at risk.

The financing piece is where many first-timers stumble. Fix and flip loans work nothing like a mortgage. They're short-term, asset-based, and fast-moving. If you go in without understanding how they're structured, you'll either overpay, overborrow, or get caught in a deal that doesn't pencil out.

Quick Answer: Fix and flip loans are short-term bridge loans (typically 6–18 months) that finance both the purchase and renovation of a distressed property. They qualify based on the after-repair value (ARV) of the property — not your personal income. First-time investors can qualify with a 600+ credit score, 10–20% down, and a credible deal. Grafton Funding offers fix and flip loans nationwide.

What Is a Fix and Flip Loan?

A fix and flip loan (also called a hard money loan or bridge loan) is short-term financing designed specifically for buying and renovating investment properties.

Key characteristics:

Short-term: Typically 6–18 months
Asset-based: Qualification focuses on the property's after-repair value, not your W-2
Draw-based: Renovation funds are released in stages as work is completed
Interest-only: Monthly payments are typically interest-only, keeping carry costs low
Paid off at exit: You repay the loan when you sell the property (or refinance into a long-term loan)

Fix and flip loans exist because conventional lenders won't finance distressed properties. Hard money lenders fill that gap — closing in days rather than weeks.

How Fix and Flip Loans Are Structured

Loan Components

Purchase Loan: Funds the acquisition of the property. Typically 80–90% of the purchase price.
Rehab Budget (Construction Holdback): The renovation budget is held in reserve and released in draws as work is completed and inspected. Most loans allow 9–10 draws over the renovation period.

Loan-to-Value and After-Repair Value

Fix and flip loan sizing is driven by ARV — After-Repair Value — the estimated market value of the property once renovations are complete. Most lenders will lend up to 65–75% of ARV.

Example:

Estimated ARV: $280,000
Maximum loan at 70% of ARV: $196,000
Purchase price: $145,000
Rehab budget: $45,000
Total project cost: $190,000 — within the $196,000 maximum

Ready to Finance Your First Fix & Flip?

Review fix and flip loan programs for first-time investors — fast closes, draw-based funding, ARV-based approval.

View Fix & Flip Loan Programs

What Fix and Flip Lenders Look At

The Deal — Most Important

After-Repair Value (ARV):

The lender orders an appraisal that includes an as-repaired value estimate. Your ARV estimate needs to be defensible and conservative — lenders push back on optimistic ARV projections.

Rehab Scope and Budget:

A detailed scope of work (SOW) is expected — a line-item breakdown of every renovation element and its cost. First-timers often submit vague estimates. Lenders want specifics: cabinets, countertops, appliances, flooring, labor — each line-itemed.

Loan-to-ARV:

Your total project cost should be 65–75% of ARV or less to qualify at most lenders.

Borrower Profile

Credit score: 600–660 minimum; 680+ opens better rates and terms
Experience: Some lenders require prior flip experience; others offer first-timer programs
Liquidity / Reserves: $30,000–$50,000+ in accessible liquid assets significantly improves approval odds

Fix and Flip Loan Rates and Costs

Interest rate: Typically 9%–12% annually (charged on the drawn balance)
Origination points: 1–3 points at closing (1 point = 1% of the loan amount)
Interest-only payments: On a $180,000 draw at 10.5%, that's $1,575/month in carry cost
Extension fees: 0.5%–1% of the loan balance per month if the project runs long

Total financing cost on a typical $200,000 project over 6 months at 10% with 2 points: approximately $14,000. This must be factored into your profit analysis.

The Maximum Allowable Offer (MAO) Formula

The MAO formula (otherwise known as "The 70% Rule") tells you the most you should pay for a distressed property to still generate acceptable profit:

MAO = (ARV × 70%) − Rehab Costs

Example:

ARV: $280,000
70% of ARV: $196,000
Estimated rehab: $45,000
MAO: $196,000 − $45,000 = $151,000

At $151,000 purchase price, your total cost ($151,000 + $45,000 = $196,000) is exactly 70% of ARV — representing your break-even with financing costs at a conservative margin.

Common First-Timer Mistakes

Underestimating the rehab budget.

Get a written contractor estimate before you close. Add a 15–20% contingency buffer. Older properties frequently have hidden issues (plumbing, electrical, foundation) discovered mid-project.

Being too optimistic on ARV.

Work backward from verified comparable sales within 0.5 miles, same bedroom/bath count, within the last 90 days.

Not accounting for all costs.

Include financing costs, holding costs (utilities, insurance, property taxes), and seller closing costs (agent commissions alone are 5–6%). Use a complete cost worksheet before every deal.

Taking too long.

Every extra month adds a month of interest, utilities, insurance, and taxes. Have your contractor lined up before you close. [LINK: investor-resources/brrrr-strategy-financing]

The Fix and Flip Process: Step by Step

Analyze the deal: Run comparable sales to estimate ARV; get a contractor walk-through and preliminary rehab estimate.
Make your offer: Use your MAO formula to set your maximum purchase price.
Apply for fix and flip financing: Contact your lender before going under contract. Most lenders can issue approval within 24–48 hours for a clean deal.
Conduct due diligence: Order an inspection; review title; finalize scope of work; get written contractor bids.
Close: Fix and flip loans close fast — typically 5–10 business days.
Renovate: Execute your scope of work; request draws as phases complete.
List and sell: List as soon as renovation is complete. Every extra week costs money.
Repay the loan at closing: At sale, the loan is repaid from the proceeds. You keep the profit.

Bottom Line

Fix and flip loans are short-term (6–18 months), asset-based, and qualify on ARV — not personal income
First-time investors can qualify with a 640+ credit score, 10–20% down, and a credible deal (total cost ≤ 70–75% of ARV)
The most common first-timer mistakes: underestimating rehab costs, overestimating ARV, and ignoring holding costs
Line up your contractor, ARV analysis, and lender before going under contract
Financing costs (interest + origination points) typically total $10,000–$15,000 for a 6-month project — build this into your profit model

Frequently Asked Questions

Can first-time investors get fix and flip loans?

Yes. Many lenders offer specific programs for first-time flippers. The key factor is deal quality — your credit score, a defensible ARV, a detailed scope of work, and adequate reserves matter more than prior flip experience. Having a strong deal at a good price compensates for limited experience in most lenders' eyes.

What credit score is required for a fix and flip loan?

Most lenders require a minimum credit score of 620–640. A score of 680 or higher opens up better rates, terms, and more lender options. Some programs are available for scores in the 600–619 range with additional equity or reserves — ask your lender about first-timer options.

How is the loan amount calculated for a fix and flip loan?

Fix and flip loans are sized based on a percentage of the after-repair value (ARV) — the estimated value of the property once renovations are complete. Most lenders fund up to 65–75% of ARV. The total project cost (purchase price + rehab budget) must stay within this limit. The lender funds the purchase portion at closing; rehab funds are released in draws as work is completed.

How long does it take to close a fix and flip loan?

Fast-moving lenders can close fix and flip loans in 5–10 business days for clean deals. Most close within 2 weeks. This is significantly faster than conventional mortgages — which is why fix and flip lenders are preferred for distressed property acquisitions where motivated sellers want quick closes.

What's the difference between a fix and flip loan and a hard money loan?

They are typically the same product. 'Hard money loan' is an older industry term for short-term, asset-based real estate loans. 'Fix and flip loan' or 'bridge loan' are more commonly used terms today. Both refer to the same loan structure: short-term, interest-only, qualifying on ARV rather than personal income, with draw-based renovation funding.

Ready to Finance Your First Fix & Flip?

Grafton Funding works with first-time fix and flip investors. We'll walk you through the deal analysis, explain exactly how the loan is structured, and make sure you understand the numbers before you commit.

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