What Is ARV in Fix & Flip Loans? (How Lenders Calculate It)
- Mar 24
- 3 min read
Updated: Apr 9
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.
Quick Answer: ARV (After Repair Value) is the estimated value of a property after all renovations are complete. Fix & flip lenders use ARV — not purchase price — to set loan limits, typically lending 70–75% of ARV to protect against market risk and ensure the deal pencils out for both borrower and lender.
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• Using outdated comps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.
Frequently Asked Questions
What does ARV mean in real estate?
ARV stands for After Repair Value — the estimated market value of a property once all planned renovations are completed. It is used by lenders, appraisers, and investors to evaluate whether a fix and flip deal makes financial sense.
How do lenders use ARV to calculate fix and flip loan amounts?
Most fix and flip lenders cap their loan at 70–75% of ARV. This means if your ARV is $300,000, the lender will advance up to $210,000–$225,000 to cover the purchase price and renovation costs combined.
How is ARV determined for a fix and flip property?
ARV is determined by a licensed appraiser using comparable sales — recently sold properties in the same area with similar size, condition, and features as the renovated subject property. Lenders order their own appraisal and will not solely rely on investor estimates, although some lenders, including Grafton Funding, do not do appraisals at all and research their own internal valuations.
What is the difference between ARV and as-is value?
As-is value is what the property is worth today in its current condition, while ARV is the projected value after all renovations are complete. Fix and flip loan leverage is based on both ARV and the as-is value, which is what allows investors to borrow enough to fund renovations.
Can I use a higher ARV to get a bigger fix and flip loan?
The lender's appraiser sets the ARV based on market comparables — you cannot simply claim a higher ARV to increase your loan amount. Inflating your ARV estimate in your own projections puts you at risk of being over-leveraged if the appraised ARV comes in lower than expected.
Planning a renovation project?
Get a structured review before you submit an offer.
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