The True Cost of a Fix-and-Flip Loan: A Complete Fee Breakdown for 2026
A fix-and-flip loan's advertised rate is only one part of what the loan actually costs. Rates typically run 8% to 13% in 2026. But origination points (1% to 3% of the loan), an underwriting fee ($995 to $1,995), and draw fees ($200 to $300 per disbursement) can add thousands more. How interest is calculated on undrawn rehab funds matters too. On a $220,000 loan, a well-structured deal can beat a poorly compared one by $4,000 to $8,000.
At Simplending Financial, we structure fix-and-flip loans nationwide through our SimpleFlip program. The questions that come up most at closing are rarely about the rate. Investors usually want to know about the fees and interest mechanics nobody quoted upfront. This article breaks down every cost line. It explains the interest-calculation detail almost no one asks about. Then it runs a full deal through the math from purchase to payoff.
What Does a Fix-and-Flip Loan Actually Cost?
The full cost stack has five components: the interest rate, origination points, an underwriting or processing fee, draw fees, and extension fees for projects that run long.
| Cost component | Typical range |
|---|---|
| Interest rate | 8% to 13%, interest-only during the hold |
| Origination points | 1 to 3 points (1 point = 1% of the loan amount) |
| Underwriting/processing fee | $995 to $1,995 flat |
| Appraisal | $500 to $1,500 |
| Draw fee (per disbursement) | $200 to $300 |
| Extension fee | 0.5 to 1 point plus continued interest |
Lenders advertise rate and points because those are the easiest numbers to market. Underwriting fees, draw fees, and rehab-fund interest rules rarely appear on a rate sheet. Most investors learn about them at the closing table. Some don't learn about draw fees until the fifth draw request.
Is Interest Charged on the Full Loan or Just What's Been Drawn?
The answer depends on whether the lender uses Dutch interest or non-Dutch interest. This is the single biggest hidden-cost distinction in fix-and-flip financing.
Dutch interest charges interest on the entire approved loan amount from day one. That includes rehab funds still sitting undrawn. Say a $220,000 loan includes $65,000 in rehab funds you haven't touched yet. You're still paying interest on the full $220,000.
Non-Dutch interest charges interest only on funds actually disbursed. Take the same $220,000 loan, but with only $20,000 drawn from the rehab holdback so far. Interest accrues on that $20,000 plus the purchase advance, not the full approved amount.
The difference adds up to real money. Dutch interest can add several hundred dollars a month compared to non-Dutch structuring on a rehab budget released across six months. The lender is charging you for capital you haven't received yet. Ask directly whether a loan uses Dutch or non-Dutch interest. Put that question at the top of any lender comparison, ahead of the rate.
What Other Fees Should I Expect Beyond Rate and Points?
Three fees show up on nearly every fix-and-flip closing statement. Few lenders put them on the marketing page.
Underwriting or processing fee. This flat charge typically runs $995 to $1,995. It covers the lender's cost to draft loan documents, run credit and background checks, and process the file. Some lenders call it a "legal fee" or "doc fee." It's the same charge under a different name.
Draw and inspection fees. Every time you request rehab funds from the holdback, the lender sends an inspector first. The inspector verifies the completed work matches the request. Expect $200 to $300 per draw. A full renovation with five or six draws adds $1,000 to $1,800 in fees. That cost never shows up on a rate comparison chart.
Appraisal fee. This runs $500 to $1,500. It covers the lender's valuation of both as-is value and after-repair value (ARV). Complex properties and luxury markets sit at the higher end of that range.
These fees aren't hidden in the sense of being concealed. They're standard across the industry. They're hidden in the sense that almost no fix-and-flip content quantifies them next to the rate. That gap leaves investors comparing rate sheets that look complete but aren't.
How Much Does an Extra Month of Financing Actually Cost?
One additional month on a $220,000 loan at 10.5% costs roughly $1,925 in interest alone. That's before property taxes, insurance, utilities, or an extension fee kick in.
Renovation delays are the most common way a profitable flip turns marginal. A permitting delay, a contractor scheduling gap, or a slower-than-expected sale can each add a full month of carrying cost. A two-month delay on that same $220,000 loan adds close to $3,850 in interest. That often exceeds the entire difference between the two lender quotes an investor spent weeks comparing. ATTOM's 2025 year-end home flipping data puts the median time from purchase to resale at 160 days nationally. Use that figure to stress-test your own timeline instead of planning around a best-case guess.
Should I Choose a Lower Rate or Fewer Points?
Prioritize fewer points for projects under six months, even at a slightly higher rate. Prioritize the lower rate for projects over nine months.
Points are a fixed, one-time cost paid at closing no matter how long you hold the loan. Rate is a cost that compounds with time. On a short hold, a high-point, low-rate loan rarely has enough time for the lower rate to earn back the larger upfront fee. On a longer hold, the math flips. The accumulated interest savings from a lower rate eventually outweighs a modest points difference. The breakeven point usually falls between six and nine months, depending on loan size. Run both scenarios through the numbers before closing. Don't just compare headline rates.
Does Investor Experience Change the Total Cost?
Yes. Experience level shifts both the rate and the points, not just one or the other. That compounds the total cost gap between a first-time and a repeat borrower.
A first-time flipper with no completed projects usually lands at the higher end of the range. Expect 11% to 13% interest with 2.5 to 3 points, and often a lower leverage cap around 70% to 75% of purchase price plus 100% of rehab. An investor with two or three completed flips typically moves into a middle tier: 9.5% to 11% with 2 to 2.5 points. Investors with five or more completed projects and a documented track record often qualify for the lender's best pricing. That means 8% to 9.5% with 1 to 2 points, sometimes paired with higher leverage, since the lender takes on less execution risk.
On a $200,000 loan, the gap between first-time and experienced pricing can exceed $6,000 across an 8-month hold once you count both points and the rate difference. That's why lenders ask about track record during the first conversation. They aren't just gathering information; they're pricing the deal. Share a clear history of completed projects, even just two or three. It's one of the few things an investor can do to lower every line item in the cost stack at once.
A Real Deal, Line by Line
Here's a representative deal: a distressed property in the Houston Heights corridor, with every cost itemized rather than just the headline rate.
- Purchase price: $175,000
- Rehab budget: $65,000
- ARV (after-repair value): $310,000
- Loan structure: 85% of purchase plus 100% of rehab, 12-month term, 10.75% rate, 2 points, non-Dutch interest
- Loan amount: $148,750 (purchase) + $65,000 (rehab) = $213,750
- Cash to close: $26,250 (purchase gap) + $4,275 (2 points) + $1,495 (underwriting fee) + roughly $1,300 (appraisal and closing costs) = $33,320
Holding costs over an 8-month project timeline:
- Interest on the $148,750 purchase draw, 8 months at 10.75%: roughly $10,660
- Interest on rehab funds, drawn incrementally across 6 draws (averaging roughly half the $65,000 outstanding over the period): roughly $2,330
- Draw fees (6 draws x $225): $1,350
- Property taxes, insurance, utilities during hold: roughly $3,100
Total holding and financing cost: roughly $17,440
At sale:
- Sale price (at ARV): $310,000
- Realtor commission and closing costs (about 7%): $21,700
- Loan payoff: $213,750
Net proceeds after payoff and sale costs: $310,000 minus $213,750 minus $21,700 equals $74,550. Net profit after all financing costs comes to $74,550 minus $17,440, or roughly $57,110 on $33,320 cash invested. That's close to a 171% cash-on-cash return over 8 months. This figure sits well above ATTOM's national median gross profit of $65,981 for 2025. The line-item math, not the headline rate, is what actually determines whether a deal outperforms the market. Run your own numbers through a profitability calculator before closing to stress-test a deal against these figures.
What Happens If My Flip Doesn't Sell in Time?
You have two options: extend the loan, or refinance into a long-term rental loan.
Extending is usually the faster path if the property is close to sale-ready. It typically costs 0.5 to 1 point plus continued interest. On the example above, a 90-day extension would run roughly $1,070 to $2,140 in points alone, plus about $5,600 in additional interest at the same rate.
Refinancing into a DSCR loan converts the project from a flip to a hold. This structure qualifies you based on the property's rental income rather than your personal income. It works well when market conditions soften mid-project or a sale takes longer than expected. Simplending Financial's SimpleRent DSCR program is built for exactly this scenario. The DSCR calculator shows what a given property would qualify for as a rental before you commit to that exit.
The Bottom Line
Rate is one line in a five-line cost stack. Points, the underwriting fee, draw fees, and rehab-fund interest rules all move a deal's actual profit. Often they move it more than the spread between two competing rate quotes. Before comparing lenders on rate alone, ask about Dutch versus non-Dutch interest. Get the full fee schedule in writing. Run the timeline against a realistic hold period, not a best-case one. For the loan types and structures behind these numbers, see the complete guide to fix-and-flip loan types and the pre-purchase due diligence checklist. Ready to see how these numbers apply to a specific property? SimpleFlip loan officers can walk through the full line-item breakdown for your deal before you close with any lender.
Frequently Asked Questions
What is the average cost of a fix-and-flip loan?
A fix-and-flip loan typically carries an 8% to 13% interest rate, 1 to 3 origination points, a $995 to $1,995 underwriting fee, and $200 to $300 per rehab draw. On a $220,000 loan held for 8 months, total financing costs usually run $15,000 to $20,000.
Do fix-and-flip loans charge interest on undrawn rehab funds?
It depends on the lender's structure. Dutch interest charges on the full approved loan amount from day one, including rehab funds not yet disbursed. Non-Dutch interest charges only on funds actually drawn. Non-Dutch interest costs less for investors who draw rehab funds incrementally over the project.
How many points do fix-and-flip loans typically charge?
Most fix-and-flip lenders charge 1 to 3 origination points, where 1 point equals 1% of the loan amount. A $200,000 loan at 2 points costs $4,000 upfront, paid at closing no matter what rate you get.
What happens if a fix-and-flip project runs past the loan term?
Investors can extend the loan, typically for 0.5 to 1 additional point plus continued interest. Or they can refinance into a long-term DSCR rental loan that qualifies based on the property's rental income instead of personal income. Extending suits properties near sale-ready. Refinancing suits properties better held as a rental.
Is it better to choose a lower interest rate or fewer points on a fix-and-flip loan?
For holds under six months, fewer points usually save more money, even at a slightly higher rate, since points are a fixed upfront cost. For holds over nine months, a lower rate usually saves more, since interest compounds with time while points don't.
Can I refinance a fix-and-flip loan into a rental loan if the property doesn't sell?
Yes. A DSCR (Debt Service Coverage Ratio) loan refinance pays off the fix-and-flip loan and converts the property into a long-term rental hold. It qualifies you based on the property's rental income rather than your personal income or credit profile.