Fix and Flip Loan vs. Bridge Loan: Which One Fits Your Deal?

When investors compare a fix and flip loan vs. bridge loan, the confusion is understandable. Both are short-term investor loans, and both are often lumped together as “hard money.” But they are built for different situations, and choosing the wrong one can leave you without renovation money or paying for features you do not need.

The short answer: if the property needs a renovation, you generally want a fix and flip loan. If it is already in good condition and you need short-term financing while you sell, lease up, or refinance, a bridge loan is usually the better fit. Below, we break down the differences with real program terms and examples.

What Is a Fix and Flip Loan?

A fix and flip loan finances both the purchase of a property and the cost to renovate it. The purchase portion is funded at closing, and the rehab portion is typically released in draws as work is completed. When the work is done, you sell the property or refinance it into long-term financing.

The loan is sized around both what you are spending and what the property will be worth after the renovation, which is why fix and flip lenders focus on your rehab budget and the after-repair value (ARV).

What Is a Bridge Loan?

A bridge loan is short-term financing that “bridges” you from one point to the next: from purchase to a sale, from acquisition to permanent financing, or from a quick close to a planned refinance. Bridge loans generally do not include a renovation budget, so lenders look for properties that are already in good condition.

Fix and Flip Loan vs. Bridge Loan: Side-by-Side

Here is how our two programs compare:

Feature	Fix and flip loan	Bridge loan
Starting rate	8.25%	8.25% (No DSCR option)
Term	12 months standard; 18 months case by case	12 months
Purchase leverage	Up to 90% of purchase price	Up to 85% of purchase price, plus verified completed CapEx if owned under 6 months
Renovation funding	Up to 100% of rehab budget	Not included
Value cap	Up to 75% of after-repair value	Up to 70% LTV
Property condition	Needs work (that is the point)	C2 or better (No DSCR option); C4 or better with no deferred maintenance (DSCR exit option)
Minimum FICO	660 (below 660 subject to lender approval)	660 (below 660 subject to lender approval)
Rental income test	None	None (No DSCR option) or 1.10 minimum DSCR (DSCR exit option)
Loan amount	$50K–$3M	$50K–$3M

The Key Differences Explained

1. Property condition

This is usually the deciding factor. Appraisers rate residential condition on a scale from C1 (new or like new) to C6 (substantial damage or deferred maintenance). Our No DSCR bridge option requires C2 or better, which means the property is in excellent shape. The DSCR exit option allows C4 or better, provided there is no deferred maintenance. If your property needs a new roof, a kitchen gut, or mechanical repairs, it is a fix and flip deal.

2. Renovation money

A fix and flip loan can cover up to 100% of the rehab budget, so you preserve your own cash for the down payment, closing costs, and reserves. A bridge loan does not fund renovation work.

3. How the loan is sized

Fix and flip loans look at both cost and future value. Our program lends up to 90% of the purchase price plus up to 100% of rehab, with the total capped at 75% of ARV. For projects where the rehab is larger than the purchase price, loan-to-cost is used to size the loan.

Bridge loans look at the property as it stands today: up to 85% of the purchase price, capped at 70% LTV. If you have owned the property for less than six months, verified completed capital improvements can be added to your cost basis.

4. Rental income

Fix and flip loans do not test rental income. Our bridge program offers a choice: the No DSCR option has no rental test, while the DSCR exit option requires a 1.10 minimum debt service coverage ratio, based on the lower of in-place rent or market rent. That option suits investors who plan to hold the property and refinance into a long-term rental loan.

Two Example Scenarios

These hypothetical examples show how the decision typically plays out. Actual loan amounts depend on valuation and underwriting.

Scenario A: A dated single-family home that needs a full rehab

Purchase price is $180,000, the renovation budget is $70,000, and the after-repair value is $340,000.

• 90% of purchase: $162,000
• 100% of rehab: $70,000
• Total: $232,000, under the 75% ARV cap of $255,000

Best fit: fix and flip loan. A bridge loan would not fund the rehab, and the property’s current condition would not meet bridge condition requirements.

Scenario B: A recently renovated duplex you want to hold

The property is in good condition with no deferred maintenance, and it is leased at rents that cover the debt payment by more than 1.10 times. You need to close quickly and plan to refinance into a 30-year loan.

Best fit: bridge loan (DSCR exit option). There is no renovation to fund, and the rental income supports the DSCR requirement. Later, you can refinance into a long-term DSCR rental loan.

When a Fix and Flip Loan Is the Better Choice

• The property needs repairs or updates to reach its full value
• You want renovation costs financed instead of paid from your own cash
• Your profit depends on the after-repair value
• You are newer to investing (our program has no minimum experience requirement)

When a Bridge Loan Is the Better Choice

• The property is already in good condition
• You need short-term financing to close, then sell or refinance
• You recently bought a property and completed improvements, and you want to finance against your updated cost basis
• You plan to hold the property and the rents already support the debt

Questions to Ask Before You Choose

1. Will the property need work before it can be sold or rented?
2. Can the work realistically be finished within a 12-month term?
3. Am I selling, or refinancing into a long-term loan?
4. Does the property’s current condition meet the bridge requirements?

Still deciding? Our guide to real estate investor loan types covers construction and rental loans too, and our loan programs page lists all current terms.

Frequently Asked Questions

Is a bridge loan the same as a fix and flip loan?

No. Both are short-term investor loans, but a fix and flip loan includes renovation funding and is sized partly on after-repair value. A bridge loan is generally for properties that are already in good condition and does not include rehab money.

Can I use a bridge loan on a property that needs minor repairs?

It depends on condition. Our No DSCR bridge option requires C2 or better condition, and the DSCR exit option requires C4 or better with no deferred maintenance. If repairs are needed, a fix and flip loan is usually the better fit.

Which loan has higher leverage?

On purchase price, our fix and flip loan goes up to 90% compared with 85% for bridge, and it can also fund up to 100% of the rehab budget. Both are subject to value caps: 75% of ARV for fix and flip and 70% LTV for bridge.

Can I refinance a fix and flip loan into a rental loan?

Yes. Many investors renovate with a fix and flip loan, lease the property, and then refinance into a long-term DSCR loan.

This article is for general informational purposes only and is not an offer or commitment to lend. All loans are subject to underwriting and approval, and terms are subject to change.