Rehab Loans — Purchase + Renovation Financing for Investors
A rehab loan combines the property purchase and renovation budget into a single short-term investor loan. Instead of paying cash for rehab or juggling a second loan, the lender funds the purchase up front and disburses rehab capital in draws as the work is completed.
Rehab loans are purpose-built for fix-and-flip investors selling post-renovation and BRRRR investors (Buy, Rehab, Rent, Refinance, Repeat) who stabilize and refinance into permanent financing. The property qualifies based on its After Repair Value (ARV), not the purchase price or its current condition.
Check Rehab Loan Eligibility Talk to a Rehab Loan Specialist — (833) 350-9185How a Rehab Loan Works
- Deal evaluation — You submit the property with purchase price, rehab budget, scope of work, and projected ARV (supported by comparable sales).
- Underwriting — Lender confirms the rehab scope is realistic and the ARV comps are solid. Decision is driven by the project math, not your W-2.
- Closing — Purchase funds at closing, typically 10-14 business days from acceptance.
- Rehab draws — As work progresses, you submit inspections or invoices and the lender releases rehab funds in 3-5 scheduled draws.
- Exit — Sell (fix-and-flip) or refinance into permanent financing like a DSCR loan (BRRRR).
The rehab loan is short-term by design — typically 12-24 months — so you’re not paying long-term interest on transitional debt.
Typical Rehab Loan Terms
| Feature | Typical Range |
|---|---|
| Loan amounts | $100,000 – $3,000,000+ |
| Loan-to-Cost (LTC) | Up to 90% of purchase + 100% of rehab |
| Loan-to-ARV | Up to 70% of After Repair Value |
| Term | 12-24 months (interest-only typical) |
| Credit score | Flexible — deal-driven |
| Income docs | Minimal |
| Experience | Newer investors OK; seasoned investors get better pricing |
| Rehab budget range | $10,000 – $500,000+ |
| Property types | 1-4 unit residential investment property |
| Vesting | LLC preferred |
| Close time | 10-14 business days |
| Origination | 1-3 points typical |
What Counts as “Rehab”
Rehab loans cover a wide range of renovation scopes:
- Cosmetic: paint, flooring, fixtures, appliances, landscaping
- Systems: HVAC, electrical, plumbing, roof, water heater
- Structural: foundation, load-bearing wall changes, additions
- Layout changes: adding bedrooms or bathrooms, opening floor plans
- Condition upgrades: kitchen remodel, bath remodel, finished basement
- Property repositioning: converting single-family to duplex, adding ADU, unfinished basement buildout
Scopes must be documented with a contractor bid or detailed itemized budget before closing. The lender wants to see that the rehab capital matches the value-add plan.
Fix-and-Flip Scenario
Property: 3BR/2BA single-family home, Las Vegas NV. Distressed condition, needs full cosmetic rehab + HVAC replacement + kitchen/bath remodel.
- Purchase price: $220,000
- Rehab budget: $55,000
- Total project cost: $275,000
- Projected ARV (comps): $370,000
- Rehab loan amount: $247,500 (90% LTC on purchase + 100% of rehab)
- Investor cash to close: $22,000 down + $5,000 reserves + closing costs
- Term: 12 months interest-only
- Exit: List at $360,000-$370,000 upon completion (4-5 month rehab timeline)
- Projected net profit after sale costs: ~$50,000-$70,000
Result: Closed in 11 days. Rehab funds released in 4 draws. Property listed at month 5, sold within 30 days.
BRRRR Scenario (Buy, Rehab, Rent, Refinance, Repeat)
Property: 2-unit duplex in Kansas City MO. Below-market rents, outdated condition, strong neighborhood.
- Purchase price: $180,000
- Rehab budget: $40,000
- Post-rehab market rent (both units): $2,800/month total
- Rehab loan: $200,000 (90% LTC + 100% rehab)
- Investor cash to close: $18,000 down + reserves + closing costs
- Term: 12 months interest-only
- Post-rehab appraised value: $285,000
- Exit (month 6): Refinance into DSCR loan at 75% of appraised value = $213,750 permanent loan
- Result: Refinance pays off rehab loan, returns $13,750 cash to investor, and investor owns a cash-flowing rental with only $4,250 left in the deal.
This is the BRRRR playbook in its textbook form — rehab loan handles the transition; permanent DSCR refinance locks in long-term cash flow with most of the original capital recycled.
Rehab Loan vs Hard Money vs DSCR
| Feature | Rehab Loan | Hard Money | DSCR |
|---|---|---|---|
| Purpose | Purchase + rehab | Fast close, bridge | Long-term stabilized rental |
| Term | 12-24 months | 6-24 months | 30 years |
| Rate | Higher (includes rehab risk) | Higher | Moderate (non-QM) |
| LTV/LTARV | 70% LTARV | 65% LTARV | 80% LTV on stabilized |
| Rehab funding | Built-in draws | Usually separate/cash | Not applicable |
| Close time | 10-14 days | 7-10 days | 21-30 days |
| Exit required | Yes — sell or refi | Yes | No (permanent) |
| Best for | Fix-and-flip, BRRRR | Fast close, distressed | Hold-for-rental stabilized |
Quick guide:
- Buying + rehabbing to sell? Rehab loan.
- Buying + rehabbing to hold? Rehab loan → DSCR refinance (BRRRR).
- Just need fast close, no major rehab? Hard money.
- Already stabilized, long-term hold? DSCR directly.
Who Uses Rehab Loans
- Fix-and-flip investors targeting a 4-8 month project cycle
- BRRRR investors building rental portfolios through value-add
- Wholesaler-flip hybrids who wholesale most deals but occasionally rehab for profit
- Experienced investors with a clear playbook and strong comps
- Newer investors with partner experience or conservative first deals
- Developers converting or repositioning small multi-family
States We Originate Rehab Loans In
Investment property rehab loans don’t require state-by-state NMLS broker licensing, so we originate rehab loans across all 50 U.S. states for non-owner-occupied properties. This matches our hard money and commercial lending footprint.
See If Your Rehab Deal Qualifies
Rehab underwriting is fast. Send the purchase contract, rehab scope, and 3-5 comparable sales supporting your ARV projection — we typically quote same day.
Check Rehab Loan Eligibility Talk to a Rehab Loan Specialist — (833) 350-9185Frequently Asked Questions
Related Investment Loan Programs
- Hard Money Loans — Fast close without rehab draws
- DSCR Loans — Permanent financing after rehab (BRRRR exit)
- NONI Investment Loans — Premium DSCR with no ownership seasoning
- Bridge Loans — Transitional financing between transactions
- Commercial Loans — Multi-family 5+ unit permanent
1st Nationwide Mortgage, NMLS 1281. Rehab loans are short-term investment property loans combining purchase + renovation financing. Subject to deal underwriting, ARV support, and rehab scope review. Terms vary by property type, rehab size, and investor experience. Not all applicants or properties will qualify.
Ready to Get Started?
Talk to a licensed loan officer about your options — no obligation.