Fix and Flip Loan Costs, Line by Line

01 September 2026 · SFR Capital

Investors compare lenders on rate, which is the wrong single number. The right one is total cost over the actual hold, including the fees that appear at closing and the ones that should not appear at all.

Worked example

Take a single-family investment property where the lender's value conclusion is $600,000. At 70% loan-to-value the loan is $420,000 — first lien, interest-only, on a 12-month term.

• Monthly interest at 12%: $4,200
• Origination at 2%: $8,400, paid at closing
• Six-month hold: $25,200 interest + $8,400 origination = $33,600

Figures are illustrative. Actual terms are set per deal after underwriting.

The fees that should not be there

A direct lender using its own capital has no reason to charge you for an outside appraisal, a document preparation fee, a processing fee, or an underwriting fee on top of origination. When those appear, they usually indicate a broker in the chain rather than a lender, and each layer adds both cost and a party who can say no late.

Cost of a slow close

The expense investors forget is time. A 30-day contract that runs 45 days costs the extension, possibly the deposit, and occasionally the deal. A cheaper rate from a lender who cannot commit to a funding date is not cheaper.

How to compare honestly

Ask every lender for the same three numbers on the same deal: total dollars at closing, total interest over your realistic hold, and the cost of paying it off early. The third one catches prepayment penalties, which can quietly make a low rate the expensive option on a four-month flip.

Where the money actually goes

Split the cost of a fix-and-flip loan into three buckets, because they behave differently and only one of them is the rate.

1. Cost at closing

Origination is the main one — 2% of the loan on a $420,000 loan is $8,400, paid once. Then the ordinary closing costs that exist regardless of lender: title insurance, recording, doc stamps and intangible tax in Florida, and the title company's fee. These are not lender charges and vary by county.

2. Cost per month held

Interest, and only interest, on an interest-only loan. At 12% on $420,000 that is $4,200 a month. Add the carrying costs the loan does not cover but the project does: property taxes, insurance, utilities and any HOA dues. On a Florida property, insurance is now frequently the second-largest monthly line after interest.

3. Cost of exiting

Ideally zero. This is where prepayment penalties and minimum-interest clauses live, and it is the bucket investors forget to ask about because it is invisible until the day they repay.

The comparison that actually matters

Two lenders on the same $420,000 loan:

• Lender A: 10% rate, 2% origination, six months' minimum interest.
• Lender B: 12% rate, 2% origination, no prepayment penalty.

On a four-month flip, Lender A charges six months of interest at 10% ($21,000) plus $8,400 = $29,400. Lender B charges four months at 12% ($16,800) plus $8,400 = $25,200. The higher rate is $4,200 cheaper, and the gap widens the faster you sell.

Fees that indicate a broker rather than a lender

A direct lender using its own capital has no reason to charge separately for: document preparation, underwriting, processing, an application fee, or an outside appraisal it does not order. When several of these appear together it usually means the party you are speaking to is placing the loan elsewhere. That matters beyond cost — it means the final credit decision is made by someone you have not spoken to, who can revisit terms late.

The cost nobody prices: a closing that slips

A 30-day contract that runs 45 days can cost a contract extension fee, the deposit if the seller declines to extend, a contractor who moved to another job, and occasionally the deal. None of that appears on a rate sheet. A lender who commits to a funding date and holds it is worth more than a fractional rate difference, and the way to test it is to ask what happens if title runs long.

Building the number into your deal

Work backwards. Take the realistic resale value, subtract selling costs (commission, doc stamps, concessions — commonly 7–8% in Florida), subtract the rehab and holding costs, subtract the finance cost above, and what remains is your margin. If that margin only works at the fastest timeline and the highest resale price, the deal has no room in it, and financing is not the variable that will save it.

Working the cost backwards from the sale

The useful exercise is not adding up fees, it is subtracting them. Start at the price you believe the finished property sells for, take off selling costs — commission, doc stamps on the deed, prorated taxes, seller concessions — then take off your total financing cost at the month you expect to close, then the purchase price and the rehab. What remains is the deal.

Run that same subtraction twice more: once at a sale price ten per cent below your estimate, and once with the timeline two months longer than planned. If the deal survives both, it is a real deal. If it only works at the best price on the fastest timeline, financing cost is not your problem — the margin is.

Where investors underestimate

• The holding months after the work is done. Listed is not sold. Contract to close is another thirty to forty-five days, and interest runs through all of it.
• Insurance on a vacant property under renovation. Builder's risk is not the same premium as a standard landlord policy, and in Florida it is rarely a small line.
• Utilities and taxes. Small monthly numbers that become a noticeable figure over eight months.
• The second contractor. Not always, but often enough that experienced investors carry it in the budget rather than discovering it.

None of these are financing costs, which is exactly why they get left out of a financing comparison and then decide the outcome.

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SFR Capital LLC (SFR) is a private lender, license exempt under Fla. Stat. § 494.00115. SFR only makes business purpose mortgage loans on non-owner occupied Florida investment property. Nothing here is an offer or commitment to lend. All loans are subject to SFR approval of the sponsor, property collateral, title and documentation.