Fix and Flip vs Ground-Up Construction Loans
Both products are short-term investor construction loans, but the underwriting differs based on the starting state of the property. Fix and flip starts with an existing structure that needs renovation. Ground-up construction starts with a vacant lot or a teardown.
Fix and Flip Loan
Acquisition + rehab on an existing structure.
Best for: Renovation projects on existing 1-4 unit residential properties.
Pros
- +Faster underwriting — existing structure simplifies appraisal
- +Higher LTV vs ground-up (loan-to-cost up to 90%)
- +Smaller minimum loan ($75K typical)
Cons
- −Limited to existing residential structures
- −Major structural rehab can disqualify (foundation work, roof replacement)
Ground-Up Construction Loan
Vertical construction on a vacant lot or teardown.
Best for: Build-to-sell, build-to-rent, and small infill development.
Pros
- +Builds new SFR, 2-4 unit, or 5-10 unit ground-up
- +Higher loan amounts ($500K–$5M+)
- +Land can roll into the loan
Cons
- −Requires licensed GC (mostly)
- −More draws (5–8 typical) vs fix-and-flip (3–4)
- −LTC typically 80–85% (lower than fix-and-flip)
- −Longer underwriting — soils report, permits, GC contract review
| Field | Fix and Flip Loan | Ground-Up Construction Loan |
|---|---|---|
| Min FICO | 600+ | 660+ |
| LTV (purchase) | Up to 90% of purchase + 100% of rehab | Up to 85% LTC |
| LTV (cash-out) | Up to 75% of ARV | Up to 70–75% of completed value |
| Income docs | No income docs | No income docs |
| Term | 12–18 months interest-only | 12–18 months interest-only |
| Time to close | 7–14 days | 21–30 days |
Which one should you choose?
- Fix and Flip Loan: choose fix and flip if there is an existing structure to renovate. Faster, cheaper, less paperwork.
- Ground-Up Construction Loan: choose ground-up construction for vacant lots, teardowns, or projects where total scope makes a fix and flip impractical.
- For a teardown with retained foundation, either may work — pricing usually decides.
Frequently asked questions
Can I switch from fix and flip to ground-up mid-project?
No. They are different programs with different underwriting. If you discover a fix and flip needs a teardown, you typically refinance into a ground-up construction loan.
Is land equity counted in either loan?
Yes. Both treat owned land as borrower equity. Ground-up programs allow rolling recently purchased land into the loan; fix and flip programs apply equity against LTV calculations.
Which has stricter draw inspections?
Ground-up. Inspectors verify each phase (foundation, framing, MEP rough-in, drywall, finish, CO) before releasing draw funds.
Not sure which fits your scenario?
Tell us the deal — we'll come back with the right product and current pricing.
Related
14 min strategy guide
The BRRRR Strategy: Complete Guide for Real Estate Investors
11 min strategy guide
Fix and Flip: A Practical Getting-Started Guide
Fix & Flip
Short-term fix and flip loans for real estate investors. Up to 90% of purchase + 100% of rehab. ARV-based underwriting. Fast close.
Ground-Up Construction
Construction financing for investor builders. New SFR, 2-4 unit, and small multifamily ground-up. Up to 85% of total cost, 70–75% of completed value.
Fix-to-Rent / BRRRR
Bundled short-term rehab loan plus pre-approved DSCR refinance for BRRRR investors. One lender, one underwriting pass, two closings.
DSCR vs Hard Money
DSCR or hard money for your next investment property? Comparison of long-term DSCR versus short-term hard money loans for investors.