Every national fix and flip guide walks you through the same three words: ARV, draws, and points. Fewer of them show you how those three things actually interact on one deal, and almost none of them mention the two things that quietly eat into a Connecticut flipper's profit at the finish line.
If you're financing a flip in CT for the first time, or you've done a few and the math never quite matches what you expected at closing, this is the walkthrough that connects the pieces. Fix and flip financing is business-purpose, investment-property lending — it's built for a deal like this, not a home you plan to live in, and that's part of why it can move as fast as it does.
The short version: Fix and flip loans are sized off the After-Repair Value (ARV), not the purchase price, with rehab funds released in stages called draws as work is completed and inspected. Points are an upfront fee charged as a percentage of the loan. In Connecticut, two extra costs change your real numbers: every closing goes through an attorney, and when you sell the finished flip, Connecticut's conveyance tax comes out of your proceeds. Run those into your math before you make an offer, not after.
A conventional mortgage is sized off what the property is worth today. A fix and flip loan is sized off what it will be worth once the work is done — the After-Repair Value.
Lenders typically cap total financing as a percentage of ARV, commonly landing in the mid-60s to mid-70s percent range, covering both the purchase and the rehab budget together. The property's current condition matters far less than a realistic, comparable-sales-backed ARV. This is also where deals go sideways: an optimistic ARV based on the nicest recent sale on the street, rather than three or four genuinely comparable ones, is the single most common reason a flip loan comes in smaller than an investor expected.
Get your ARV from an appraiser or a real estate agent pulling true comps before you write an offer, not after.
The rehab portion of your loan doesn't land in your account on day one. It's held back and released in stages, called draws, as the work gets done.
A typical structure looks like this:
Most fix and flip loans run somewhere between three and six draws depending on the size of the rehab. Each one adds a short delay while you wait on scheduling an inspection, so a rehab with a tight timeline needs a contractor who can hit a schedule, not just a low bid. This is where flips actually lose weeks, far more often than in the closing itself.
One detail worth asking about directly: whether interest is charged on the full rehab holdback from day one or only on funds actually disbursed. That difference can add up to real dollars over a five- or six-month hold, and it's rarely explained up front.
Points are an origination fee charged as a percentage of the loan amount, paid at closing. One point equals 1% of the loan.
Nationally, fix and flip points commonly land in the low single digits, and short-term rates on these loans typically run higher than a conventional mortgage — that's the tradeoff for speed, a rehab holdback, and a review built around the deal instead of your W-2. Your actual rate and points depend on the specific property, your experience, and the deal structure, and are set by our Approval Team, not quoted here as a fixed number.
What matters more than the sticker figures is what they mean in dollars over your real hold period, which is the next section.
These figures are illustrative only, meant to show how the pieces connect — not a quote.
Say you're buying a Bridgeport two-family for $220,000, with a $60,000 rehab budget and an ARV of $370,000 based on solid comps. Total project cost is $280,000, comfortably inside a typical ARV-based cap.
You budget a six-month hold: two months of permitting and rehab, one month of punch-list and staging, and a conservative three months to find a buyer and close, since days-on-market swings widely between Connecticut towns.
At resale, before you count your rehab and holding costs, Connecticut's conveyance tax comes off the top: 0.75% state tax on the first $800,000 of the sale price, plus a municipal conveyance tax that's typically 0.25% (some towns run higher). On a $370,000 sale, that's roughly $3,700 in the aggregate — money that isn't in most national flip calculators because most states don't charge it this way.
Add attorney fees for the purchase and the sale — Connecticut requires an attorney at closing on both ends, unlike states where a title company alone can close the deal — plus your interest carry over the actual six months you held the loan, and your real profit is meaningfully lower than "ARV minus purchase minus rehab." Run the full stack before you fall in love with a deal.
A few things that surprise out-of-state investors and first-time CT flippers alike:
If your plan after the flip is to refinance into a rental instead of selling, it's worth understanding DSCR investor loans before you start the rehab, since the exit strategy changes what "done" looks like. And if you're weighing a flip against buying your next primary residence before selling your current one, that's a different tool — see how a bridge loan works.
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ARV, or After-Repair Value, is what the property is expected to be worth once the rehab is complete. Lenders size fix and flip loans off ARV rather than the current purchase price, which is why an accurate, comp-based ARV matters more than almost anything else in the deal.
Most fix and flip loans release rehab funds in three to six draws, timed to phases of the work. Each draw is typically inspected before funds are released, so your contractor's ability to hit a schedule directly affects how fast you get paid.
Yes. Fix and flip and other hard money financing are business-purpose, investment-property loans and are not available for owner-occupied homes.
Yes. Connecticut's conveyance tax applies at resale: a 0.75% state tax on the first $800,000 of the sale price, plus a municipal conveyance tax that's typically 0.25% (higher in some towns). Build it into your exit math, not just your purchase math.
This varies by lender and deal, so ask directly before you close. Some situations can be resolved with a change order or a revised draw schedule; larger overages may require additional funds from the borrower. Confirm the process up front rather than mid-rehab.
Many investors do exactly that, typically by refinancing into a DSCR loan once the rehab is complete and the property is rent-ready. Decide your likely exit early, since it can affect how you plan the rehab scope.
Written by Gaetano Ciambriello, Home Finance Advisor at AFC Mortgage Group (NMLS #1783508).
AFC Mortgage Group LLC | NMLS #2801 | Monroe, CT | Equal Housing Lender.
This article is for educational purposes only and is not a commitment to lend. It does not quote or guarantee any rate, term, or approval, and it does not constitute financial, tax, or legal advice. Program guidelines, terms, and availability vary and are subject to change. All loans are subject to credit approval, property approval, and Approval Team review.
Business-purpose and investment-property loans are offered through AFC Credit Partners and are not available for owner-occupied properties.
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