Investor Financing Guide · Texas
Fix & Flip Loans in Lubbock
A fix-and-flip loan funds both the purchase and the renovation of a property you intend to resell — typically 80–90% of total project cost, with the rehab budget held back and released in draws as work completes. For Lubbock flippers, the right loan structure matters as much as the rate: draw speed, extension terms, and the lender's ARV discipline decide whether the project runs smoothly.
The Lubbock market, for investors
Lubbock is a university anchor town — Texas Tech's enrollment drives a perennial student-rental economy at some of the state's lowest entry prices.
Student rentals carry turnover and management intensity that generic vacancy assumptions miss; underwrite to the academic calendar and the market rewards you with strong gross yields.
How flip financing is structured
The loan has two buckets: acquisition funds that wire at closing, and a rehab holdback released in arrears as inspections confirm completed work. You front each phase of construction and get reimbursed — which means your real cash requirement is the down payment plus closing costs plus at least one phase of rehab, not just the down payment.
Pricing mirrors hard money — interest-only at roughly 9.5–12% with 1–3 points as of early 2026 — because it is hard money, specialized for renovation. Some lenders charge interest on the full loan from day one; better structures charge on drawn balances only, which meaningfully cuts carry on larger rehabs. Ask which you're getting.
Experience tiers are explicit: most lenders price and leverage by verified completed projects. Zero-experience borrowers still get funded, but at lower LTC and higher rates — partnering with an experienced GC or co-investor on the first deal often pays for itself in loan terms alone.
The deal math lenders check
Every flip lender runs some version of the same screen: total cost (purchase + rehab + carry + selling costs) against ARV, with the loan capped around 70–75% of ARV. The classic 70% rule — pay no more than 70% of ARV minus rehab — is a rough proxy for the same discipline. If your numbers only work at 80% of ARV, the appraisal will find out before the market does.
Comps drive the ARV, and the appraiser will use finished, renovated comparables — not aspirational listings. The most common failure point in flip financing isn't the borrower's credit; it's an ARV that doesn't survive the appraisal.
Typical terms at a glance
| Typical rates (early 2026) | 9.5% – 12% interest-only |
|---|---|
| Origination | 1 – 3 points |
| Leverage | 80% – 90% of cost; up to 100% of rehab in the holdback |
| ARV cap | ~70% – 75% |
| Term | 9 – 18 months typical for a single-family flip |
| Draws | Inspection-based, in arrears; 3–7 business days per draw is common |
Typical ranges as of early 2026; leverage and pricing step up with verified flip experience. Confirm live quotes before contracting.
Ready to price your deal?
Key Real Estate Capital funds fix-and-flip projects nationwide with draw schedules built for working investors — and can write the DSCR refinance if you decide to keep the property.
Get a Lubbock quote from Key Real Estate Capital →Opens keyrealestatecapital.com.
Model the whole flip, not just the loan
Your numbers
Agent commission + seller closing, % of sale
Taxes, insurance, utilities
Set to 0 for an all-cash flip
Results
Purchase + rehab + closing
$8,925 points + $23,428 interest
7.0% of ARV
≈ 99% annualized
70% rule max offer: $397,500 ($675,000 × 70% − rehab). Your purchase price is above the screen — the full model above is what matters, but margins are likely thin.
What you'll need to qualify
- A deal passing the ARV screen (~70–75% all-in) with renovated comps behind it
- Cash for down payment, closing, and fronting the first rehab phase
- A line-item rehab budget — lump-sum budgets get discounted or declined
- A licensed GC or documented self-GC capability, per lender policy
- An exit: sale comps and days-on-market you've actually checked
The process, step by step
- 1
Underwrite the deal yourself
Run the full model — purchase, rehab, carry, selling costs against ARV — before you write the offer.
- 2
Term sheet + valuation
Same-day quotes are normal; the ARV appraisal is the schedule driver.
- 3
Close
Acquisition funds at closing, rehab holdback established, draw schedule agreed.
- 4
Renovate on draws
Work, inspect, reimburse — keep receipts and photos; clean draw files release faster.
- 5
Sell (or refinance)
Loan pays off at sale. If the market softens, the fallback is renting it and refinancing into DSCR.
Mistakes that cost Lubbock investors money
- Budgeting the rehab without contingency — 10–15% overrun reserve is the professional standard
- Forgetting selling costs: commissions plus seller closing typically take 6–8% of the exit price
- Underestimating draw lag and running out of cash mid-project
- Scope creep past what the neighborhood's comps reward — renovate to the block, not to taste
- No rental fallback underwritten — the flip that must sell is the flip that gets discounted
FAQ
- Can I get a flip loan in Lubbock with no experience?
- Yes — most programs have a first-timer tier with lower leverage (think 80–85% of cost instead of 90%) and modestly higher pricing. Partnering with an experienced GC, or starting with a lighter cosmetic rehab, improves both approval odds and terms.
- How are rehab funds released?
- In arrears, against inspections: you complete a phase, the lender inspects (in person or by photo/video), and reimburses that line of the budget. Plan cash flow for the gap between paying your crew and receiving the draw.
- What if the flip doesn't sell before the loan matures?
- Options are an extension (fee-based, negotiate terms up front), a price cut, or refinancing into a rental loan — the classic exit is a DSCR refinance if the property rents well. Underwrite that fallback before you buy.
- Do flip loans cover 100% of the purchase price?
- Rarely. 80–90% of total cost is the standard envelope, with 100% financing reserved for strong-experience borrowers cross-collateralizing other property. If a lender advertises 100% to everyone, read the fee schedule carefully.