What closing costs to expect on a fix and flip
Published November 9, 2026
Most first-time flippers run their numbers the same way: purchase price, plus rehab budget, subtracted from what the house should sell for. Whatever’s left looks like profit.
The gap in that math is closing costs. A flip has two closings, one when you buy and one when you sell, and each comes with its own stack of fees. On a typical deal the two together can take a third or more of the spread you were counting on. None of it is hidden, but it’s easy to underestimate, especially the first time.
Here’s what to expect at each closing, why the numbers change so much from one place to the next, and how to build them into your budget before you make an offer.
Closing #1: when you buy
Lender costs
With a fix and flip loan, most of your buy-side costs come from the lender.
- Points. An upfront fee calculated as a percentage of the loan amount. One point is 1% of the loan. Flip loans often carry somewhere between one and three, and first-time borrowers tend to land toward the higher end.
- Lender fees. Underwriting, processing, document preparation and similar charges. Some lenders roll these into the points, others list them separately.
- Appraisal or valuation. Many lenders order an appraisal or a broker’s opinion of value, often including the after-repair value (ARV). You usually pay for it up front, even if the deal doesn’t close.
- Draw setup. If your rehab money is released in stages, some lenders charge a fee per draw inspection. That’s not a closing cost exactly, but it’s worth asking about now so it ends up in your budget.
Title, escrow and government costs
- Title insurance. The lender will require a lender’s title policy, which protects them if a problem with the property’s ownership history turns up later. Depending on local custom, you may also be buying or splitting the cost of an owner’s policy.
- Escrow or settlement fees. Whoever runs the closing charges for it. Depending on your state, that may be a title company, an escrow company or an attorney.
- Recording fees. The county charges to record the deed and the lender’s mortgage or deed of trust.
- Transfer taxes. Some states charge a tax when property changes hands, some cities and counties add their own on top, and some places charge little or nothing. Whether the buyer or the seller pays is often a matter of local custom.
- Prepaids. Insurance for the property (usually a builder’s risk or vacant property policy during a rehab) and sometimes a share of property taxes.
Closing #2: when you sell
This is the closing first-timers most often leave out entirely.
- Agent commissions. Usually the largest selling cost by far if you list with an agent. Commissions are negotiable, and how they’re structured has been changing, so get real numbers from local agents rather than relying on an old rule of thumb.
- Owner’s title policy. In many places the seller pays for the buyer’s title insurance. In others, the buyer does.
- Transfer taxes, again. If your area charges them and local custom puts them on the seller, you pay a second time.
- Settlement fees and loan payoff. Another round of escrow or attorney fees, plus whatever it costs to pay off and release your loan.
- Seller concessions. If the buyer’s inspection turns something up, or the market cools, you may end up covering part of the buyer’s closing costs or offering a repair credit.
What it looks like on a real deal
Here’s a simple, made-up example. Your numbers will be different, but the shape is usually the same.
You buy a house for $250,000, put $60,000 into the rehab and sell it for $375,000. On paper, that’s a $65,000 spread.
Your lender covers 85% of the purchase and all of the rehab, so the loan is $272,500.
| Buy-side costs | |
|---|---|
| 2 points on the loan | $5,450 |
| Lender fees | $2,000 |
| Title and escrow | $2,500 |
| Recording and other fees | $500 |
| Transfer tax (0.5%) | $1,250 |
| Total | $11,700 |
| Sell-side costs | |
|---|---|
| Agent commissions (5%) | $18,750 |
| Owner’s title policy | $1,800 |
| Transfer tax (0.5%) | $1,875 |
| Settlement and payoff fees | $1,000 |
| Total | $23,425 |
Together, that’s $35,125 in closing costs. The $65,000 spread is now about $29,900, and that’s before interest payments, insurance, utilities and property taxes during the months you own the house. (Holding costs deserve their own post. Plan on them too.)
The deal can still be a good one. But you’d much rather know it’s a $30,000 deal before you make the offer than find out at the second closing.
Keep in mind that the transfer tax and title lines are the ones that swing the most by location. In this example they’re modest. In some places they’d be close to zero, and in others they could be several times higher.
How much does the loan itself cost?
Points and fees are only part of what a fix and flip loan costs. The rest is interest, and that depends on how long you keep the loan.
Most flip loans are interest-only, so each month you pay interest on the money you’ve drawn so far. Because rehab funds are released in stages, your balance (and your payment) usually grows as the work progresses.
Back to the example. Say the rate is 11% (a made-up figure; yours depends on the lender, the deal and your experience), and the whole project takes six months from purchase to sale:
- Interest on the $212,500 used for the purchase runs about $1,950 a month from day one.
- The $60,000 rehab money adds up to about $550 a month once it’s all drawn.
- Over six months, interest comes to roughly $13,500.
Add the $5,450 in points and $2,000 in lender fees, and the loan costs about $21,000 in total. The points and fees were already counted in the buy-side closing costs, so the interest is what’s new: it takes the spread from about $29,900 down to about $16,400, still before insurance, utilities and property taxes.
The biggest lever is time. Once the rehab is fully drawn, every extra month costs about $2,500 in interest alone. A project that drags from six months to nine adds about $7,500, close to half of what’s left. That’s why a realistic timeline (permits, contractor availability, how long houses take to sell where you’re buying) matters as much as a good rate.
When you compare lenders, compare the total cost over your expected hold, not just the rate or just the points. A lower rate with more points can cost more on a short project, and the reverse can be true on a longer one.
Why the numbers vary so much by location
Closing costs are surprisingly local. Two identical deals in neighboring states, or even neighboring counties, can come out thousands of dollars apart because of:
- Transfer taxes. Whether there is one, how much it is and whether cities or counties add their own.
- Who pays what. Local custom decides whether the buyer or seller pays for the owner’s title policy, the transfer tax and the escrow fees.
- Who runs the closing. In some states an attorney has to be involved. In others a title or escrow company handles everything.
- Title insurance rates. Some states set them by regulation, others leave them to the market.
- County fees. Recording fees and practices vary from one county to the next.
National calculators and online rules of thumb are fine for a rough sense of things. They aren’t a substitute for numbers from people who close deals where your property is.
Why a lender who closes deals in your area helps
A lender who regularly funds flips in your market has already closed deals like yours with the local title companies, under the same county’s fees and the same local customs. That helps you in a few practical ways:
- A realistic estimate up front. They can tell you what their own costs will be and give you a solid sense of what title, recording and transfer taxes usually run locally, before you commit to a purchase price.
- Fewer surprises at the closing table. They know the local requirements and paperwork, so last-minute fees and delays are less likely.
- Better resale math. A lender who knows the market can sanity-check your ARV and your selling assumptions, which is where the second set of closing costs comes from.
A quick checklist before you make an offer
- Ask your lender for a term sheet that lists the rate, the points, every fee and the draw costs, and work out the total over your expected hold.
- Ask a local title company or closing attorney for an estimate of buy-side and sell-side closing costs for your price range.
- Find out whether your area has a transfer tax and who customarily pays it.
- Get real commission numbers from a local agent, or price out your selling plan if you’ll sell another way.
- Subtract both closings, plus a few months of holding costs, from your spread. If the deal still works, you’re ready.
When you’re ready, the application takes a few minutes. We’ll walk you through the details lenders ask about and connect you with a lender who funds flips in your area.