After-repair value (ARV) is the estimated market value of a property once all planned renovations are finished. It is the single most important number a fix-and-flip or rehab lender looks at. Get it right, and you size your deal correctly. Get it wrong, and you either overpay or run short on funding.
Bancaverse is a broker, not a lender. This is general information on business-purpose, non-owner-occupied investment financing only. It is not consumer mortgage or legal advice.
What is after-repair value (ARV)?
ARV answers a simple question. What will this property be worth after the work is done?
It is not today’s price. It is not the cost of the renovation. Instead, it is the future value, once the property is fully repaired and ready to sell or rent.
For business-purpose investors, ARV drives almost every lending decision. Lenders use it to set loan size, leverage, and risk.
How lenders use after-repair value (ARV)
Most fix-and-flip and rehab lenders cap the loan at a percentage of the after-repair value (ARV). This is called the loan-to-ARV ratio, or LTARV.
Typically, that cap sits between 65% and 75% of ARV. As a result, a higher ARV can unlock a larger loan.
Lenders rely on ARV for three main reasons:
- To size the loan. The maximum loan is usually a set percentage of ARV.
- To measure risk. A strong ARV gives the lender a cushion if the deal goes sideways.
- To check the exit. ARV shows whether the sale or refinance will repay the loan.
The 70% rule explained
Many flippers use a quick shortcut called the 70% rule. It helps you decide what to pay for a property.
The formula is simple:
Maximum purchase price = (70% × ARV) − repair costs.
For example, say a renovated home should sell for $400,000. Repairs will cost $60,000.
- 70% of $400,000 = $280,000.
- $280,000 − $60,000 = $220,000.
So you would aim to pay no more than $220,000. The rule builds in room for financing costs, holding costs, and profit.
How after-repair value (ARV) is calculated
ARV is based on comparable sales, often called comps. These are recently sold properties that are similar to yours after renovation.
Appraisers and lenders look for comps that match on:
- Location and neighborhood
- Size, beds, and baths
- Condition and finish level
- Recent sale date
On most deals, the lender orders an as-repaired appraisal. The appraiser reviews your scope of work. Then they estimate the value as if the work is already complete.
In short, ARV is an informed projection, not a guess. Strong comps make it credible.
How much can you borrow against ARV?
Your loan amount usually depends on two limits. The lender applies whichever is lower.
- Loan-to-ARV (LTARV): a percentage of the after-repair value, often 65% to 75%.
- Loan-to-cost (LTC): a percentage of your purchase price plus rehab budget, often 80% to 90%.
Here is a quick example. Suppose the ARV is $400,000 and the lender offers 70% LTARV.
- 70% × $400,000 = $280,000 from the ARV side.
Next, the lender checks LTC. If your total cost is $300,000 and the LTC cap is 90%, that allows $270,000.
Therefore, your loan would be $270,000. That is the lower of the two figures.
ARV vs. price vs. cost
These three numbers are easy to confuse. They are not the same.
- Price: what you pay to buy the property today.
- Cost: purchase price plus the renovation budget.
- ARV: what the property is worth after the work is done.
Lenders care most about ARV and cost. Together, they show both the upside and the money at risk.
Why ARV matters even more in 2026
Lending is tighter than it was a few years ago, and many owners now face the 2026 CRE maturity wall. As a result, lenders lean harder on the ARV cushion.
Conservative comps and a clear scope of work now carry real weight. They can be the difference between a funded deal and a declined one.
Moreover, a credible ARV strengthens your exit. It shows how a sale or a refinance will repay the loan on time.
A worked example, from offer to exit
Imagine a dated single-family home in a strong rental market. Renovated comps sell for about $350,000.
You estimate $50,000 in repairs. Using the 70% rule, your target purchase price is $195,000.
- 70% × $350,000 = $245,000.
- $245,000 − $50,000 = $195,000.
You buy at $190,000, just under target. A lender funds 70% of the $350,000 ARV, or $245,000.
That covers most of your purchase and rehab. Finally, you sell at the ARV, repay the loan, and keep the profit.
Common ARV mistakes to avoid
A wrong ARV is one of the fastest ways to lose money on a flip. Watch for these traps.
- Using weak comps. Old or dissimilar sales inflate the number.
- Ignoring the finish level. Buyers pay for quality, so match comps to your real scope.
- Assuming a hot market holds. Build in a margin for softer conditions.
- Skipping holding costs. Taxes, insurance, and interest all eat into profit.
When in doubt, be conservative. A realistic ARV protects your downside.
Frequently asked questions
What does ARV mean in real estate?
ARV stands for after-repair value. It is the estimated market value of a property once all planned renovations are complete.
What is the 70% rule?
The 70% rule says you should pay no more than 70% of the ARV minus repair costs. It is a quick screen for whether a flip can be profitable.
How much can I borrow on a fix-and-flip?
Most lenders fund 65% to 75% of the ARV, limited by a loan-to-cost cap near 80% to 90%. The lower limit applies.
Is an ARV loan a consumer mortgage?
No. ARV-based fix-and-flip and rehab loans are business-purpose financing for investment property. They are not consumer or owner-occupied mortgages.
Get matched with the right rehab lender
The right loan starts with a credible ARV and a lender who understands your plan. Bancaverse represents you, the borrower. We present your deal to a network of private and institutional lenders. Then we return competing offers, so you can compare leverage, rate, and speed on the same project. Reach out to price your next fix-and-flip or ground-up deal.
ARV in a BRRRR or rental refinance
ARV is not only for flips. It also drives the refinance step in a BRRRR strategy. BRRRR stands for buy, rehab, rent, refinance, repeat.
After the rehab, a lender refinances the stabilized property based on its new value. That value is the ARV. A higher ARV returns more of your capital, so you can move on to the next deal. Private lenders increasingly fund this cycle; see the state of private credit in 2026.
In both cases, the lesson is the same. A credible ARV unlocks better leverage and a cleaner exit.
How to strengthen your ARV case
You can make your ARV easier to approve. A little preparation goes a long way.
- Pull three to five recent comps within about a mile, sold in the last six months.
- Match the finish level of your renovation to the comps you cite.
- Document your scope of work with a clear budget and timeline.
- Note any value-add features, such as an added bedroom or updated systems.
As a result, the appraiser and the lender can verify your number quickly. That speeds approval and protects your leverage.
Ultimately, after-repair value (ARV) is the foundation of every rehab deal. Estimate it carefully, support it with strong comps, and the rest of the financing falls into place. Start there, and you put yourself in a position to win the deal and the loan.
