Updated September 2026 with FLYP's current project figures.
The short answer
A pay-at-closing renovation is underwritten on one test. Take the projected after-renovation value, subtract selling costs and every loan or lien that gets paid before FLYP, and divide what is left by the most that could ever become payable to FLYP. If that ratio is at least 1.30, the project can work. If it is not, we say no.
This post walks through how each number is set, what goes on each side of the ratio, and the situations that get a project declined. Fall is when sellers across Washington are being told yes or no by lenders of every kind, and a plain explanation is more useful right now than another pitch.
How as-is value gets set
As-is value is what a buyer would most likely pay for the home in its current condition, on the market today, with no work done. It is not a Zestimate, it is not the county assessed value, and it is not what the home would have sold for in 2022.
It comes from closed comparable sales in the immediate area, adjusted for condition, layout, lot, and what buyers are currently rewarding. Automated estimates and published medians are a starting point, not an answer. They describe a market in aggregate, not a specific dated kitchen.
Public figures show how much a median moves without any single house changing. NWMLS put King County's median sales price at $859,000 in April 2026 and at $879,500 in July 2026. That shift is mostly a change in which homes happened to sell that month, which is why underwriting works from comps on your street rather than a county median.
What the market is doing right now
Condition discounts are not constant, so the market context matters. Northwest MLS reported 24,888 active listings across its service area at the end of July 2026, up 19.8% year over year, with inventory growing in 25 of its 27 counties. In King County, active listings rose 23.7% year over year to 7,836 in July while closed sales fell 11.9%.
In a market with that much standing inventory, buyers have choices, and a home that needs work tends to get discounted harder than it would when supply is thin. You can check the current statewide and county numbers yourself in the NWMLS monthly snapshot.
How projected value gets estimated, and why it is anchored to comps
Here is the part most renovation programs never explain. Projected value is not calculated as as-is value plus renovation cost plus a markup. Cost does not create value. If it did, every remodel would pay for itself.
Even the most-quoted payback table does not claim that. Zonda's Cost vs. Value Report shows cost recouped varying widely by project type, and its resale figures are estimates built from surveys of real estate professionals and an econometric model, not from actual sale transactions. Treat it as informed opinion, not as proof of what any renovation returns.
Projected value is anchored to renovated comps: what homes of similar size, era, and location have actually closed for after being brought to current finish levels. If updated three-bedroom homes in your neighborhood are closing in a band, the top of that band is the ceiling, not a starting point. Underwriting works below the middle of the band, for three reasons:
- Renovated comps are themselves history. They closed weeks or months ago.
- Every renovation has an execution range. Assuming the best possible outcome is how projections get embarrassing.
- Momentum can reverse during the work. The median days on market for the Seattle-Tacoma-Bellevue metro, tracked monthly from Realtor.com data, went from 36 days in May 2026 to 44 in July. Any projection has to survive a market that moves against it.
Then the scope gets built backward from that value. If updated comps do not support a top-of-the-line kitchen, the scope does not include one. Scope discipline is the main reason a project pencils, and the main reason we sometimes propose a smaller renovation than the homeowner had in mind.
The 1.30 coverage ratio
FLYP requires a minimum 1.30x coverage ratio before taking a project. Stated precisely: projected net proceeds, meaning the projected after-renovation value less selling costs and less the balance of every senior lien, divided by the maximum amount that could ever become payable to FLYP, must be at least 1.30.
That is a 30 percent cushion between what the sale is projected to leave after selling costs and senior liens, and the most FLYP could ever be owed. It is an underwriting safety margin. It is not a return, not a multiplier on the renovation, and not a promise about the sale.
What sits on each side of the ratio
| Item | Where it goes |
|---|---|
| Projected after-renovation value | The starting point, anchored to renovated comps |
| Selling costs, such as commissions, excise tax, and escrow and title fees | Subtracted to reach projected net proceeds |
| Mortgage payoff and every other senior lien | Subtracted to reach projected net proceeds |
| Fixed contract price on the signed estimate | Counts toward the amount payable to FLYP |
| Washington sales tax on the renovation | Counts toward the amount payable to FLYP |
| Signed change orders | Counts toward the amount payable to FLYP |
| County recording fee | Counts toward the amount payable to FLYP |
There is no program fee and no percentage of the sale price. FLYP earns a normal general contractor margin built into the fixed price, the same way any licensed contractor does. The plain-language summary of everything you would sign is at how the process works.
Two worked cases
Hypothetical example, passes. Projected after-renovation value $850,000. Selling costs assumed at 9%, or $76,500. Mortgage payoff $470,000. Projected net proceeds $303,500. The most that could ever become payable to FLYP under the contract, $115,000. Coverage ratio about 2.6. There is real room between the projection and what has to be paid, so a soft comp or a slow spring does not put the homeowner underwater.
Hypothetical example, declined. Projected after-renovation value $715,000. Selling costs assumed at 9%, or $64,350. Mortgage payoff $515,000. Projected net proceeds $135,650. The most that could ever become payable to FLYP, $110,000. Coverage ratio about 1.23, under the 1.30 minimum. The renovation might still be a good idea in a rising market, but it leaves almost no margin for error, and the wrong outcome would cost this homeowner equity they cannot replace. Declining is the honest answer.
What our own underwriting files show
Across the 12 homes that had both an as-is value and a projected after-renovation value, out of 16 homes FLYP had underwritten as of September 2026, the projected lift over as-is value had a median of 27 percent and a range of 1 percent to 89 percent. Read that carefully, because of what it does not say.
Those are projections made during underwriting, on a small sample of homes, not sale results. No FLYP home has sold yet, so there is no sale price, no realized gain and no average return to report. Several files project almost no lift at all, which is part of why some projects get declined. Anyone in this category quoting you a tidy ROI percentage is quoting you a projection too, whether or not they admit it.
The most common reasons a project is declined
- Thin equity. The most common reason by far. A high mortgage balance relative to value means very little is left after selling costs and senior liens, and the ratio never clears 1.30.
- A building-level condo problem. A unit can be beautiful and still be hard to sell at a supportable price because of a special assessment, litigation, a low owner-occupancy ratio, or reserve problems that no interior renovation touches.
- A lot worth more to a builder. In some Seattle and Eastside neighborhoods, land value is close to or above the renovated value of the existing structure. Renovating a teardown is a way to spend money that the market will never pay back.
- A timeline that does not fit. If you need to be out in five weeks, a renovation is not the tool. Under the pay-at-closing structure, interest starts six months after the work is finished at 1.5% per month, and the balance is due ten months after completion whether the home has sold or not. That clock only makes sense if there is real time to market the home.
- A scope that cannot be priced with confidence. Unpermitted additions, structural unknowns, or a foundation question can make a fixed price impossible to stand behind honestly.
Financing conditions are part of the backdrop on every one of these. Freddie Mac's survey had the 30-year fixed rate averaging 6.65% the week of August 20, 2026 and 6.66% the week of August 27, and rates shape both what your buyer can pay and what your alternatives cost.
What a decline actually means for you
A no from underwriting is not a verdict on your home. It means this particular structure does not fit. Usually one of three other paths does:
- List as-is. Price to condition, keep your money in your pocket, and let a buyer take on the project. A cash offer can be arranged if speed matters more than top dollar, and terms depend on the property.
- Pay for the remodel conventionally. If you have cash or want to stay in the home afterward, a paid remodel is not tied to a sale and does not carry the pay-at-closing interest clock or the ten-month due date.
- Do a smaller scope. Paint, floors, lighting and a deep clean move the needle more than people expect, and they do not require a renovation program at all.
The risk that stays on the table even when a project qualifies
Clearing 1.30 is not a sure thing. A homeowner can still lose money or equity on a pre-sale renovation. NWMLS reported the service-area median sales price down 1.5% from July 2025 to July 2026, a reminder that values can move against you while work is underway.
Your home can sell for less than projected. It can take longer than planned. Interest can begin accruing six months after completion, and the balance comes due at ten months regardless of whether the home has sold. Paying the balance early stops the interest, and the deed of trust is released within ten business days of payoff, but the exposure is real and you should treat it that way.
The bottom line
The coverage ratio exists so that a bad outcome is survivable, not so that it is impossible. Anyone telling you a pre-sale renovation cannot lose money is selling, not underwriting. For the tax and title questions that come with any of this, talk to a CPA or an attorney who knows your situation.
If you want to know where your home lands, the underwriting answer comes from your actual numbers, not from an article. You can get started here and we will tell you plainly whether it clears.
