Fix & Flip Home Loans
What is a Fix & Flip Home Loan?
A Fix & Flip Home Loan is a short-term financing solution designed for real estate investors who purchase distressed or undervalued properties, renovate them, and then sell them for a profit. Unlike traditional mortgages, these loans cover both the property purchase and the renovation costs, giving investors quick access to capital and flexibility throughout the project.
Benefits of a Fix & Flip Loan
- Quick access to funds for purchase and renovations
- Flexible terms tailored to short investment cycles
- Often interest-only payments during the renovation period
- Loans based on the property’s after-repair value (ARV), not just its current condition
- Opportunity to maximize profits by improving undervalued homes
Who Should Consider a Fix & Flip Loan?
- Real estate investors targeting distressed or outdated properties
- Contractors or builders who want to finance renovation projects
- Experienced flippers looking to expand their business
- First-time investors entering the house-flipping market
Eligibility
- Typically requires experience in real estate or renovations (though some lenders will work with first-time flippers)
- Credit score of at least 620, though higher scores may qualify for better rates
- A clear renovation plan and cost estimates
- Down payment or equity contribution (usually 10–20% of total project costs)
Is It Right for You?
A Fix & Flip loan may be ideal if you want to move quickly on a property with profit potential but lack the upfront cash to cover both the purchase and repairs. These loans are best suited for investors with a clear plan to renovate and sell within 6–12 months.
Key Requirements
- Property appraisal based on after-repair value (ARV)
- Down payment and/or sufficient reserves
- Solid renovation budget and timeline
- Credit and background checks
Types of Income Used
- Potential future rental or sale proceeds (based on ARV)
- Investor’s documented experience and financial capacity
- Not dependent on traditional W-2 or tax-return income
Documents Needed
- Purchase contract for the property
- Detailed renovation plan and contractor bids
- Appraisal or ARV estimate
- Bank statements or proof of reserves
- Credit report authorization
Advantages Over Other Loan Types
- Designed specifically for short-term investment projects
- Faster approval and funding compared to traditional mortgages
- Allows financing for properties traditional lenders may reject (foreclosures, distressed homes, etc.)
- Flexible repayment options (often interest-only until sale)
Considerations
- Higher interest rates and fees compared to conventional loans
- Short repayment period (usually 6–12 months)
- Requires careful planning and execution to avoid losses
- Investors carry the risk if property doesn’t sell as quickly or profitably as expected
FAQ
Q: How long are Fix & Flip loan terms?
A: Typically 6 to 12 months, though some lenders may offer up to 18–24 months.
Q: Do I need previous flipping experience?
A: Experience is preferred by many lenders, but some will work with first-time flippers if the project is well-documented.
Q: Can I use a Fix & Flip loan for rental properties?
A: These loans are primarily designed for short-term renovations and sales. For rental-focused projects, an Investor Cash Flow (ICF/DSCR) loan may be more appropriate.
Q: What happens if I can’t sell within the loan term?
A: You may need to refinance into another loan type or extend the loan with lender approval (often at an additional cost).
Get started today!
Fill out the questionnaire on this page to start a discussion about your mortgage needs today!
