Fix and flip loans are short-term, real estate loans designed to help an investor purchase and renovate a property in order to sell it at a profit—generally within 12 to 18 months.
Though your credit history is evaluated by fix-and-flip lenders, it’s not weighted as heavily as it is with a traditional home loan.
Lenders will, however, expect borrowers to have adequate cash reserves, equity in other properties, and, some real estate investing experience.
The flexibility built into a hard money fix and flip loan is good news for borrowers, but it definitely doesn’t mean that lenders are handing cash to anyone who decides they want to try flipping houses. It also doesn’t mean that all fix and flip lenders are the same.
When you’re ready to get started, you’ll need to first find the right lender and then make sure they’re willing to invest in you.
While bad credit can make it difficult to get a fix-and-flip loan, it’s not impossible. FHA loans, for instance, have a minimum credit score of 500 to 579 with a 10% down payment.
However, if you don’t have good credit, expect to put up more capital for the investment, have substantial equity in other properties, or be able to demonstrate previous (successful) house-flipping experience.
There are two fix-and-flip loan options to consider: bridge loans and the FHA 203(k) rehabilitation loan. A bridge loan provides short-term financing to borrowers, either until they can secure more permanent funding or until the project is complete.
Bridge loan requirements will vary from one lender to the next. Some bridge loan lenders may require you to meet the same underwriting requirements as a standard home mortgage, while some lenders don’t require a credit check, a minimum credit score, income verification, or any prior real estate investment experience.
If you have bad credit and are considering a bridge loan, shop around with multiple lenders. Bridge loans tend to have higher interest rates and steep closing costs that can be as much as (or more) than those of a traditional home loan.
With an FHA 203(k) rehabilitation loan, borrowers with credit scores as low as 500 can borrow between $5,000 and $35,000 for a fix-and-flip. There are no income limits to qualify for a 203(k) loan, and down payment requirements are as low as 3.5% of the loan amount with a credit score of 580 or higher. There are origination fees and other costs involved with a 203(k) loan, as well.
There are many ways to flip houses with no money. Some options include partnering up with another investor, taking out a hard money loan, pulling from existing home equity on another property, crowdfunding, and in some cases, requesting a lease or owner financing.
Our rehab loans help you minimize out-of-pocket expenses for both rehab and construction costs.
Fix and flip loans are short-term, real estate loans designed to help an investor purchase and renovate a property in order to sell it at a profit—generally within 12 to 24 months.
If you need liquidity and cash flow management assistance (to ensure your project gets completed) this loan is for you. This is a great program for investors that fix & flip properties quickly. We finance both acquisition AND renovation costs.
The more experience an investor has, the fewer out-of-pocket costs there will be. The more real estate investment experience you have, the fewer out-of-pocket costs there will be.
The process is very simple:
Fix and flip loans are most often used to purchase residential properties at auction or foreclosure, to finance renovations and upgrades, and to cover other expenses associated with the ownership of the property.