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I am the author of this blog and also a top-producing Loan Officer and CEO of InstaMortgage Inc, the fastest-growing mortgage company in America. All the advice is based on my experience of helping thousands of homebuyers and homeowners. We are a mortgage company and will help you with all your mortgage needs. Unlike lead generation websites, we do not sell your information to multiple lenders or third-party companies.
What are Fix and Flip Loans?
If you are “flipping a house,” that is, buy a home for less, fix it up, and then resell for more, you would need a Fix and Flip loan. These loans are for investment property and are also called rehab financing.
How much loan can I get?
Though the best terms are usually reserved for experienced investors with excellent credit and high down payment, you don’t need to have a history of successful real estate investments to get this kind of loan. Our loans are available for both experienced and beginner investors. The loan amounts are typically between $200,000 and $2 million.
The Loan amount is based on the estimated after-repair value, called ARV in short. We fund 75% of standard rehab and 70% of extensive rehab costs. The costs can include hard (construction) or soft (e.g., permits) costs.
These are short-term 12 months with interest-only payments and fixed interest rates. The title can be held in individual and even entity (corporations, LLC) names.
Fix and Flip Loans with Bad Credit
A minimum credit score of 620 is required. You can get hard money or bridge loans with a lower credit score but typically at a significantly higher rate and closing costs. A hard money loan can carry an interest of 12% to 15% or even higher. A credit check is required irrespective of the loan type.
The other good option can be an FHA 203k loan which allows for a credit score as low as 580, and you can borrow between $5,000 and $35,000. These loans are for primary residence only, and you can put down as little as 3.5%. Fannie Mae also offers HomeStyle renovation loans.
Eligible and Ineligible Property Types
Eligible: The property has to be non-owner occupied (investment property). Single Family Home, Townhomes, 2-4 units, Multi-family, and Mixed-use, are all eligible property types.
Ineligible: The project scopes that are ineligible for fix and flip loans are – tear downs, modular, ADUs, adding a story, adding a unit, removing exterior walls, adding >500 sq. ft., conversions, and new construction.
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