Fix and Flip Loans: Turning Ugly Houses into Profitable Investments

So, you’ve been watching a little too much HGTV and think you’ve got what it takes to flip a house? We love the enthusiasm! But before you start knocking down walls and installing shiplap, let’s talk about how you’ll actually finance that dream flip—because spoiler alert: traditional mortgages aren’t built for fixer-uppers. Enter fix and flip loans, the real MVPs of the house-flipping world.

What Is a Fix and Flip Loan?

A fix and flip loan is a short-term, asset-based loan designed for real estate investors looking to purchase, renovate, and sell a property for profit. Unlike traditional mortgages, these loans focus less on your personal income and more on the property’s potential value—because let’s be real, most flippers aren’t W-2 employees with pristine tax returns.

What Makes Fix and Flip Loans Special?

Unlike conventional loans, fix and flip loans:

✅ Omit Personal Income Verification – No tax returns, W-2s, or pay stubs required. Your income isn’t the star of the show here—your ability to manage the project is.

✅ Rely on Credit Score & Bank Statements – Lenders want to see you have solid financial management. Most require bank statements with seasoning (typically 2-3 months) to prove you have the funds needed to handle the deal.

✅ Fund Properties in Need of TLC – Traditional loans frown on fixer-uppers. Fix and flip loans? They embrace them!

✅ Short-Term Focus – These loans typically last 6-18 months, so you need to have an exit strategy (i.e., sell or refinance) before the clock runs out.

Fix and Flip Loan Requirements

Let’s break down what you’ll need to qualify:

🔹 Down Payment – Usually 10-25% of the purchase price, depending on your experience and credit score. The more seasoned you are, the less you may need to put down. Some lenders will cover 90-100% of the renovation cost for higher credit scores and experienced investors.

🔹 Credit Score – Most lenders want to see at least a 620-680 credit score, but the higher, the better.

🔹 Bank Statements & Reserves – You’ll need seasoned bank statements (typically 2-3 months old) to show you have the funds for the down payment, closing costs, and at least 3-6 months of reserves to cover loan payments.  Some lenders have waived or reduced seasoning requirements, but this is not for investor that not doing this full-time.

🔹 Asset-Based Approval – The lender’s primary concern is the After-Repair Value (ARV) of the property, meaning they’ll focus on what the home will be worth after renovations rather than its current condition.

Final Thought: Is a Fix and Flip Loan Right for You?

If you’ve got a keen eye for distressed properties and a solid plan for turning them into goldmines, a fix and flip loan can be your best friend. Just remember—this isn’t free money. You’ll need skin in the game, financial reserves, and a timeline that doesn’t involve endless renovation delays.

Think you satisfy the criteria in this article and are ready to get started on your first (or next) flip? Click HERE Let’s chat and get you funded!