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Fix and flip loans: how they work and what they cover
A fix and flip loan pays for a house you plan to renovate and sell. This guide explains how lenders size these loans, with the terms we offer on Houston flips.
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Estimate only. Loan amount is the lower of 100% of purchase plus rehab or 70% of the sale price when finished (after-repair value). Minimum loan $150,000. Business-purpose loans on investment property.
What a fix and flip loan is
A fix and flip loan is short-term financing for an investor who buys a house, renovates it and sells it. You may also see it called a house flipping loan, a rehab loan or a hard money loan for flipping houses.
It is sized on the deal: what you pay, what the rehab costs and what the finished house should sell for.
How lenders size loans for flipping houses
Lenders look at two limits. One is a share of your cost, meaning the purchase price and the rehab budget. The other is a share of the after-repair value. The loan is the lower of the two.
Many lenders fund only part of the purchase price, which leaves the investor to bring the rest in cash. We fund 100% of the purchase and 100% of the rehab, up to 70% of the after-repair value.
| Deal | Amount |
|---|---|
| Purchase price | $180,000 |
| Rehab budget | $60,000 |
| Total cost | $240,000 |
| After-repair value | $360,000 |
| 70% of after-repair value | $252,000 |
| Loan amount | $240,000 |
What to compare between fix and flip lenders
- Share of purchase funded. This decides how much cash you need on closing day.
- Share of rehab funded. This decides whether the work is paid from the loan or from your pocket.
- After-repair value limit. This caps the loan and tells you how cheaply you must buy.
- Days to close. A faster close makes your offer stronger.
- Smallest loan. Some deals are too small for some lenders.
Our fix and flip loan terms
| Term | Houston Private Money |
|---|---|
| Purchase price funded | 100% |
| Rehab budget funded | 100% |
| Loan limit | 70% of after-repair value |
| Time to close | 5 days |
| Smallest loan | $150,000 |
| Where we lend | Houston area |
We lend in the Houston area. See Houston fix and flip loans for details.
Questions investors ask
Straight answers about fix and flip loans.
What is a fix and flip loan?
Short-term financing for an investor who buys a house, renovates it and sells it. The loan is sized on the purchase price, the rehab budget and the after-repair value.
What does 100% fix and flip financing mean?
We fund 100% of the purchase price and 100% of the rehab budget, as long as the total loan is no more than 70% of the after-repair value.
What is after-repair value?
After-repair value, or ARV, is what the house should sell for once the rehab is finished. It is usually based on recent sales of renovated houses nearby.
Where do you lend?
We lend on investment houses in the Houston area.
How fast can you close?
We can close in 5 days.
More from Houston Private Money
Loans, calculators and guides for Houston fix and flip investors.