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House flipping loans: the options and how to qualify
Most house flippers use short-term hard money loans. Here are the options, what they cost and how to get approved.
Get my termsHouston hard money lenderWhat loans do house flippers use?
Most house flippers use hard money loans: short-term loans from private lenders that cover the purchase and the renovation and are paid off when the house sells. Others use private money from individuals, a HELOC on another property, or cash. Hard money is the most common because it closes in days and lends on distressed houses banks will not.
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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.
House flipping loan options
| Option | Speed | Best for |
|---|---|---|
| Hard money loan | Days | Most flips; distressed houses |
| Private money from an individual | Varies | Investors with a funding partner |
| HELOC | Weeks | Owners with equity in another property |
| Bank loan | Weeks to months | Livable houses, strong income |
| Cash | Immediate | Small deals, no financing cost |
How lenders size a flip loan
They compare your total cost with a share of the after-repair value. With us: 100% of purchase and rehab, up to 70% of ARV.
| Flip | Amount |
|---|---|
| Purchase | $180,000 |
| Rehab | $60,000 |
| Total cost | $240,000 |
| ARV | $360,000 |
| Loan | $240,000 |
How to qualify
- Buy well below ARV; use the 70% rule calculator
- Get real contractor bids for the rehab
- Form an LLC
- Keep cash for closing costs and holding costs
Full list: hard money loan requirements.
What it costs
Expect an interest rate and points; see hard money loan rates. Factor interest into your holding costs along with taxes, insurance and utilities.
Questions investors ask
Straight answers about house flipping loans.
What is the best loan for flipping houses?
For most flips, a hard money loan, because it closes fast and lends on the deal and distressed houses.
Can I get a loan to flip a house with no money?
Yes, if the deal fits. We fund 100% of purchase and rehab up to 70% of ARV. See how to flip a house with no money.
How long are house flipping loans?
Usually 6 to 18 months.
Do house flipping loans cover renovation?
Ours cover 100% of the rehab budget, paid as the work is done.
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