How to Get a Loan for Flipping Houses

Flipping houses can be a lucrative business. However, it takes a large amount of money to acquire, fix up, and sell properties quickly!

In fact, flipping houses takes more money than you’d think. On top of the acquisition cost, you still have to pay for the renovations, taxes, utilities, and homeowner’s insurance from the time you acquire it until the time you sell.

If you’ve realized that, and are looking for a way to finance a flip—you’ve come to the right place.

Off the bat, you should know that the process for securing loans for flipping is different versus getting a loan for a home to live in or rent out. You can’t go to traditional mortgage lenders, because many don’t loan money for fix-and-flip projects.

Instead, you’ll go typically through a hard money lender (HML) or private real estate lender. These money lenders loan money with the intent of getting repaid quickly (and charge much higher interest rates), so they are often used for flipping houses.

Up for the challenge? Read on to know how to secure the loan you need to finance your flip.

How loans for flipping houses work

Most loans for flipping houses come in 6-18-month terms, with 12-month fix-and-flip loans being the most common.

Some loans have an initial term with an option to extend. These are generally interest-only balloon payment loans with a fixed interest rate. So, if you get a 12-month loan, you’ll make monthly interest payments for a year before paying the entire principal balance at the end.

In some cases, lenders offer investors the option of not making any payments initially, then just repaying the principal with accumulated interest at the end of the term.

Loans for house flipping cover the entire project—property acquisition and renovation included. The maximum loan amount is calculated in two ways:

  • Loan-to-Cost (LTC): A percentage of the project’s anticipated cost, where the estimated loan amount is divided by the total acquisition, construction, and renovation costs
  • Loan-to-Value (LTV): A percentage of the property’s expected market value after project completion

The decision isn’t up to you, as lenders will default to whatever the smaller loan amount between the two.

How you can qualify for a house-flipping loan

While applying for a traditional mortgage mainly relies on your own ability to repay the loan, applying for fix-and-flip loans is more focused on the property itself and your business plan for it.

You need to justify the loan with a satisfying after-repair value (ARV) and show a realistic renovation budget and timeline. In other words, for house-flipping loans, the lender puts more importance to the LTC and LTV than your income and personal assets.

Where to look for lenders

Ready to take the plunge? Here are some of the places you can find funding for your house flip.


There are plenty of places to find HMLs online, like Lima One Capital and LendingHome (NOTE: we are not endorsing any of these lenders!).

Lima One Capital works with flippers and will lend up to 90% of LTC or up to 75% of LTV, with the fees and interest rates decreasing with a borrower’s flipping experience.

On the other hand, LendingHome offers house flipping loans for up to 90% of the purchase price and 100% of renovation costs, with just a couple of fees and requirements. Their interest rates range from 7.5% to 12%, and the company holds back repayments until after the renovations are complete.

Private lenders

Compared to HMLs, private lenders may be more open to negotiating payment terms or even become a partner on the deal—taking a share of the profits instead of charging interest. They often charge 8-12%, plus 0-2 points, compared to a HML’s 12-15% with 2-5 points.

You can seek out private lenders in real estate networking events— just be confident in approaching and negotiating. You can also find them online, just like HMLs. You can try direct mailing those you find in data broker websites or posting about your project in websites such as BiggerPockets, LendingClub, or LendPost.


You can crowdfund, but there are many legal conditions. Just be aware of state and federal rules. For example, you can’t advertise. They are also strict with reporting—you have to report the right information and structure your dealings properly.

Despite these roadblocks, it’s completely possible to crowdfund a flip. Plus, crowdfunding has been a strategy for decades, although in a different form. Before online crowdfunding websites became popular, people simply combined investor money into an entity (such as an LLC).


If you want to flip houses but don’t have enough money—or if you want to protect your savings—there are plenty of ways for you to get a fix-and-flip loan. These funding options can give you the financial boost you need to achieve your house-flipping dreams!

Remember that fix-and-flip loans are often more expensive than traditional mortgage financing, as there are higher risks involved for the lender. However, outsourcing your funding allows you to get started in the flipping business with little capital and gives you the ability to flip more properties simultaneously to increase your overall profits.

Imagew courtesy of Anastasia Shuraeva