Traditional bank mortgages weren't built for flips. Banks want 30-45 days to close, and they want the property in move-in condition before they'll fund it. Most flip properties are neither. That gap is exactly why specialized fix-and-flip financing exists.
This guide breaks down the loan types available, how lenders actually qualify deals, the 70% rule investors use to protect their margins, and what to look for when picking a lending partner.
Key Takeaways
- Flip financing is short-term and asset-based: lenders care about the property's after-repair value (ARV), not your W-2
- Hard money and DSCR-style loans allow approval with lower credit and less paperwork than conventional mortgages
- 70% rule caps your purchase offer so profit margin is protected before you sign a contract
- Lender fit hinges on speed, leverage, draw flexibility, and how credit or experience gaps are treated
How Do I Finance a House Flip?
A flip loan has to cover more than the purchase price. Build your budget around four cost categories:
- Purchase price — what you pay to acquire the property
- Renovation costs — materials, labor, permits
- Carrying costs — insurance, taxes, utilities, loan interest while you own it
- Selling costs — agent commissions, closing costs, staging
Lenders evaluate deals through two ratios instead of your income statement:
- Loan-to-Cost (LTC): how much they'll lend against your total acquisition-plus-rehab budget
- Loan-to-ARV: how much they'll lend against the property's projected finished value
On many flip programs, renovation LTC can run as high as 95–100%, while loan-to-ARV is usually capped around 65–70%. That gap matters. A high LTC still will not mean zero cash out of pocket if the ARV cap binds first.
The Typical Process
- Get pre-qualified based on your credit, experience, and the deal itself
- Estimate ARV using recent comparable sales in the neighborhood
- Submit bids and scope of work so the lender knows exactly what you're rehabbing
- Close and draw funds in stages as renovation milestones are completed
Down payments on flip loans commonly run 10-25%, with the exact number tied to leverage limits and your track record as an investor. An investor-focused network like Kingdom Capital Financial can simplify the search: instead of forcing your deal into one bank's box, you get matched with lending partners fitted to the project and your experience level.
What Types of Loans Are Used for House Flip Financing?
Hard Money / Fix-and-Flip Loans
These are short-term, asset-based loans from private lenders. Approval focuses on the deal, not your tax returns, and funding happens fast.
- Terms: typically 6-18 months, interest-only
- Structure: purchase funds plus a rehab draw schedule released as work completes
- Pricing: AAPL reported 2023 national bridge loan rates of 10.97%–11.27%; recent market averages have run near the low-10% range
Rates move with the market, so treat any figure as a benchmark, not a quote.
DSCR and Cash-Flow-Based Loans
DSCR loans qualify you based on the property's rental income, not your personal income or tax filings. They're a natural fit for investors who buy a flip, then decide to hold it as a rental instead.
Kingdom Capital Financial helps investors arrange DSCR financing for exactly this scenario:
- Credit scores accepted as low as 575
- No tax returns or financial statements required
- Qualification based on current or anticipated rental cash flow
- No limits on collateral type or number of financed properties
Home Equity Loans, HELOCs & Cash-Out Refinance
If you own another property with equity, you can borrow against it for a lower rate than hard money offers. The catch: that property becomes collateral. Miss payments, and you're risking a home you already own, not just the flip.
Other Options: Personal Loans, 401(k) Loans, Private/Partner Financing
- Personal loans: faster but usually smaller amounts and higher rates
- 401(k) loans: tap your own retirement funds; weigh repayment terms and retirement risk
- Private/partner financing: capital from personal connections or a business line of credit; more flexible, less standardized
ATTOM's 2025 flipping data shows 37.7% of flips were financed, up from 36.9% the year before. Cash still dominates, but the financed share is growing.
Understanding the 70% Rule and Other Key Metrics
The 70% rule is an investor heuristic, not a law or a lender mandate. It's a quick gut-check before you make an offer.
Formula: Maximum purchase price = (ARV × 70%) − estimated repair costs, where ARV is the after-repair value.
According to Rocket Mortgage's breakdown of the rule, the rule builds in a profit cushion. That buffer is meant to absorb financing costs, holding costs, and the unexpected repair you didn't budget for before they eat into your margin.
Example:
- ARV: $300,000
- Repair estimate: $40,000
- Calculation: $300,000 × 0.70 = $210,000; then $210,000 − $40,000 = $170,000 maximum offer
ARV vs. LTC vs. LTV
- ARV (After-Repair Value): what the home will be worth once fully renovated, based on comparable sales
- LTC (Loan-to-Cost): loan amount as a share of total acquisition plus rehab costs
- LTV / LTARV: loan amount versus as-is value (LTV) or completed value (LTARV)
According to Urban Institute data, loan-to-as-is-value is usually capped around 75-80%, while loan-to-ARV sits lower, around 65-70%. Confirm which denominator your lender is actually using. Comparing an LTC quote to an LTARV quote is comparing apples to oranges.
How Much Can You Profit From Flipping a House?
Your profit ceiling gets set the day you buy, not the day you sell. Overpay at acquisition, and no amount of granite countertops fixes that math.
National benchmark: ATTOM's 2025 data puts the typical flip's gross profit at $65,981, or a 25.5% gross ROI — the widest margin in years, but that's gross, before expenses.
What eats into that gross number:
- Carrying costs — insurance, taxes, utilities, and monthly loan interest while you hold the property
- Financing costs — points, origination fees, and prepaid interest
- Unexpected repairs — the surprise behind the drywall
- Selling costs — agent commissions, closing costs, buyer concessions
ATTOM estimates rehab and other expenses can run 20-33% of ARV, so budget toward the high end of that range.
Taxes cut deeper still. The IRS treats gains on properties held under a year as short-term capital gains, taxed as ordinary income rather than at the lower long-term rate. That gap can shrink your net take-home well below the gross number you calculated at closing.
Choosing the Right Fix-and-Flip Lender
Not all fix-and-flip lenders operate the same way. Before signing anything, compare:
- Speed to close — some hard money lenders close in days; conventional loans take 30–45+ days
- Leverage terms — how they calculate LTC and LTARV, and what percentage they'll actually fund
- Draw process — how fast rehab draws get released once inspections clear
- Underwriting flexibility — how they treat credit dings or limited flip history
- Fee transparency — points, extension fees, prepayment penalties
A single bank program often forces every deal into the same box. An investor-focused network can match structure to the deal instead. Kingdom Capital Financial connects investors to DSCR, bridge, construction, and fix-and-flip programs through its lending partners, with no limits on collateral type or the number of properties you finance. That flexibility matters when you scale past a first flip into a portfolio.
Before committing, get written terms from at least two or three options. If a rehab could run long, confirm prepayment penalties and extension fees up front—those line items can erase a real chunk of margin.
Frequently Asked Questions
What is the FHA rule on flips?
HUD bars FHA-insured financing on properties resold within 90 days of acquisition. For resales 91-180 days out, a second appraisal is required if the resale price is double or more the seller's purchase price, which limits who can buy your flip with an FHA loan.
Can a 70-year-old get a 30-year mortgage?
Yes. Federal fair lending law (Regulation B) prohibits age discrimination against applicants who can legally contract. Flip loans rarely use 30-year terms, so age is seldom a practical issue.
What credit score do I need for a fix-and-flip loan?
Hard money and DSCR-based lenders often accept scores well below conventional bank thresholds. Kingdom Capital Financial's DSCR program, for example, accepts scores as low as 575 since underwriting centers on the property.
How fast can I close on a fix-and-flip loan?
Private and hard money lenders often close in 5-10 business days, sometimes faster for simple deals. Conventional mortgages typically take 30-45 days.
Do I need prior flipping experience to qualify?
Some lenders work with first-time flippers on smaller projects, while others prefer a completed track record. Terms and leverage can vary based on experience, so ask upfront how a lender treats first-timers.
Can I use a fix-and-flip loan for any property type?
Many investor-focused lenders support single-family, mixed-use, and multifamily collateral, giving more flexibility than traditional single-family-only restrictions. Confirm eligible property types with your specific lender before making an offer.
