February 27, 2025

Written by: Daly Kay DiNatale

Are you looking to purchase a property in order to fix it up and then flip or sell it? A fix and flip loan, also known as a rehab loan or bridge loan, is the right fit.

With the housing market taking off, you can flip investment properties quickly and make a substantial profit!  Fix and Flip Loans from a private lender offer a great opportunity for real estate investors to take advantage of the current real estate market conditions!

At Capital Funding, we are excited about the opportunity to help real estate investors generate substantial profits with quick turnaround times using our fix and flip loan product.

As a private lender, we are able to offer real estate investors and developers’ turnkey solutions not available through conventional banks such as our fix and flip loan program. The leverage and interest rate of your loan is determined by your credit score and experience and NOT your income!

Fix  and Flip Loans Provide Real Estate Investors With:

• Competitive interest rates, starting at 6.99%+
• Up to 80% loan-to-value ratio (LTV) or 90% LTC (the lower of the two)
• A Quick and Easy loan application process
• No required income documentation such as tax returns or W2 forms
• Excellent Service
• Fast Closings in 1-3 weeks (versus 45-60 days with a bank)
• Minimum loan amount of $100,000 with a maximum loan amount of $10,000,000+
• No Minimum FICO score
• No Debt Service Requirement

Why waste time going to a conventional mortgage lender or a bank when you can obtain similar rates a much rapid pace with no tax returns from Capital Funding!

A hard money lender, such as Capital Funding, is a great finance option when looking for a loan to fund a house flip. Hard money loans are ideal for property investors who are looking for a source of finance to quickly fix and flip a property, particularly if your credit history isn’t subpar. You may have considered other loan options to fund your house flip, including financing from banks and credit unions, peer-to-peer lenders, a home equity loan, or a home equity line of credit (HELOC) but if you have average income, below average credit, or simply do not have the time to wait around for a bank then a hard money loan is a great fit for you!

At Capital Funding, we offer variety of fix and flip loan structures such as a 12 or 24 month interest only loan for beginners and seasoned professionals or developers.

A fix and flip loan program provides real estate investors with the capital needed to purchase or refinance a property which needs renovation or rehab in order to be sold or stabilized.

To qualify as a flip, the investment property must an investment property or spec home which is going to be sold or rented out upon completion and not occupied as a primary residence.

Investors typically buy cheap, run-down, and distressed properties and renovate them quickly to resell at a much higher price, this is commonly known as ‘house flipping.’

You are probably aware that a traditional mortgage can be used to finance a single property – your primary residence. On the other hand, fix and flip loans are used to purchase a real estate investment property in order to renovate it and quickly sell it for a profit. While they were traditionally used to purchase commercial properties, fix and flip property loans are now commonly sourced to buy residential rental properties in order to generate a quick profit for investors. While a conventional loan program focuses heavily on personal income and credit scores (chattel mortgages), fix & flip loan takes into account the potential for significant return on investment in a short period of time after making the necessary capital improvements to the property to sell it.

There are some crucial differences between conventional mortgage loans offered through banks and investment property loans, and these can be particularly challenging for rental investors obtaining financing from a local bank versus a private lender such as Capital Funding.

1. PROPERTY TYPE

To qualify for Fix and Flip, your chosen real estate must fit into qualifying categories: single-family properties, multifamily units, townhouses, planned unit developments, or condominiums. Commercial Office, Retail, Industrial, and Multifamily will fit on Capital Funding’s Commercial Program but not as an asset type on the SFR Fix and Flip Program.

When obtaining a traditional mortgage, the condition of the property is a key consideration and will help to determine the value and acceptance of the loan. The as-is condition must be deemed suitable to justify the mortgage. With fix and flip loans, the condition of the property is typically bad so hard money lenders focus more on the after-repair value of the property versus the “as is” value.

2. INTEREST RATES

Interest rates and fees are typically higher on an investment property given investment properties are perceived to have more risk due to the speculation. However the gap between conventional and rental investment loan rates has shrunk in the last year as capital markets have opened up in their appetite in purchasing fix and flip bridge loans.

Fix and flip loans are designed to offer a short-term finance solution, lasting around 12 t0 24 months, with investors making interest-only payments each month. Traditional mortgages, on the other hand, are long-term loans typically amortized over a term of between 15 and 30 years.

3. DOWN PAYMENT
Conventional Lenders or Banks often require a larger down payment requirement to secure an investment property loan.

When flipping houses, speed is the most important thing! Therefore, the process of applying for, and receiving, a fix and flip loan must be efficient. For this reason, fix and flip loans can be processed in as little as 7 to 10 business days. Traditional bank loans can take between 45 and 60 business days to close. This is mainly due to stringent regulations, involving detailed credit checks and examination of the property’s condition. While not an issue when purchasing your primary residence, this lengthy process would be unsuitable for fix and flip financing which makes

4. CREDIT
High Credit Score Requirements along with a low debt to income ratio is required for conventional bank rental loans.

While a conventional home loan is heavily determined by an investor’s individual credit history and debt to income ratio, this is not deemed as important when it comes to fix and flip financing, and other hard money loans. A fix and flip lender may ask for a minimum credit score, but they will be more interested in financial projections, taking into account the projected value of the renovated property. If you have a proven track record with experience in the flipping business, this will also be taken into consideration in your loan approval. After all, when it comes to flipping houses, a successful track record counts for a lot!

Rental loans can be used to finance property types such as single-family homes, duplexes, triplexes, quadplexes, multifamily units, townhouses, planned unit developments, and condominiums.

Single-family homes are defined as properties designed to house one family aka one housing unit. Whereas a multifamily home is a residential property containing more than one family. Capital Funding’s rental loans do qualify 1–4-unit residential buildings as “Single-family.”

Are you wondering how you can benefit from turning to a private lender rather than traditional banks?

SPEED, RELIABILITY, HIGH LEVERAGE, AND NO MINIMUM CREDIT REQUIREMENT

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Private lenders can benefit you by offering:

• Low Rates starting in the 6’s
• More flexible loan terms than traditional banks conventional loans
• A faster turnaround approval process – 7 – 14 Day Close!
• No document loans = no pay stubs, tax returns, or W2’s
• Loans customized to your rental portfolio
• Higher leverage and Lower down payments

Private money lenders typically offer interest-only loans, meaning that a monthly mortgage payment covers the interest, and the balance of the loan is payable at the end of the term.

If you are looking to invest in a non-owner-occupied fix and flip property, a private money lender can help you to gain access to capital more quickly than a conventional lender or bank.

Private lenders are a great option if you need fast access to cash flow, have a poor credit history, issues with your income verification, or have a high debt to income ratio!

As a direct lender, Capital Funding has cut out the middleman, allowing us to offer you the lowest cost of capital out there!

We offer a convenient loan application process that is available through our loan portal which can be e-signed via DocuSign. Upon receipt of the rental loan application, we will schedule a follow-up call to go through the particular facts regarding your loan submission.

During the application process we will ask questions about your experience with rental properties and your estimated credit & income. However, we will not require any formal tax returns or W2’s in qualifying you for the loan.

For Purchase Transactions:

• Loan Application & Disclosures
• Renovation Budget and Renovation Package with Contractor Information
• Driver’s License or Passport (ITIN number if you are a Foreign National)
• Purchase Agreement and any addendum(s)
• Proof of Earnest Money Deposit with check or wire receipt
• 2 Months Bank Statements to show the necessary cash to close and liquidity
• Entity Docs – Articles of organization, Operating agreement or Bylaws, EIN #, CDD Form, Corporate Resolution
• ACH Setup Form
• Title Commitment, Survey, HOA/Condo Questionnaire (if applicable), E&O, Wire Instructions, Confirmation of GAP Coverage, CPL, Draft Deed, HUD
• Evidence of Insurance – RCE/Insurable Value Required for Dwelling Coverage and Liability Coverage
• Appraisal Payment (Appraisal to be Ordered by Capital Funding)

For Refinance Transactions:

• Loan Application & Disclosures
• Renovation Budget and Renovation Package with Contractor Information
• Driver’s License or Passport (ITIN number if you are a Foreign National)
• Payoff Statement or Mortgage Statement (if applicable)
• 1 Months Bank Statement to show current liquidity
• Entity Docs – Articles of organization, Operating agreement or Bylaws, EIN #, CDD Form, Corporate Resolution
• ACH Setup Form
• Title Commitment, Survey, HOA/Condo Questionnaire (if applicable), E&O, Wire Instructions, Confirmation of GAP Coverage, CPL, HUD
• Evidence of Insurance – RCE/Insurable Value Required for Dwelling Coverage and Liability Coverage
• Appraisal Payment (Appraisal to be Ordered by Capital Funding)