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Flipping properties is a strategy that involves purchasing real estate below market value and quickly reselling it. Investors purchase distressed properties, properties in up-and-coming areas, and properties that need renovations with the intention of flipping them for the largest profit possible. These properties may be residential or commercial and usually require some sort of repairs or updates before they are resold.
Investors may use cash to buy a property to flip, but more often, they will acquire a loan. There are many different types of fix-and-flip loans, including hard money loans, private money loans, bridge loans, lines of credit, and more. Keep reading to find out more about which loans for flipping houses are right for you.
Best Overall: LendingHome
Why We Chose It: This reputable company caters to real estate investors and offers fast funding times and simple applications.
Funded over 30,000 projects
Helpful resources on flipping houses
Only lends in 28 states
Higher fees and rates for less experienced investors
LendingHome was founded in 2013 in San Francisco, California with the goal of starting a company that reimagined the lending process. Today, it combines innovative technology, industry resources, and an experienced and knowledgeable team. The lending process is entirely online and there are no branches to visit. The company only caters to real estate investors and the more deals you do and the more experience you have, the more you will be rewarded with lower rates and fees.
This lender offers short-term bridge loans for fix-and-flippers, as well as longer-term rental loans, a property marketplace for off-market deals, and investment options for accredited investors. In addition, the site features blogs and tips on flipping houses.
LendingHome lends in 28 states and offers competitive rates on its loans for flipping houses that start at 6.5 percent (as of March 2021) with no application fees and low origination points. The company works with flippers of all experience levels and can close loans in as quickly as five days. Each borrower will work with an experienced agent throughout the entire process. You can start by filling out an online form, after which an agent will contact you.
Best for Real Estate Companies: LendingOne
Why We Chose It: LendingOne only lends to real estate companies including LLCs, Limited and General Partnerships, and Corporations, and it does not charge prepayment penalties.
Apply online or over the phone
Rental and house flipping resources on the site, such as webinars
Lends in 45 states
Rates are only available after you apply
Minimum loan amount is usually $75,000
LendingOne was founded in 2014 by an entrepreneur and a commercial real estate executive. It’s a financial technology (fintech) company and a private real estate lender that lends to real estate investors in 45 states. Its mission is to make the lending process for investors quicker and more reliable. The company focuses on three areas: real estate, technology, and customer service. It’s a direct private real estate lender that aims to put investors' needs first.
The company offers fix-and-flip loans, rental loans, rental portfolio loans, new construction loans, multifamily bridge loans, and fix-to-rent loans. You can apply online or over the phone and there’s an instant rate online that can be completed in two minutes or less. Fix-and-flip loans have a minimum loan amount of $75,000 and rates vary depending on borrower experience and the property itself. The application process is designed to be streamlined.
Terms for fix-and-flip loans are 12 months and there are no prepayment penalties. The purchase and repair costs are funded in one loan and no interest is charged on unused rehab funds. The site offers resources for real estate investors and webinars on different types of investment properties.
Best for Multiple Loans: Lima One Capital
Why We Chose It: The company offers a wide variety of fix-and-flip rehab loans, has an easy online application process, and lends in 41 states.
Several loan options to choose from based on experience level
Some loans can be used by foreign investors
Easy application process with guides and document tracking
The site could give more information on each loan
Rates and funding times vary and are given after you apply for a loan
Founded in 2010, Lima One Capital is a private money lender that operates online. It offers a variety of real estate investment property loans to investors across the country and lends in 41 states plus Washington, D.C. The company’s mission is to operate with integrity, charge reasonable fees, put the customer first, and offer superior execution with each of its loans. It strives to provide value and mitigate risks.
The site features an investor center, helpful industry-related blogs, and even a virtual toolbox. You can apply for a loan online via a process that features document tracking so you know what’s left to submit.
Rates and fees vary based on the deal, property, and the borrower’s qualifications. Most deals are funded within 14 days and have 13-month terms. For specific qualification and fee information, fill out an application or contact the company directly.
Best for Real Estate Portfolios: Finance of America Commercial
Why We Chose It: These flexible loan programs have high limits for investors with multiple properties, maintain branches across the globe, and lend nationwide.
Soft costs included in the financing such as permits and surveys
High exposure limits up to $10 million
Loans for borrowers of all experience levels
Investors may not feel the personal touch as with smaller companies
Website doesn’t have investor resources, blogs, or webinars
Finance of America Commercial is part of the Finance of America Companies, which was formed in 2013 as a way to reinvent the traditional finance company model. It offers a diverse selection of lending products and services and brings together more than 15 businesses in the industry. The company has in excess of 300 offices across the world and focuses on its commitment to its customers, constant innovation, strategic partners, and strong leadership. Finance of America Companies also has entities focused on mortgages and solving the challenges businesses face.
Finance of America Commercial offers loans for borrowers who are completing their first flip as well as loans for borrowers who own multi-million-dollar real estate portfolios. The company offers fix-and-flip loans, bridge loans, new construction loans, single rental loans, and portfolio rental loans. The fix-and-flip loans let investors purchase and renovate multiple properties up to an approved exposure limit. This is ideal for experienced flippers and investors who own real estate companies that work on multiple projects at once.
Fill out a contact form or call the company directly to get a quote and start your application. Loans for flipping houses usually have 12-month terms, but they can extend up to 18 months. Funding times vary and loan amounts range from $50,000 to $3 million for single properties and $10 million for multiple properties. Rates start at 6.75 percent (as of March 2021) and properties can be single-family homes, condos, townhomes, mixed-use, or properties with up to 20 units.
Some lenders for flipping houses offer competitive rates, low fees, and are done completely online. Others provide multiple types of loans to choose from and have additional resources to learn more about the house-flipping industry. Overall, we recommend checking out LendingHome. It has a positive reputation, specializes in working with real estate investors, and offers competitive rates on its loans designed for flipping houses.
Frequently Asked Questions
What Are Loans for Flipping Houses?
Loans for flipping houses are specific types of loans designed to be used to purchase and renovate fix-and-flip properties. These loans are typically offered by private lenders and hard money lenders instead of conventional banks due to the risks involved and the properties not usually being in move-in condition. They’re short-term loans that tend to be funded quickly. Most fix-and-flip loans are interest-only loans and the principal balance is designed to be paid off when the property is sold or refinanced into a more permanent loan.
What Are the Different Types of Fix-and-Flip Loans?
The most common types of fix-and-flip loans include:
- Hard money loans: Loan based on the real estate as collateral; lenders are usually individuals or private companies
- Bridge loans: A short-term loan that is either paid off or used until more permanent financing is established
- Private money loans: A non-bank loan that can be short- or long-term and uses the real estate to secure the loan
- Cash-out refinances: Replaces your current home loan with a higher loan amount and you get the difference in cash, which can then be used to purchase a house to flip
- Lines of credit: A preset borrowing limit that you can draw from over a specified period of time and use to purchase the property you intend to flip
Keep in mind that a lot of fix-and-flip loan names are interchangeable and one company may refer to a bridge loan as a hard money loan and vice versa.
What Does ARV Mean?
ARV is a common term in the house-flipping industry. It stands for After Repair Value and is one of the most important figures to understand before you flip a house. The ARV is usually how much you can expect the property to be worth after it is rehabbed. This value may vary based on the area, the current market conditions, and how updated the house is compared to comparable houses. Typically, a lender will lend based on a percentage of the ARV. This percentage varies by lender, geographic location, and the investor’s experience. Expect for it to be anywhere from 60 percent to 80 percent.
How We Chose the Best Loans for Flipping Houses
We researched seven of the top loan options for flipping houses and selected reputable companies with mostly positive feedback and industry experience. We reviewed them based on types of loans offered, loan terms, funding times, fees, and interest rates (where available), along with customer service and ease of communication.