Fix-and-Flip Loans With 100% Financing

If you want to purchase an investment property with no money down, a 100% fix-and-flip loan might be a possible solution. Once approved for this short-term financing option, some lenders allow you to close the loan in just a few weeks.

But finding a lender that offers 100% fix-and-flip financing can be challenging. Many lenders require you to have some equity in the property to lower their risks. 

Below, we explore the pros and cons of this loan option and include a list of lenders offering 100% financing.

Can you get a fix-and-flip loan with 100% financing?

It’s possible since some lenders offer fix-and-flip loans with 100% financing. These short-term loans allow you to borrow up to 100% of a property’s purchasing price. You could use one to purchase an investment property with no down payment and cover some of the repair costs.

Terms vary for these loans but typically range from six to 18 months. Rates also vary but are generally higher than standard mortgage loans.

When you apply, lenders estimate the home’s after-repair value (ARV)—the estimated value of the property after the renovations are complete—to determine your maximum loan amount.

ARV = (Home’s purchase price) + (Home’s value after repairs are made)

Lenders typically allow you to borrow 70% of the home’s estimated ARV. For example, if the home’s estimated ARV is $300,000, you can borrow up to $210,000.

Where to get a 100% fix-and-flip loan

For real estate investors looking to leverage their next project with minimal initial capital, a 100% financing fix-and-flip loan can be a game-changer. 

We’ll explore three lenders that offer such financing, providing investors with the opportunity to maximize their investment potential without the upfront financial burden associated with real estate purchases and renovations. 

Review each lender’s unique products, terms, and eligibility requirements because they cater to different investor needs and project scales. Click the lender’s name in the table for more about its 100% fix-and-flip loan.

Lender	Features	Terms
Next-Financing	100% financing, no prepay penalties, and fast closings	12 months, 10% interest-only, and up to 70% ARV
Shepherd’s Finance	Personalized loan plans and flexible project requirements	Term lengths not specified, max $500,000 loan
Residential Capital Partners	No money down, fast process, and wide property range	9 months, no prepay penalties, and up to 70% ARV

Next-Financing: Best for experienced investors

View Rates

• Offers 100% of purchase funds, rehab funds, and closing costs for qualified investors with at least two verifiable flips in the last two years
• No income or tax return verification required, only two months of bank statements to show liquidity and a minimum 620 credit score
• Rates (APR)*: 7.99% – 11.99%

*In February 2024

Next-Financing’s Next100 Fix and Flip Loan program, available in all 50 states, is tailored for seasoned investors seeking to maximize their leverage without the common hurdles. Its streamlined process promises fast approvals and closings, making it an attractive option for those with a proven track record.

Next’s comprehensive financial solution covers the purchase price and rehabilitation costs and even extends to cover all associated closing costs and fees, effectively removing the upfront financial barrier for qualified investors. 

By eliminating the need for income or tax return verification and focusing on a straightforward liquidity proof through two months of bank statements, Next streamlines the approval process and reduces the time from application to closing. 

To qualify, applicants need a minimum credit score of 620 and evidence of at least two verifiable flips in the past two years. Once approved, Next-Financing offers a 12-month term at a 10% interest-only payment structure.

Shepherd’s Finance: Best for personalized support

View Rates

• Requires proof of past successful projects
• Tailors loan plans to fit the borrower’s budget and property needs without stringent financial documentation requirements
• Limits funding to specific projects, such as detached single-family homes or townhomes, with a maximum loan amount of $500,000

Shepherd’s Finance offers a personalized approach to fix-and-flip financing, focusing on the borrower’s experience and project viability.

It distinguishes itself in the fix-and-flip financing market by not just focusing on the financials but placing a significant emphasis on the borrower’s ability to execute successful projects. 

Shepherd’s evaluates potential loans based on the borrower’s experience with similar types of projects. For example, if a borrower has successfully flipped smaller residential homes, Shepherd’s Finance is more likely to support projects that align with this proven track record rather than ventures into larger or more complex renovations. 

Shepherd’s Finance requires borrowers to have builder’s risk insurance, general liability insurance, and, where applicable, flood insurance to protect against unforeseen circumstances that could affect the project’s completion or the property’s value. 

Residential Capital Partners: Best for diverse property types

View Rates

• Provides 100% financing for purchase and repairs up to 70% of ARV, with no money down required for qualified borrowers
• Funds are available for single-family residences, 2 – 4-unit family residential properties, townhomes, and condominiums.
• 9-month loan term at 10%* APR with no prepayment penalties, catering to loans ranging from $75,000 to $1.25 million

*In February 2024

Residential Capital Partners offers comprehensive financing solutions for single-family real estate investors, emphasizing speed and simplicity. The lender minimizes hassle and paperwork and could be ideal for investors seeking fast, straightforward financing for their flipping projects. 

ResCap assures borrowers that, provided they have a clear title, a completed appraisal, and proper insurance on the property, it can wire funds within 24 to 48 hours. It offers loans with a 10% interest rate, aligning with the industry standards for fix-and-flip projects. The origination fee is set at one point, translating to 1% of the loan amount. 

The lender has affiliates across 12 states—North Carolina, South Carolina, Connecticut, Massachusetts, New Jersey, New York, Pennsylvania, Florida, Georgia, Tennessee, Ohio, and Texas—making it accessible to flippers in those locations. 

Pros and cons of 100% financing fix-and-flip loans

Before applying for a 100% financing fix-and-flip loan, weigh the potential advantages against the disadvantages.

Pros

• Less stringent eligibility requirements

  Qualifying for 100% fix-and-flip financing is possible if you have bad credit. Some lenders have minimum credit score requirements as low as 620.

• Quick approval and closing times

  Some lenders can fund and close your loan as early as two weeks.

• Less paperwork

  Some lenders only require you to provide your last two bank statements.

• You avoid needing to use your own funds

  Only the property you are flipping secures the loan.

Cons

• Higher interest rates

  Interest rates for fix-and-flip loans are generally higher than standard mortgage loans.

• Risk of repairs costing more than expected

  Repairs might cost more than expected, reducing your anticipated profits.  If you don’t make a profit on the flip, you could have trouble repaying what you borrowed.

• No guarantee the home will sell.

  The longer it takes to sell the home, the more interest you’ll pay on the loan.

• Home may not sell for a high enough price

  If the home sells for a lower price, you may need to add funds to pay back the loan.

Ask the expert

David Haas

CFP®

If you have sufficient equity in your own home, a home equity loan or additional mortgage on that property will be cheaper than a fix-and-flip loan. The downside is that you are putting your home at risk for your investment, and if your project does not go as well as you expected, you don’t want to put yourself in a position where losing money means losing your home.

Risks and mitigation strategies of 100% fix-and-flip loans

Using a fix-and-flip loan to buy an investment property comes with significant risks, but there are steps you can take to minimize them.

For example, if you want to reduce the risk of going over budget on repairs, you could create an emergency fund for unexpected repairs.

Or, if you don’t have much experience flipping properties, you could work with a more experienced real estate investor to increase your chances of selling a property for a profit.

Ask the expert

David Haas

CFP®

A significant risk when flipping any property is that the housing market can drop in your area between the time you purchase the property and the time you try to sell it. This can cause you to get a lower-than-expected price or sometimes may make your property take much longer to sell. Meanwhile, you are paying interest, and if you still own the property at the end of the loan term, you will have to refinance the loan and might not have enough equity to do it. You should always prepare yourself for these contingencies by ensuring access to additional funds or some kind of fallback position, such as renting out the property until the market improves.

How to get a fix-and-flip loan with 100% financing

What you need to qualify for a 100% fix-and-flip loan varies by lender, but here are the factors lenders typically consider.

• Credit score. Minimum credit score requirements vary. But the higher your credit score, the better your chances of qualifying for a lender’s lowest advertised annual percentage rate APR.
• Credit check. Whether you need to agree to a credit check also varies. Some lenders require one, while others don’t.
• Business structure. Some lenders require you to apply for a loan as a corporate entity, such as a limited liability company or trust.
• Flipping experience. Lenders might require you to provide proof that you’ve fixed and flipped a certain amount of homes in the past two years.

Some documents a lender might ask you to provide when filling out the loan application include:

• Tax returns
• Business documents
• Recent bank statements
• Property appraisal document 
• Detailed project plans, including a list of repairs you’ll make

When shopping for a loan, compare fees, rates, and terms to find the best deal for your financial situation.

FAQ

Who qualifies for 100% fix-and-flip financing?

Qualifying for 100% fix-and-flip financing typically requires a combination of a strong credit score, experience in real estate investment, and a compelling project proposal. 

Lenders look for borrowers with a track record of successful real estate projects. This demonstrates their ability to manage and complete flips profitably. 

Criteria can vary widely among lenders:

• Credit score: A high credit score may be necessary, with some lenders looking for scores of 680 or higher.
• Experience: Previous experience with fix-and-flip projects is often required, with some lenders expecting one or more successful projects in the last few years.
• Project viability: The property and project plan must show strong potential for profitability. Lenders will evaluate the property’s after-repair value (ARV) compared to the loan amount.
• Financial stability: Lenders may assess personal financial statements, liquidity, and overall financial health.

How do interest rates for 100% financing compare to traditional financing?

Interest rates for 100% financing tend to be higher than those for traditional financing because lenders perceive higher risk in offering loans that cover the entire cost of a property’s purchase and renovation without any down payment from the borrower. 

The specific rate can vary based on the lender, the borrower’s creditworthiness, and market conditions, but it’s not uncommon to see rates several percentage points above conventional mortgage rates.

Can I get 100% financing for a fix-and-flip if I’m a first-time investor?

It’s more challenging for first-time investors to secure 100% financing for a fix-and-flip project due to lack of experience, but it’s not impossible. 

Success may depend on:

• Strong credit score: Demonstrating excellent creditworthiness.
• Solid project plan: A detailed, realistic, and profitable proposal.
• Additional collateral: Offering collateral besides the property itself might help.
• Cosigner or partner: Teaming up with an experienced investor can also improve chances.

Are there any additional fees associated with 100% financing loans?

Yes, 100% financing loans often come with additional fees, including higher origination fees, processing fees, appraisal fees, and others related to closing the loan. 

These fees cover the increased risk and administrative costs associated with these types of loans. Borrowers need to ask about all possible fees and factor them into the overall cost of the loan.

How can I improve my chances of getting approved for 100% financing?

Improving your chances involves several strategies:

• Enhance credit score: Improve your credit score to meet or exceed lender requirements.
• Gather documentation: Prepare comprehensive documentation, including detailed project plans, cost estimates, and personal financial records.
• Showcase experience: If you have previous experience, highlight your past successes in real estate investment.
• Find the right lender: Look for lenders specializing in or more open to 100% financing arrangements for fix-and-flip projects.
• Solid proposal: Ensure your project plan is detailed, realistic, and demonstrates a high potential for profitability.

What happens if my fix-and-flip project goes over budget?

Going over budget requires immediate action to prevent financial strain. Options include:

• Additional financing: Seek additional funding through personal loans or credit lines or ask the lender to increase the loan amount. You might also explore taking on an additional investor.
• Cost reevaluation: Review and adjust the project scope to cut costs where feasible without significantly affecting the final value.
• Personal investment: If available, inject personal funds to cover the shortfall.
• Negotiate with contractors: Work to renegotiate terms or costs with contractors to manage overruns.

It’s crucial to have a contingency plan and budget in place from the start to mitigate the impact of any overruns on the project’s profitability.