A fix and flip lender evaluates both the collateral and the plan to buy, renovate, and sell. Eligibility is lender specific; there is no universal credit score, experience count, or after repair value percentage. Ask for the lender's current criteria before paying for valuation or other diligence.
Property, cost, and projected value
Prepare the purchase contract, comparable sales, photos, a line item repair budget, contractor information, and permit schedule. Lenders may compare the requested loan with the current value, the total project cost, and an estimated value after repairs (ARV). Ask which measure applies at closing and to later draws.
For illustration only: if a lender capped a hypothetical loan at 70% of a $400,000 ARV and 85% of a $260,000 purchase-plus-repair budget, the two limits would be $280,000 and $221,000. The lower limit would govern before any other conditions. Those percentages are example policies, not market standards or a quote.
Borrower and available funds
A lender may consider credit history, completed projects, liquidity, ownership entity, and contractor experience. A first time investor should ask whether an experienced contractor or guarantor changes eligibility. Document cash for the acquisition, initial work, carrying costs, and contingencies; draw funding may reimburse completed work rather than provide cash in advance.
Draws and exit
The OCC commercial real estate handbook discusses monitoring construction progress, costs, and disbursements. Ask your lender for its actual draw schedule, inspection conditions, holdbacks, and change order process. Model a sale that takes longer or costs more than planned, then review maturity, extensions, and payoff charges in the proposed documents.
Application checklist
- Property and purchase documents, condition photos, comparable sales, and title information.
- Repair scope, detailed budget, contractor credentials, permits, and timeline.
- Borrower or entity records, proof of funds, credit authorization if requested, and prior project history.
- A realistic sale or refinance plan and a written comparison of all loan costs.
Our directory can help identify potential lenders. Confirm each lender's requirements, credentials, and final terms directly.
FAQs
Is there a standard minimum credit score?
No single threshold applies to every fix and flip lender. Ask how your credit history affects eligibility and pricing.
How is after repair value used?
A lender may cap the loan using its estimated value after repairs, often alongside limits based on cost or current value. Ask for the actual calculation.
Can a first time investor qualify?
Some lenders consider first time investors; others require prior projects. Ask about the role of contractor experience, available cash, or a guarantor.
What cash should I have available?
Budget for required equity, fees, initial work before draws, carrying costs, and contingencies. Request a written cash to close and draw schedule.
What is the difference between ARV and loan to cost?
ARV is an estimate of post renovation property value. Loan to cost compares the loan with acquisition plus approved project costs. A lender may apply both limits.
What documents should I prepare?
Gather the purchase contract, property details, comparable sales, work scope, budget, contractor information, proof of funds, and exit plan.