That squeeze means your financing choice matters more than ever. The wrong loan structure eats into thin margins before you've even swung a hammer.
This guide breaks down the main loan types for flipping, what they actually cost, how to qualify, and the math (like the 70% rule) that keeps deals profitable. Lendora Funding works with investors nationwide on fix-and-flip and real estate financing, matching project needs with the right structure.
Key Takeaways
- Hard money and fix-and-flip loans dominate the space because they underwrite the property, not just your paycheck
- The 70% rule (ARV × 0.70 − repairs) protects you from overpaying at purchase
- Down payments generally run 10-30% depending on loan-to-cost structure and your track record
- Match the loan to your experience level, credit profile, and how fast you need to close
What Kind of Loan Is Best for Flipping a House?
There's no single "best" loan. It depends on your credit, how much cash you have on hand, whether you own a home with equity, and how fast you need to move. Here's the short version of what's ahead:
- Fix-and-flip / hard money loans — the industry standard for active flippers
- Home equity loans, HELOCs, cash-out refis — for homeowners sitting on equity
- Personal loans, 401(k) loans, seller financing — niche options with real trade-offs
Fix-and-Flip / Hard Money Loans
These are short-term, interest-only loans built specifically for flips. Terms typically run 6 to 24 months, according to Rocket Mortgage's hard-money overview. That same overview cites rates in the 8%–15% range, with max LTV around 60%–80%. Lender-specific offers vary widely:
- Kiavi advertises rates as low as 7.75%, up to 100% loan-to-cost and 80% of after-repair value, covering 100% of rehab costs
- RCN Capital's ARV program funds up to 100% of purchase price plus 100% of renovation costs, capped at 75% ARV
- Lendora Funding provides fix-and-flip financing with deal-focused underwriting and fast funding timelines for qualified investors
Renovation funds don't arrive as a lump sum. Most lenders disburse in draws after each phase passes inspection. That protects the lender—and means you need cash flow to front some contractor costs before reimbursement lands. Underwriting here leans heavily on the deal itself, not just your W-2s. That's the appeal for investors who don't fit a traditional mortgage box.
Home Equity Loans, HELOCs, and Cash-Out Refinancing
If you own a home with equity, you can tap it to fund a flip instead of taking out a separate hard money loan.
- Primary residence cash-out refinance: Fannie Mae and Freddie Mac generally cap this at 80% LTV, meaning roughly 20% equity needs to remain
- Investment property equity: Caps drop to 70%-75%, requiring 25-30% equity
- HELOCs: Bank of America's published example allows borrowing up to 85% of home value minus what's owed, though this varies by lender These options often carry lower rates than hard money since they're secured by a stabilized property, not a renovation project. The catch: your primary home becomes collateral for your flip.
Personal Loans, 401(k) Loans, and Seller Financing
These fill gaps but rarely serve as a primary flip funding source.
- Personal loans: Unsecured, capped by lender policy, and rates depend heavily on your credit
- 401(k) loans: Capped at the lesser of $50,000 or 50% of vested balance, per IRS retirement plan loan rules; typically repaid within five years
- Seller financing: The seller acts as the lender. Terms are fully negotiable, which can work well when a seller wants a steady income stream instead of a lump sum.
Miss 401(k) loan payments and you could owe taxes plus a 10% early withdrawal penalty if you're under 59½.
Understanding the Costs of Flipping a House
The 70% Rule Explained
This is the formula every flipper should know before making an offer:
Maximum purchase price = (ARV × 0.70) − estimated repair costs
Say a property's after-repair value is $400,000, and repairs will cost $50,000. Your max purchase price would be ($400,000 × 0.70) − $50,000 = $230,000. Pay more, and you're squeezing your own profit margin before you've started.
Both BiggerPockets and Rocket Mortgage confirm this same formula. Note: it's a screening tool, not a guaranteed profit calculator.
Renovation Costs Run Higher Than You Think
Plan rehab spend with current benchmarks, not best-case guesses:
- Whole-home remodeling: $15–$60 per sq ft (HomeAdvisor 2026); high-end work can hit $150
- On a 1,500 sq ft flip: roughly $22,500–$90,000 on the standard end
- Overruns are common: Houzz's 2026 report found 37% of projects went over budget
Build a contingency into every bid instead of assuming the first estimate holds.
Carrying Costs Add Up Fast
While the property sits, you're paying:
- Loan interest (on drawn funds, not always the full holdback)
- Property taxes
- Insurance
- Utilities
- Any HOA fees
None of these is large alone, but over a 4–6 month hold they can erase thousands from your net profit.
Down Payment Math on a $300,000 Purchase
Down payment size depends entirely on loan structure:
| Structure | Typical Down Payment | On $300,000 |
|---|---|---|
| High-leverage LTC (up to 90%) | 10% | $30,000 |
| Standard fix-and-flip LTC | 15-20% | $45,000-$60,000 |
| Lower-leverage / new investor | 25-30% | $75,000-$90,000 |
Profit Potential, Realistically
ATTOM's latest data shows a median gross profit of $65,981 and 25.5% gross ROI nationally. That figure excludes rehab and carrying costs, so your net margin will be lower once those expenses come out. Price the deal and the loan against net profit, not gross headlines.
Qualifying for a Fix-and-Flip Loan: Credit, Experience, and Documentation
Credit, Experience, and First-Time Borrowers
You can still qualify without a track record. Lenders typically offset inexperience with:
- Higher down payment requirements
- More conservative ARV caps (70% instead of 75-80%)
- Slightly higher rates to price in risk
Can you get a $50,000 loan with a 700 credit score? Generally, yes. A 700 score clears most fix-and-flip lender thresholds (Lima One, for example, requires a 660 minimum). Property value, project scope, and exit plan often carry more weight than the score itself.
Documentation Lenders Typically Want
- LLC or entity formation documents
- Proof of funds for down payment and reserves
- Detailed project budget and scope of work
- Property condition report or inspection
- Purchase contract
The Conventional Mortgage "Flipping Rule"
If you're hoping to use a conventional mortgage instead, know the restrictions:
- FHA loans: Per HUD Handbook 4000.1, a property resold 90 days or fewer after the seller acquired title is ineligible. Resales between 91-180 days require a second appraisal.
- Fannie Mae/Freddie Mac: No blanket 90-day ban, but cash-out refinances require the mortgage to be at least 12 months old and title held for at least 6 months.
This is exactly why fix-and-flip loans exist. Conventional financing wasn't built for a quick buy-renovate-sell cycle.
Is Releasing Equity to Buy Another Property a Good Idea?
Tapping equity through a cash-out refinance or HELOC can fund a flip at a lower rate than hard money. But it comes with real trade-offs.
Pros:
- Lower interest rates than hard money loans
- Access to larger sums if equity is substantial
- Uses your existing lender relationship
Cons:
- Your primary residence becomes collateral for a flip's risk
- A cash-out refinance can reset your mortgage term and rate
- Ties up equity you might need for emergencies
Before you tap home equity, run these checks:
- Confirm your current equity position and remaining headroom
- Gauge local market trends for both your home and the flip
- Set a backup exit if the property sits longer than planned
Dedicated fix-and-flip financing keeps your primary residence off the collateral line, which is worth comparing before you refinance.
How Lendora Funding Supports House Flippers
Lendora Funding provides nationwide real estate financing built around how investors actually work, covering fix-and-flip loans, bridge loans, and cash-out refinancing under one roof.
- Fix-and-flip financing: Covers purchase and rehab costs so you can renovate and resell without tying up your own capital
- Bridge loans: Fill short funding gaps when a deal can't wait on permanent financing
- Cash-out refinancing: Pull equity from a held property to fund the next acquisition
The consult is hands-on. Funding specialists like Yane Scolano work one-on-one with first-time and repeat flippers to map financing structures and improve qualification odds—before you're locked into terms that don't fit the project.
The application is built for speed: submit online, get matched with a soft credit pull that won't ding your score, and get a callback with real options. That turnaround helps you secure a property before another buyer does.
Frequently Asked Questions
What kind of loan is best for flipping houses?
Hard money and fix-and-flip loans are the most common choice since they underwrite based on property value, not personal income. Homeowners with equity can also consider a cash-out refi or HELOC as an alternative.
How much does it cost to flip a 1,500 sq ft house?
Renovation alone typically runs $22,500 to $90,000 based on standard per-square-foot rates, before carrying costs like interest, taxes, and insurance. Actual costs vary heavily by region, scope, and how much of the work is cosmetic versus structural.
How much of a down payment do you need for a $300,000 house?
For fix-and-flip financing, expect 10-30% ($30,000-$90,000) depending on loan-to-cost structure and your experience level. Conventional investment financing typically requires 25% or more down.
Can I get a $50,000 loan with a 700 credit score?
Yes, in most cases. A 700 score clears typical fix-and-flip lender minimums, though the property's value and your project plan generally weigh more heavily than credit alone.
What is the 70% rule for flipping houses?
It caps your purchase price at 70% of the after-repair value minus estimated repair costs. The formula is: (ARV × 0.70) − repair costs = maximum purchase price.
Is there a flipping rule for conventional loans?
Yes. Fannie Mae and Freddie Mac generally won't finance a property resold within 90 days of the seller's purchase, and FHA requires a second appraisal on many 91–180 day resales. That's why most quick flips use hard money or fix-and-flip loans instead.
