Explore Options for Financing Your Next Flip

There are plenty of ways to get financing for your flip. You just need to know where to look.

T.V. often romanticizes what a flip project is really like. On the screen, a trashed space suddenly becomes a dream home within a few minutes. Then, the flippers rake in the profits.

These shows don’t usually dig into the critical steps that happen before the shiny countertops and floors go in. Namely, how financing works.

Flips are big business in the U.S. According to ATTOM’s third-quarter 2021 U.S. Home Flipping Report, 94,766 single-family houses and condominiums in the United States were flipped in that period. Those third quarter flips were 5.7% of all home sales or one in 18 transactions, a number that’s up for the second quarter in a row after a year of declines.

All of this starts and ends with financing. You’ll want to know the types of financing that are available to you so you can evaluate which is right for your investment situation. Here are some financing options for flipping houses.


If you have the cash to buy a property and fix it up, this may be the right option for you. Buying a house with cash will keep you out of debt and help you establish a track record as a flipper who can make money on flips. Having a few successful flips under your belt will be important as you move to bigger and more expensive flips and perhaps need financing beyond cash.

Buying a house with cash may make a seller see you as a preferred buyer over another. It also “helps pad your bottom line when margins are slim” noted Polina Ryshakov, Sundae’s Chief Economist.

Buying a house with cash can benefit you on the back end as well. It will give you flexibility as to when you need to sell. It allows you to wait for the higher price you’re seeking and limits holding costs along the way. That way, you won’t be worried about paying back a loan quickly or ballooning interest payments.

Other cash related options

In addition to simply saving cash, you may be able to get cash from assets you already own via a cash-out refinance. There are some restrictions on a cash-out refinance, however. Among these restrictions are that you’ll need to have equity in your current residence. Every lender is different, but generally you can’t take out more than 80% of the home’s value. VA loans allow you to take out 100%.

Other options for getting cash are home equity loans and home equity lines of credit (HELOC). A home equity loan is a lump sum loan on a certain amount of equity in a home you already own. In contrast, a home equity line of credit is where the equity in your house acts a bit like a credit card you can draw from. The advantage is that you only take what you need when you need it from a HELOC, so this type of financing can offer more flexibility. One disadvantage is that your own home is on the line if you can’t pay back your loan.

Hard money

Hard money loans come from private investors or a private investment fund instead of federally regulated banks. These types of loans are short-term and can usually be secured in a week or less. They use the property (or a “hard” asset) as collateral. Different hard money lenders specialize in different aspects of real estate investment, including property flipping, multifamily rental properties, or in a specific region.

One reason flippers like hard money loans is that you can borrow against the After Repair Value (or ARV) of a property. Let’s imagine you want to buy an investment property for $200,000. You estimate that you can sell the property for $250,000 after fixing it up. A hard money lender may let you borrow up to $250,000 (minus any down payment).

Since hard money loans are privately financed, they don’t work under banking rules and regulations. As such, normal lending rules about down payments and credit score don’t necessarily apply. Once you build a relationship with a hard money lender, you may be able to secure multiple deals from a single lender. If you take out a hard money loan, however, you need to be confident that you can complete the flip quickly. You’ll want to minimize holding costs and sell the flip before your loan is due.


Often people will use friends and family to finance a flip. If you’re arranging it privately, be sure to hammer out the details in a real estate investment partnership agreement. Or, you could work with a crowdfunding site that’s focused on real estate investment. Different sites will have different rates, terms, and costs. If you can, get recommendations from other flippers on crowdfunding sites they’ve used and had good experiences with.

Bank financing

Don’t discount traditional bank financing. This Is especially true if you have a strong credit history, can show a paper trail of successful house flips, and plan to work on the flip for a while. Bank financing may come with a lower interest rate than other types of fix and flip loans. On the flip side (pun intended), you’ll have to pay attention to all the fees associated with the transaction.

FHA 203(k) Loan

This financing option won’t be for everyone. To qualify for an FHA 203(k) loan, you need to be the primary owner of the home you want to renovate. For those interested in living in a home while it’s being worked on, the advantage is that this type of loan can include its purchase price and the cost of improvements. If you’re using contractors, be sure to pick ones who have worked with this kind of purchase before as contractors get paid at the end of your project from an escrow fund.

Fannie Mae Homestyle Renovation Mortgage

A homestyle renovation mortgage type of loan allows you to borrow to both buy the house and make renovations. But, much like the FHA 203(k) loan, it has some extra restrictions.

You’ll want to use a licensed contractor familiar with the process as the renovation money is only released after the work has been approved and is done and inspected. This loan can be used for a variety of home types, including second home, investment property, and larger properties such as duplexes, triplexes, and quadplex.

Find and fund your next flip

No matter which type of financing type you choose, don’t forget to work on your investment property pipeline too. It can take time to find the right real estate investment deal for you. Sundae’s Marketplace is a top online portal for buying exclusive investment properties.

With Sundae, you’ll have a one-stop-shop for finding opportunities and even financing them. Sundae Funding enables investors in certain markets to fund their flips without ever having to leave our platform.

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Erin B

Erin Behan is a writer and editor covering real estate investor strategy for Sundae. She's lived in L.A., New York, and Atlanta and currently resides in Portland, Oregon, where she writes and edits for a number of outlets, including WebMD, Farmers Insurance, and Vox Creative. She spends her free time hiking with her two boys, snuggling with her cat, and enjoying the best of the Pacific Northwest.