Fix and flip loans for beginners

Two lenders publish a floor a beginner cannot clear

New Silver's fix-and-flip product page states a 650 credit score and stops there. Its own help centre says something the product page does not: 650 applies with two or more completed projects, one completed project needs 700 or better, and New Silver no longer lends to borrowers with none. A first-time flipper reading the product page has no way to know they are ineligible.

Lima One Capital requires one exit of an investment property in the last 36 months. That is a broader test than it first sounds — the exit can be the sale or refinance of any investment property you held title on, not only a completed flip, and it counts if someone else financed it. But with nothing behind you, it is still a floor.

Anchor Loans is the third to watch. It publishes the lowest credit floor in the set at 620, and pairs it with the heaviest experience expectation: three or more successful flips in the last twelve months for easy pre-approval, five or more in eighteen months for its best rates. Less experienced borrowers are considered case by case. If you are picking a lender off a credit-score column, Anchor looks like the easiest option here and is close to the hardest.

Which lenders publish that they take first-timers

Easy Street Capital's FAQ confirms first-time flippers are eligible, including on its quick-close option, and it publishes the lowest credit floor of any lender here that says so — 600, for the EasyFix program specifically.

Park Place Finance publishes the clearest beginner terms in the set, because it publishes a tier for them: zero to two flips gets loans from $100,000 to $1.5 million, up to 85% loan-to-cost, up to 70% of ARV, a six or twelve month term, and rehab financing capped at $250,000. Three or more flips in the last 36 months moves you to 95% loan-to-cost, 75% of ARV and a $2.5 million ceiling. Very few lenders write the difference down.

Groundfloor publishes no experience minimum, and its referral programme is explicitly built around first-time borrowers, which is strong circumstantial evidence they take them. Kiavi publishes no minimum either and markets an Emerging Investors track. LendingOne markets an Early-Stage Investors track without stating a requirement anywhere.

What a first deal costs beyond the down payment

Rehab money is not handed over at closing. It sits with the lender and comes out in draws, and at most lenders a draw follows an inspection of work already done — which means you pay the contractor first and get repaid afterwards. Only one of the thirteen lenders publishes whether its draws are advanced before work or reimbursed after it — Private Money Lenders, which says they are reimbursed after an inspector clears the work. For the other twelve it is a question to ask out loud before you sign.

The other unpublished number that matters is how interest accrues. Only Lima One and LendingOne state whether interest is charged on the full loan or only on what you have drawn. On a loan with a large rehab holdback, being charged on the whole commitment from day one is a real cost for money still sitting in the lender's account.

Then there are the costs that are published and easy to skip past. Park Place itemises document preparation at $1,495, a third-party attorney fee of $535 and an appraisal at $500 to $700. Groundfloor charges a three-month minimum interest requirement if you repay inside the first three months — the only genuine prepayment term in the set, and a real cost on a fast cosmetic flip. Kiavi charges no appraisal and no application fee at all.

Common questions

Can I get a fix and flip loan with no experience?

From some of these lenders, yes. Easy Street Capital and Park Place Finance both publish that they accept first-time flippers, and Park Place publishes a specific set of terms for borrowers with zero to two flips. Groundfloor, Kiavi and LendingOne publish no experience minimum. New Silver states it no longer lends to borrowers with no completed projects, and Lima One requires one prior investment property exit in the last 36 months.

How much money do I need for my first flip?

More than the down payment implies, and the published leverage figures will not tell you how much. The three costs that surprise people are the rehab draw gap — you pay contractors and get reimbursed afterwards at most lenders — closing costs, which some lenders itemise and some do not publish at all, and carrying costs for however long the property takes to sell. Published down payments in this set run from about 10% to about 15% of purchase for a first-time borrower, but that is the smallest of the three numbers.

Do beginners get worse terms?

Usually, and only one lender here publishes by how much. Park Place's beginner tier is 85% loan-to-cost and 70% of ARV against 95% and 75% at three or more flips, with a $250,000 rehab cap that the experienced tier does not have. Every other displayed lender publishes one set of leverage figures regardless of experience, which does not mean experience is irrelevant to them — it means the effect is in pricing and underwriting rather than in anything published.

Keep reading

• Fix and Flip Loans With No Money Down
• Bad Credit Hard Money Loans
• Hard Money Lenders With No Credit Check
• Fix & Flip Cost of Capital CalculatorWhat a quote actually costs once points, fees and the interest accrual basis are in it.