Flip loans, also known as hard money loans, are short-term financing tools used by real estate investors to purchase and renovate properties for resale. These loans are asset-based and prioritize the value of the property rather than the borrower's credit score. Typically used for house flipping, they provide fast funding and are ideal when traditional bank loans are not an option.
Flip loans usually last 6–12 months and are structured as interest-only payments with a balloon payment at the end. Lenders assess the After Repair Value (ARV) of a property and often loan up to 70% of the ARV. Common terms include loan-to-value ratios (LTV), rehab budgets, interest rates ranging from 8% to 15%, and minimal documentation compared to traditional mortgages. These loans are designed to be quick and flexible, enabling investors to move fast in competitive markets.
Not necessarily. Flip loans are based more on the property value and ARV than on your personal credit score.
Most hard money lenders can fund within a few days, depending on paperwork and property appraisal.
You may be able to extend the loan term for an additional fee or refinance with another lender.
Some loans include them, but many flip loans are designed to be paid off early without penalty. Always check the terms.