8 Funding for Flipping Sources [Stop Missing the Best Deals!]

Funding for Flipping

Finding funding for your next Fix and Flip may be easier than you think. In this article, we will show you 8 proven sources for finding quick and affordable capital for your next deal. We have also included links to various providers and lending institutions.

Most people will immediately think of traditional mortgages or bank loans as their only option for capital, but they aren’t the only ones offering loans to fix and flip investors.

Today you are going to discover 8 funding sources that aren’t often talked about in the regular real estate investing forums.

You will learn how to:
Access Low-Cost Fix and Flip Loans
Apply for an FHA 203k Loan
Get Cheap Credit with the FNMA HomeStyle Loan
Use Your Property in a HELOC
Apply for a Business Line of Credit
Take Advantage of Business Credit Cards
Tap into Crowdfunding
Raise Private Money

Access Low-Cost Fix and Flip Loans (Hard Money)

Fix and Flip

One of the most common ways to finance a Fix and Flip is through what’s called a hard money loan.

A hard money loan typically comes from a private lender and includes several points paid up front in an interest rate ranging anywhere from 10 to 20% depending on the project and the borrower.

Hard money lenders will usually look a lot harder at the project than at the borrower. Often, credit scores don’t matter too much, however you will typically need either substantial equity or a down payment since most hard money lenders like to be very secure in their investments.

Fix and Flip Pros:

  • Hard money lenders typically can close very, very quickly.
  • They can allow you to make offers on a property with the assurance that you’ll be able to close on time with cash.
  • One of the side benefits of working with a hard money lender who actually knows the business is that they’ve seen a lot of deals and understand the numbers. If they’re refusing your loan you should consider whether or not you would even want to proceed with the project.

Fix and Flip Cons:

  • Hard money lenders try to never lose, same with any lender.
  • You’ll find that these can be somewhat expensive loans if you don’t act quickly.
  • If you’re not an experienced person or if your project drags on, then the fees and interest can rack up. You also need to be aware of any terms which could mean additional points and payments at the latter stages of the loan if not paid in time.
Check out one of our favorite hard money lending platforms here.

Apply for an FHA 203k Loan

FHA 203k loan

An FHA 203k loan enables you to finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage or to finance the rehabilitation of an existing home.

This type of loan will allow you to get a mortgage to purchase the house and do the necessary repairs in order to put it back on the market.

Eligible FHA 203k Updates Include:

  • structural alterations and reconstruction
  • modernization and improvements to the home’s function
  • elimination of health and safety hazards
  • changes that improve appearance and eliminate obsolescence
  • reconditioning or replacing plumbing; installing a well and/or septic system
  • adding or replacing roofing, gutters, and downspouts
  • adding or replacing floors and/or floor treatments
  • major landscape work and site improvements
  • enhancing accessibility for a disabled person
  • making energy conservation improvements

FHA 203k Pros:

  • This loan makes it easy to purchase a house that needs repairs because it includes all the costs of renovation in one mortgage.
  • Since their criteria is very straight-forward, it’s easy to qualify for a loan.
  • You can get a loan with a down payment as low as a 3%.
  • You can often finance government foreclosure purchases with FHA 203k loans.

FHA 203k Cons:

  • FHA 203k loans involve a lot of paperwork. There will be plenty of documents for you and your contractors to fill out before you get the loan.
  • The loan limits can be low in certain areas so you might not be able to get the amount you want. It’s best to check on the limits before you start the process.
  • You must live in the property for 12 months. This means that it’s not going to be a quick flip, though it can still be very profitable when you consider the money that you can save.
Find more information about FHA 203k loans here.

Get Cheap Credit with the FNMA HomeStyle Loan

Fannie Mae Loan

The HomeStyle Renovation Mortgage is a special loan, created by Fannie Mae, that allows you to borrow on the cost of the house and renovations much like the FHA 203k loan.

The HomeStyle Loan has fewer improvement and property restrictions but you need a minimum FICO score of 620 to apply, which might make it hard for some borrowers.

FNMA HomeStyle Loan Pros:

  • Unlike the FHA 203k loan, the HomeStyle loan allows you to finance primary, vacation, and rental properties.
  • No restrictions on the type of improvements
  • Higher loan limits

FNMA HomeStyle Loan Cons:

  • It requires higher credit scores and lower debt-to-income ratios.
  • You need at least 5% as a down payment.
Find more information on FNMA HomeStyle loans here.

Use Your Property in a HELOC


A HELOC is a home equity line of credit. First-time investors who own a home as a primary residence can use a HELOC to tap into its equity to help finance a Fix and Flip.

Using your home as equity is a tried-and-true method for many successful investors. As long as you keep a steady hand on the costs of the project you should be able to able to make a tidy profit.

HELOC for Investing Pros:

  • Interest rates are much lower on HELOCs than on most other construction loans, certainly much lower than a hard money loan.
  • You can expect to pay a couple of points higher than a traditional 30-year mortgage.
  • You can draw on a home equity line of credit just like you would a bank account, credit card, or checking account so you don’t have to wait for the slow releases that can happen with traditional construction loans.

HELOC for Investing Cons:

  • You are putting up your own home as collateral when you take a home equity line of credit and you need to understand that those loans can be called.
  • If the market changes and the lender believes that your property is not worth as much as it was, they can cap or cut your line. In fact, they can even cut it below the amount that you’ve spent; it has happened to many borrowers during previous crises.

Apply for a Business Line of Credit

Business Line of Credit

A business line of credit is a lot like a home equity line of credit only you don’t put your home at risk.

You’re able to draw on a business line of credit just like you would from a checking account or a credit card and you can use those funds for your Fix and Flip project. There are numerous providers that offer flexible rates and repayment terms, depending on your business.

Business Line of Credit Pros:

  • You can draw on your line of credit as you see fit. Typically, a business line of credit may be guaranteed by you personally but it won’t impact your financing on your home which means you wouldn’t have to put your home up as collateral for your Fix and Flip project.

Business Line of Credit Cons:

  • You have to be a business to get a line of credit.
  • If you haven’t been in business for long, there may not be much credit available to you. However, there are so many lenders offering business lines of credit (even up to $250,000) that it’s highly likely that, if you are incorporated and you have any kind of track record at all, you will be able to secure some amount of credit.

Take Advantage of Business Credit Cards

Credit Card

Business credit cards have recently become easier to get because of the historically low interest rates.

You can use your bank credit card to pay for quick home improvements and easy renovations.

Since the interest rates are pretty high it’s best not to draw any more than is essential for your flip.

Business Credit Card Pros:

  • Once you have the credit card, there are no other approvals to acquire.
  • You don’t need to ask anybody for withdrawals.
  • Neither your home nor the property that you’re flipping is collateral for a business credit card so you don’t put your own personal property at risk.

Business Credit Card Cons:

  • If you haven’t been in business for very long, then you’re probably not going to get much of a line.
  • If you miss a payment the interest rates will be really high. In general, business credit card interest rates are going to be higher than they would be on a HELOC or FHA 203k loan or even a hard money loan.

Tap into Crowdfunding

Get Crowdfunding

There are quite a few real estate-focused crowdfunding platforms that you can use to raise money for your fix and flip.

One of the most successful platforms is PeerStreet, which specializes in real-estate backed loans. Accredited investors use the site (and others like it) to find private real estate-backed loans to add to their portfolios.

Crowdfunding Pros:

  • Crowdfunding companies are working aggressively to put money to work.
  • There’s an easy online application process.

Crowdfunding Cons:

  • There can be a lack of transparency.
  • While there are glowing reviews for some crowdfunding sites, there are some highly critical reviews from investors looking for fix and flip financing who are either not able to close on time or who had other troubles with staff or management.

Raise Private Money

Raise Private Money

Private money is when you use somebody else’s money to make a purchase. Typically, this is considered an equity investment and not a debt investment.

Private money for notes, fix and flips, and REO can come from friends, family, or local investors.

Whenever you raise private money, pay attention to the terms and conditions of the loan and be prepared to give a large share of the equity to those who are raising the majority of the money.

Raising private money can be a great way to establish yourself as a someone who can provide a good return amongst a group of investors. This way you will have a dependable source of capital for every new project that you find.

Private Money Pros:

  • When you raise private money you usually exchange the loan for a share in the equity which means that you won’t have debt payments to make.
  • You won’t have to ask for withdrawals since you will have already taken the money and placed it in your operating account.

Private Money Cons:

  • When you take equity investment instead of debt investment that means that you will share some if not most of the proceeds and the profits.
  • Equity investors participate in all of the upside or the potential of the property in the sale, where debt investors have more fixed returns.
Check out one of our favorite private money lending platforms here.

Leave a Comment