Fix and Flip Loan

Last updated: April 22, 2025

Our mission is to help you build wealth through real estate. We provide real estate investors with fast, reliable, low-cost capital to purchase and renovate 1-4 unit residential properties.

Let's explore the OfferMarket Fix and Flip loan program!

What is a Fix and Flip loan?

A Fix and Flip loan is a loan to purchase and renovate a property. Fix and flip loans are commonly referred to a "hard money loan" or a "bridge loan" -- these names are used interchangeably among real estate investors and private lenders.

How it works

Fix and Flip loans have two components:

• Initial Advance -- the amount of the total loan that will go towards the purchase price. This amount is wired to the title company at closing.
• Construction Holdback -- the amount of the total loan that will go towards the rehab of the property. This amount is wired to the borrower via draw reimbursement.

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Your exit strategy will either be to sell ("flip") the property for a profit, or to rent the property and refinance out of the fix and flip loan into a longer term loan such as a DSCR loan. It's not uncommon for real estate investors to switch their exit strategy based on market conditions and financial projections.

For example, you may go into a project thinking it's going to be a BRRRR (buy, rehab, rent, refinance, repeat), but when you complete the project you may realize rental demand is softer than you expected and the resale market would provide irresistible gain on sale profits.

Another common example: you go into a project expecting to flip the property but the housing market cools down so you rent it out and refinance into a DSCR loan with a low prepayment penalty, wait a couple of years and then sell once the market heats back up.

These examples illustrate the importance of focusing on projects that have dual exit strategy options to mitigate your risk.

Who uses Fix and Flip loans?

• Fix and flip investors ("flippers")
• Rental property investors (learn more about BRRRR Method and the Fix and Rent bundle)

As noted above, it's not uncommon for real estate investors to have a hybrid strategy where they fix and flip and fix and rent based on how scenarios play out, like a quarterback running an audible.

Fix and Flip Loan Program Guidelines

Project Eligibility

Our mission is to help you build wealth through real estate and therefore our top priority is to help you manage risk. Across our lending business, less than 0.5% of all loans that we have ever originated have defaulted and required foreclosure. We take great pride in your success and we strive to achieve the lowest default rate in the private lending industry.

Low experience borrowers that take on projects with an objectively high degree of difficulty put themselves in the greatest financial danger. These "heavy" and "extensive" rehab projects tend to face the most delays, cost over-runs, and and adverse changes in market conditions which can put even high experience and high liquidity borrowers in a difficult position. This is especially true during periods of economic uncertainty.

To be clear, our role as your fix and flip lender is to partner with you on the deal as your deal advisor, risk manager and capital provider. Setting clear and consistent expectations is critical to empower you you safely grow your real estate business. Below, you will learn about our structured rehab scope classification system and eligibility based on rehab scope.

Initial Advance

The initial advance is determined based on borrower-specific and deal-specific criteria. We look at the number of investment properties owned within the last 24 months and the number of similar verifiable completed rehab projects over the last 5 years. The minimum credit score is 680 and we strongly prefer the personal guarantor in the borrowing entity to have a credit score of 720+. We provide increased leverage to Realtors, General Contractors and Professional Engineers.

If the purchase price is greater than our appraisal report or in-house valuation's opinion of As Is value, then the initial advance will be based on the opinion of As Is is value, not the purchase price in your contract.

If your exit strategy may affect your initial advance. If your plan is to sell the property, there should be a minimum projected gross margin of 30% and a minimum projected profit of $15,000. If your exit strategy is to rent and refinance the property, or if your flip exit strategy is not passing at your desired loan amount, then the projected DSCR after repairs should be at least 1.1. Use our Fix and Flip Calculator and our DSCR Calculator to analyze your exit strategies.

If the property has a rural designation, then the initial advance will be limited and a minimum experience level of 3 will be required.

Experience-based Tiers

Initial Advance by Tier

(*) 85% is available on an exception basis for borrowers with excellent credit and liquidity.

Adjustments to Initial Advance

Below you will find the scenarios where your initial advance will be adjusted.

Rehab scope classification

(*) A low purchase price "lopsided deal" is when the As Is value or purchase price is less than the rehab amount. See LTFC Limits section below for for Tier and LTFC limits.

Rehab scope eligibility

Your rehab scope eligibility is based on your experience tier and your rehab scope classification. In line with our focus on proper risk management, we advise our clients to focus on projects with lower rehab scopes, commonly referred to in the industry as "cosmetic" rehabs that can be completed quickly.

LTARV Limits

Your maximum loan-to-after-repair value (LTARV or ARLTV) is based on your experience tier and the rehab scope classification.

LTFC Limits

LTFC or "Loan-to-Full-Cost" is imposed on rehab scopes classified as Extensive which means the rehab budget is greater than the purchase price or As Is value of the subject property. An LTFC of 85% means the lender funds 85% of the project cost (purchase price + rehab budget), and the borrower covers the remaining 15% of the project cost. This ensures the borrower has skin in the game in projects with higher execution risk.

Example: No Experience

• Purchase price: $100,000
• Tier: 1 (0 similar verifiable experience)
• Credit score: 695
• Rehab budget: $24,000
• ARV: $150,000
• Initial advance: $75,000 (75%)
• Construction holdback: $24,000
• Total loan amount: $99,000
• LTARV: 66%
• LTFC: 79.8%
• Interest accrual: Full boat

Example: No Experience, Excellent Credit

• Purchase price: $100,000
• Tier: 1 (0 similar verifiable experience)
• Credit score: 750
• Rehab budget: $24,000
• ARV: $150,000
• Initial advance: $80,000 (80%)
• Construction holdback: $24,000
• Total loan amount: $104,000
• LTARV: 69.33%
• LTFC: 83.9%
• Interest accrual: As disbursed

Example: 5 Experience

• Purchase price: $100,000
• Tier: 4 (5 similar verifiable experience)
• Credit score: 750
• Rehab budget: $20,000
• ARV: $150,000
• Initial advance: $90,000 (90%)
• Construction holdback: $20,000
• Total loan amount: $110,000
• LTARV: 73.33%
• LTFC: 91.67%
• Interest accrual: As disbursed

Refinance using As Is value instead of Cost Basis for Initial Advance

Our standard underwriting approach involves lending within your cost basis—that is, the total of the purchase price and sunk costs incurred. This methodology ensures that the borrower maintains equity in the transaction ("skin in the game").

For refinance scenarios where you have a seasoned property that is worth more (As Is value) than cost basis (purchase price + capital expenditures), and you are looking to obtain leverage against the As Is value and conduct renovation, OfferMarket will carefully analyze the request and require the following:

• Property must be habitable (>= C4 condition)/must not be in state of disrepair
• Property must be 3+ years seasoned
• If payoff, lender should not be a bridge/construction lender nor should have default int, extension fees, late fees, etc
• Credit score 680+
• Experience Tier: 3 or higher (minimum of 4 similar verifiable rehab projects)
• Strong support for as is value > cost basis (sale comps in neighborhood support market value)
• Supportive scenario (i.e. property was rented out for 3 years, tenants vacated, now needs renovation to be listed for sale)

Transactions involving wholesalers, price run-ups

If the transaction involves a wholesaler, then the entire assignment fee or double-close price run up can be included in the value basis as long as the price run up is not more than 20% of the purchase price between the wholesaler and the seller (owner of record). You will be responsible for any additional component of the price run-up above this limit.

For example:

• A-B Contract (original owner of record and wholesaler): $100,000
• B-C Contract (assignment fee): $25,000
• As Is Value: $125,000
• Value basis for initial advance: $120,000

Wholesaler transaction guidelines:

• OfferMarket can include the assignment fee or double-close price run-up in your cost basis for your initial advance, up to 20% of A-B purchase price
• OfferMarket may decide to not allow the assignment fee or double close price run-up to be financed if the property was listed on the MLS
• OfferMarket requires full chain of contracts/assignments (A-B, B-C) and wholesaler's operating agreement
• OfferMarket will not finance finders fees or referral fees
• Must be arm's length transaction

Construction Holdback

The construction holdback component of your loan is provided via draw request and reimbursement for verified progress against your scope of work. Learn more about Draw Processing.

If you have sufficient liquidity to float the rehab with your own capital and you do not want a construction holdback component of your loan, you can elect to have no construction holdback.

Note that if your total loan amount is $100,000 or higher, then you will not be charged interest on undrawn construction holdback funds (see "As Disbursed" interest accrual).

Appraisal and In-house valuation

A valuation is required for all OfferMarket fix and flip loans. Depending on scenario, we will require a 3rd party interior appraisal, 3rd party exterior appraisal or in-house valuation.

In-house valuation

For borrowers that meet the above criteria, OfferMarket reserves the right to require an interior appraisal or exterior appraisal per the below sections at its sole discretion.

Exterior appraisal

Exterior appraisals are acceptable in the following scenarios:

• REO sale
• Foreclosure auction
• Sheriff's sale
• Online auction
• Bankruptcy sale

Exterior appraisal must be dated within 120 days of settlement date. If 120 but less than 180 days, then recertification of exterior appraisal is required.

Interior appraisal

Any scenario not mentioned in the above 'Exterior appraisal' or 'In-house valuation' sections will require a full interior appraisal:

Unless in the case of appraisal transfer (see below), OfferMarket will be responsible for ordering the appraisal via appraisal management company (AMC). You will be responsible for completing the AMC's invoice. Loan requests with unpaid appraisal invoice will be moved to HOLD status until invoice is paid.

Appraisal transfer

Appraisals not ordered by OfferMarket are eligible to be transferred to OfferMarket so long as the following conditions are met:

• appraisal was ordered via an approved appraisal management company
• appraisal is less than 180 days old at closing of our loan
• appraisal is re-certified if 120 to 179 days old at closing of our loan
• transferring lender has provided OfferMarket with:
  • signed transfer letter including the following certification "Lender certifies that the Appraisal was ordered and processed in compliance with the Appraiser Independence Requirements (AIR).”
  • Appraisal report (pdf)
  • Appraisal report (xml)
  • Appraisal invoice showing the appraisal has been paid for

Key Loan Details

Extensions

Fix and Flip loans are intended to be short-term. Extending your fix and flip loan is not ideal and should be avoided as a matter of best practice. It is important to focus on avoiding the following:

• inexperienced general contractors
• aggressive/ambitious rehab scope relative to experience and liquidity
• markets where zoning and permitting cannot be obtained in an expedient manner
• scenarios where you do not have immediate access to the property (i.e. tenant lease, eviction)
• scenarios where there is not a dual exit strategy to sell or refinance

Controlling for the above will dramatically reduce the risk that your project is delayed and needs to be extended.

Extension Limits

If you have not paid off your loan by the end of your loan term, you can extend for up to 50% of the length of your loan term. Extensions can be requested in 3 month and 6 month increments (see Extension Terms and Fees

Extension Terms and Fees

Extension fees will be added to your payoff statement per the following fee schedule:

Extension Prerequisites

In order to extend your loan, you will need to confirm that your Fix and Flip insurance policy is in effect for the duration of the extension period.

Ineligible Property Types

The following property types are not eligible for funding in this program:

• Mixed use
• 5+ unit multifamily
• Condotels
• Co-ops
• Mobile/manufactured housing
• Commercial properties
• Cabins/Log homes
• Properties with oil/gas leases
• Operating farms, ranches, orchards
• Vacation/seasonal rentals
• Unique/exotic/luxury properties
• Unpaved or dirt roads

Exception scenarios

• 660 - 679 guarantor credit score
• Leasehold (ground rent)
• Single family property 500 to 699 SqFt
• 2-4 unit property with one or more unit 400 to 499 SqFt
• Funding initial advance based on As Is value that is higher than Cost Basis
• Non-arms length transactions
• Financed interest payments

Borrower and Guarantor Requirements

Liquidity verification

To ensure a safe amount of liquidity, we verify that the guarantor(s) have a minimum of estimated cash to close + 25% of your rehab budget in liquid assets controlled by one or more guarantor.

Eligible liquid assets:

• Bank account(s) in personal name
• Bank account(s) in borrowing entity name
• Bank account(s) in other business entity name (need to verify operating agreement)
• Brokerage account(s) in personal name
• Brokerage account(s) in borrowing entity name
• Brokerage account(s) in other business entity name (need to verify operating agreement)
• Retirement account(s) in personal name (50% reduction applied due to restricted nature of account)

Important information:

• You do not need to have a business bank account, though this is recommended as a best practice for accounting and risk management.
• Aside from the cash due from borrower (cash to close) which will be confirmed on your settlement statement and wired by you to the title company or real estate attorney facilitating the closing, you do not need to move funds from your verified accounts.

Credit and Background Items

• If 3 credit scores are returned on trimerge report, we use the middle score (2nd highest).
• If 2 credit scores are returned on trimerge report, we use the lowest score.
• If no mortgage tradelines (credit report or private loan verification of mortages, we require 6 months of interest reserves.
• If less than 5 tradelines on credit report, we we require 6 months of interest reserves.
• If bankruptcy on background, discharge date must be greater than 4 years from our settlement date.
• If foreclosure on background, completion date must be greater than 4 years from our settlement date.
• If bankruptcy or foreclosure between 4 years and 7 years from settlement date, we will require a minimum of 3 months of interest reserves.
• If late mortgage payments in past 12 months, we will require LOE and may not be eligible subject to loan committee discretion.
• If past due balances on mortgage and non-mortgage tradelines (i.e. HELOC, HELOAN, credit card) must be paid in full prior to funding.
• If involuntary liens or judgements on background (i.e. tax lien, child support) must be paid in full prior to funding.
• If pending civil lawsuits, LOE required and subject to loan committee discretion.
• If pending criminal lawsuits, not eligible for funding.
• If financial crime on background, not eligible for funding.
• If serious crime on background, not eligible for funding.
• If repeat crime on background, LOE required and subject to loan committee discretion.

Interest Reserves

Interest reserves refer to interest payments collected on the settlement statement and held in servicing escrow. Interest reserves, if applicable to your loan, are applied to your accrued interest and drawn down before you start making your monthly interest payment from your bank account.

Financed Interest Payments

To protect your liquidity and avoid compromising your credit score due to excessive usage of credit cards during your rehab, you may be eligible for financed interest payments. This means that, instead of making monthly interest payments, your interest will be added to your payoff statement.

For example:

• Total loan amount: $100,000
• Interest rate: 12%
• Months held to payoff: 9
• Accrued interest: $9,000 ($100,000 * 12% ÷ 12 months * 9 months)
• Payoff statement:
  • Unpaid principal balance: $100,000
  • Unpaid interest: $9,000

Property Sourcing Guidelines

Key Points:

• New market transactions require a General Contractor agreement or Letter of Explanation for why a GC is not required.
• Properties with previous sale price increases, wholesale deals, and non‑arms length transactions require additional documentation and review.
• For condos, conversions, and projects requiring significant renovation, architect or engineer letters (or permits) are required.
• All submissions should include purchase contracts, settlement statements, payoff letters (if applicable), track record, and necessary formation documents.

Frequently Asked Questions

What states does OfferMarket fund fix and flip loans?

• Arizona*
• Alabama
• Arkansas
• California
• Colorado
• Connecticut
• Delaware
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Mississippi
• Missouri
• Minnesota*
• Montana
• Nebraska
• Nevada*
• New Hampshire
• New Jersey
• New Mexico
• New York
• North Carolina
• North Dakota*
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota*
• Tennessee
• Texas
• Utah
• Vermont*
• Virginia
• Washington
• Washington DC
• West Virginia
• Wisconsin
• Wyoming

(*) In states where NMLS license is required for business purpose lending or we do not directly lend, OfferMarket operates as a rate shopping service and refers your loan to a licensed capital provider.

Can I do more than one fix and flip loan at a time?

Yes, you can have more than one fix and flip loan at a time. It is common for OfferMarket clients to have multiple fix and flip loans outstanding at any given point in time. This said, our number one priority is assisting you with risk management and if we feel as though your liquidity or pace of project execution does not support additional loans, we will raise this concern and work with you to safely manage your risk.

Are fix and flip loans commercial?

Yes. Fix and Flip loans are considered "business purpose" loans and accordingly, because they are issued to your business entity ("borrowing entity"), they are classified as commercial loans.

What is the minimum loan amount?

The minimum loan amount is $25,000.

Which property types are eligible?

We finance non‑owner occupied 1‑4 unit residential properties including single-family residences, townhomes, small multifamily (2‑4 units), and warrantable condos.

Note:

• 2-4 unit mixed use, 5-9 unit mixed use, and 5-9 unit multifamily properties are not eligible in this program but are available via their respective loan programs here at OfferMarket.

• 10+ unit residential and non-residential commercial (i.e. retail, office, industrial) are not eligible

  How do you calculate Loan-to-Value (LTV)?

  For Fix and Flip loans, LTV most commonly refers to loan-to-after-repair-value (LTARV). LTV is loan-to-as-is-value. Our initial advance is based on the lower of the As Is value and the purchase price in your contract or the purchase price in your previous closing if this is a refinance transaction. LTARV is the total loan amount (initial advance + construction holdback) divided by the after-repair value determined in our appraisal report or in-house valuation.

  What are the credit requirements?

  A minimum FICO score of 680 is required. Borrowers with scores between 660 and 680 may be considered on an exception basis. We look at the credit score of each member of the borrowing entity that will be personally guaranteeing the loan. We do not look at the credit score of members who will not be personally guaranteeing the loan.

What are the experience requirements?

Experience is not required. Experience, based on verifiable completed projects with rehab scopes similar or greater than the requested loan, allows for greater leverage based on our experience Tier system detailed above.

Once you complete the Track Record section of your Loan File, our underwriting team will research each subject property. We may ask for supplemental documentation such as settlement statement(s), and operating agreement(s) so we can verify your involvement with the project.

Does being a wholesaler count towards experience?

Being a wholesaler in a transaction does not count towards your experience score because you were not financially responsible for successful completion of the rehab of the associated subject property.

What is builders risk insurance?

Builders risk insurance protects your property and on-site construction materials throughout the renovation, construction or rehab phase of your fix and flip or BRRR project. Perils covered by your builders risk insurance policy can vary by insurance carrier and your selected form (basic, special) and most commonly include fire, lightning windstorm, hail, falling debris, vandalism, and theft.

• Buildings under construction
• Materials and equipment on premises or within 100 feet
• Foundation

Your builders risk policy is terminated when one of the following events occur:

• Property ownership is transferred to the buyer
• 90 days have elapsed since construction was completed
• Property is occupied or put to its intended use
• Insured's interest in the property ceases
• Insured abandons the construction project with no intention of completion

Most builders risk policies are on a Completed Value Form where the property insurance dwelling coverage policy limit equals the property's ARV or ARV replacement cost estimate.

What documentation is required?

Our Loan File system is designed to make it easy to complete processing items and expedite loan approval and funding. Documentation that can be used for future transactions will be securely stored in your OfferMarket account to expedite future loan applications.

Purchase Transaction Requirements

Purchase Transaction Requirements

Are there special requirements for loans over $1M?

Loans over $1M (up to our $2M maximum) are subjected to the following adjusted guidelines:

Glossary of Key Terms

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Instant Fix and Flip Loan Quote

OfferMarket is a real estate investing platform. Our private lending division, OfferMarket Capital LLC, is a leading private lender for real estate investors and we specialize in Fix and Flip loans for 1-4 unit residential properties. Our mission is to help you build wealth through real estate and we would love the opportunity to partner with you on your next transaction.

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Thousands of real estate investors get value from OfferMarket every month. Membership is entirely free and includes the following benefits:

💰 Private lending
☂️ Insurance rate shopping
🏚️ Off market properties
💡 Market insights

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