Fix & Flip Hard Money Loan Terms, Rates, And Qualifications
With lower approval qualifications in general, fix & flip loans have minimal needs and maximum benefits. As an added bonus, most fix & flip lenders only take a week or two to provide the funds you need. The loan rates are higher than traditional bank loans because the loan term is shorter, usually only 12 months long. Interest rates usually start around 7.5% and can go up to roughly 12%, depending on the loan term (6 months to 3 years).
Monthly payments are interest-only, and the last lump-sum is paid off at the end of the loan term. Fix & flip lenders usually finance 90% of the property’s LTV (loan to value ratio) and 75% of the property’s ARV (after repair value).
Borrowers should have a credit score of at least 600, have some experience in fix & flip projects, and a debt to income ratio of 35% to 45%. The better the credit score and experience you have makes you more trustable, but as we mentioned earlier, a lot of borrowers’ credentials are overlooked because the lender is more interested in the value of the project.
Who Benefits From Fix & Flip Loans
Both the lender and the borrower benefit from fix & flip loans. And, you don’t have to be a borrower with tons of flipping experience to be able to reap the benefits. In fact, fix & flip loans are great for real estate investors who have 2-3 projects under their belt, first-time investors who have help from a private contractor, and fix & flippers that are competing with all-cash buyers.
Contact the professional hard money lenders near you, RTI Bridge Loans, to learn more about the benefits of fix & flip financing.