Fix & Flip Loan Frequently Asked Questions

 

What is a Fix & Flip loan?

A Fix & Flip loan is a short-term real estate investment loan designed for investors who are purchasing, renovating, and reselling a property.

Ei8ht Street Funding’s Fix & Flip loans can help finance both the property acquisition and the renovation budget, subject to underwriting and program guidelines.

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What credit score is required for a Fix & Flip loan?

Ei8ht Street Funding generally requires a minimum 650 FICO score for Fix & Flip financing.

Borrower experience, liquidity, property condition, renovation scope, leverage, and overall deal strength are also considered.

 

Do I need prior Fix & Flip experience?

Not necessarily. Ei8ht Street Funding can finance qualifying Fix & Flip transactions for first-time investors and borrowers with limited experience. However, the highest leverage programs are generally reserved for more experienced investors.

 

Can I get 100% financing on a Fix & Flip?

Yes, qualifying experienced investors may be eligible for 100% financing.

Ei8ht Street Funding’s 100% financing program may provide:

• Up to 100% of the purchase price

• Up to 100% of the renovation budget

To qualify for this program, borrowers generally need:

• 720+ FICO

• At least 10 completed flips within the last 36 months

• At least 5 completed flips in the same state as the subject property

• Maximum eligible loan amount of approximately $800,000

All transactions remain subject to underwriting and property eligibility.

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What is LTC on a Fix & Flip loan?

LTC stands for Loan-to-Cost. It compares the loan amount to the total cost of the project, which typically includes:

Purchase Price + Renovation Budget = Total Project Cost

For example:

Purchase price: $200,000
Renovation budget: $50,000
Total project cost: $250,000

If the loan finances $225,000 of that project, the LTC would be:

$225,000 ÷ $250,000 = 90% LTC

 

What is ARV?

ARV stands for After-Repair Value.

It is the estimated market value of the property after the planned renovation work has been completed. The ARV is generally determined through an appraisal that considers the proposed scope of work and comparable renovated properties in the area.

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What is the maximum ARV leverage on a Fix & Flip loan?

For many qualifying Fix & Flip transactions, maximum leverage is capped at approximately 75% of the property's After-Repair Value. Even if a borrower qualifies for a high Loan-to-Cost percentage, the loan still has to satisfy the applicable ARV limitation.

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Does Ei8ht Street Funding finance renovation costs?

Yes. Fix & Flip financing can include renovation funds in addition to the property acquisition financing. The approved renovation budget is generally held back and released through a draw process as work is completed. (Out of pocket rehab is also allowed for experienced investors)

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How are renovation funds released?

Rehabilitation funds are generally released through a construction draw process.

As approved work is completed, the borrower requests a draw. The completed work may be inspected or otherwise verified before eligible funds are released.

The exact draw procedure may vary depending on the transaction.

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Do I pay interest on renovation money before I use it?

Generally, no. Ei8ht Street Funding’s Fix & Flip structure typically allows borrowers to pay interest on renovation funds after those funds have been drawn, rather than paying interest on the entire approved rehab budget from day one. This can help reduce carrying costs during the renovation period. (For smaller loan amounts full note payments may apply)

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Is a renovation contingency required?

Yes. Ei8ht Street Funding generally requires approximately a 10% renovation contingency for first time investors and heavy rehab projects. The contingency is designed to provide a cushion for unexpected project expenses, cost overruns, or changes during construction.

 

What happens if the initial advance is less than the purchase price?

If the approved initial loan advance does not cover the full amount required at closing, the difference is treated as the borrower’s required contribution.

 

Can a first-time investor get a Fix & Flip loan?

Yes. Ei8ht Street Funding can consider borrowers with no prior Fix & Flip experience, subject to credit, liquidity, property, renovation scope, and underwriting requirements.

However, first-time investors should generally expect lower leverage than borrowers with a strong verified track record.

 

How is Fix & Flip experience verified?

Borrowers claiming renovation experience may be asked to document their previous projects.

Typical supporting documentation can include:

• Property addresses

• Purchase and sale records

• Renovation budgets

• Before-and-after photos

• Closing statements

• Leases, when applicable

• Proof of ownership

• Evidence showing the borrower held the required ownership interest

For experience credit, the borrower generally must have had at least a 10% ownership interest in the prior project.

 

How far back does Fix & Flip experience count?

For higher leverage programs, Ei8ht Street Funding generally focuses on projects completed within approximately the last 36 months.

For example, the 100% financing program requires at least 10 completed flips during the previous 36 months.

 

What properties are eligible for Fix & Flip financing?

Fix & Flip financing is primarily designed for residential investment properties being purchased and renovated for resale or rental.

Eligible property types can include:

• 1-4 unit properties 

• 5-20 unit multifamily properties

• mixed use properties (Must be at least 70% residential)

Other property types may require separate review or a different Ei8ht Street Funding loan program.

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Can I use a Fix & Flip loan if I plan to keep the property as a rental?

Yes. A borrower may purchase and renovate a property using Fix & Flip financing and later refinance the completed property into long-term rental financing.

Ei8ht Street Funding also offers long-term rental and DSCR loan programs that may be used as an exit strategy once the renovation is complete and the property qualifies.

 

Can I refinance my Fix & Flip loan into a DSCR loan?

Yes, subject to qualification. Many real estate investors use what is sometimes referred to as the BRRRR strategy: Buy → Rehab → Rent → Refinance → Repeat

After renovation is completed and the property is rent-ready, the borrower may be able to refinance the short-term Fix & Flip loan into a long-term DSCR rental loan.

The refinance is subject to appraisal, seasoning, credit, DSCR, liquidity, and other applicable underwriting guidelines.

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Do I need tax returns for a Fix & Flip loan?

No. Fix & Flip loans are underwritten primarily based on the borrower’s credit profile, liquidity, investment experience, property value, renovation plan, and exit strategy, rather than traditional owner-occupied mortgage income underwriting.

Specific documentation requirements can vary by borrower and transaction.

 

Do I need pay stubs or W-2s for a Fix & Flip loan?

Traditional employment documentation is generally not the primary basis for Fix & Flip qualification. Ei8ht Street Funding focuses heavily on the strength of the investment transaction, borrower liquidity, credit, experience, and the property's current and projected value.

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Can I purchase a property through an LLC?

Yes. Fix & Flip properties are commonly purchased through an eligible business entity such as an LLC.

Borrowers should generally be prepared to provide entity documentation such as:

• Articles of Organization

• Operating Agreement

• EIN documentation

• Government-issued identification for guarantors or members

 

What documents are typically required for a Fix & Flip loan?

Requirements vary by transaction, but borrowers should generally be prepared to provide:

• Completed loan application

• Government-issued identification

• Recent bank statement

• Entity documents

• EIN documentation

• Purchase contract

• Scope of work

• Detailed renovation budget

• Real estate experience (if applicable)

• Title information

• Insurance information

• Additional documentation may be required during underwriting.

 

What should be included in the scope of work?

The scope of work should clearly outline the improvements being made to the property and the estimated cost of each item. Your ESF Loan officer will provide a template for the Scope of work. The renovation budget should be detailed enough for the lender and appraiser to understand the completed project.

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Does Ei8ht Street Funding require an appraisal?

Yes.An appraisal is typically required to determine the property's current value and projected After-Repair Value. in some cases desk appraisals maybe acceptable. 

The appraiser may review the renovation scope and budget when determining the projected completed value.

 

Does a higher ARV automatically mean I can borrow more?

No. The final loan amount is generally determined using multiple limitations, including:

• Loan-to-Cost

• After-Repair Value

• Purchase price

• Renovation budget

• Borrower experience

• Credit profile

• Liquidity

• Overall transaction risk

The loan is typically limited by whichever applicable leverage calculation produces the lower approved amount.

 

Can renovation funds cover labor and materials?

Yes. Eligible renovation budgets may include both labor and material costs, provided they are properly documented and approved as part of the scope of work.

 

Can I act as my own general contractor?

Yes. This may be possible depending on the borrower’s experience, project size, and transaction structure.

Ei8ht Street Funding may request additional information regarding the borrower’s construction experience.

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What happens if the renovation costs more than expected?

Borrowers should plan for potential cost overruns.

Ei8ht Street Funding generally requires a 10% contingency, but borrowers remain responsible for costs beyond the approved loan and renovation budget.

Having sufficient liquidity is therefore an important part of Fix & Flip underwriting.

 

How much liquidity do I need for a Fix & Flip loan?

Liquidity requirements depend on several factors, including:

• Purchase price

• Renovation budget

• Borrower contribution

• Closing costs

• Required reserves

• Experience level

• Loan structure

Borrowers should be prepared to document available funds through recent bank or other eligible asset statements.

 

What is the minimum credit score for 100% Fix & Flip financing?

The current 100% financing program generally requires a minimum 720 FICO, along with significant documented Fix & Flip experience.

Borrowers who do not meet those requirements may still qualify for standard Fix & Flip financing with a required borrower contribution.

 

Do I need 10 flips to get a Fix & Flip loan?

No. Ten completed flips are not required for standard Fix & Flip financing.

Ei8ht Street Funding can consider borrowers with fewer completed projects or even no prior experience. The 10-flip requirement applies to certain higher-leverage programs, including the current 100% financing option.

 

How many flips do I need to qualify for 90% LTC?

Borrowers with approximately 1-4 or more completed rehabilitation projects may be eligible for leverage up to 90% Loan-to-Cost, subject to a maximum of approximately 75% ARV and the overall transaction. Borrowers with 5+ are eligible for 95% LTC. (Rehab type may alter LTC)

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Can I finance an auction property with a Fix & Flip loan?

Potentially. Auction purchases may be considered depending on the property, closing timeline, title requirements, access for appraisal, and ability to satisfy underwriting requirements before the required closing date.

 

Can I finance a distressed or damaged property?

Yes, in many cases. Fix & Flip financing is specifically designed for properties requiring renovation. However, major structural problems, environmental issues, significant foundation concerns, or other serious property conditions may require inspections, engineering reports, remediation, or additional underwriting review.

 

Can I finance a property that is currently vacant?

Yes. Vacancy is common with Fix & Flip properties and does not automatically make the property ineligible. We will focus on property condition, renovation feasibility, value, budget, and the borrower’s exit strategy.

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Can I use Fix & Flip financing for a property I already own?

Potentially. Existing investment properties requiring rehabilitation may qualify for refinance or rehabilitation financing depending on ownership history, property condition, existing liens, equity, and the proposed scope of work.

The exact structure should be reviewed before proceeding.

 

What is the exit strategy for a Fix & Flip loan?

The exit strategy explains how the short-term loan will be repaid.

The two most common strategies are:

• Renovate and sell the property

• Renovate, rent the property, and refinance into long-term financing

Ei8ht Street Funding evaluates the proposed exit strategy as part of the underwriting process.

 

Can brokers submit Fix & Flip loans to Ei8ht Street Funding?

Yes. Mortgage brokers and real estate finance professionals can submit Fix & Flip opportunities to Ei8ht Street Funding for pricing and review. Eligible brokers may earn compensation of up to 3 points, subject to transaction and program requirements.

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How do I get a Fix & Flip loan quote from Ei8ht Street Funding?

To obtain preliminary pricing, investors or brokers should generally provide:

• Property address

• Purchase price

• Estimated current value

• Renovation budget

• Estimated After-Repair Value

• Borrower credit score

• Number of completed flips

Providing accurate information upfront helps Ei8ht Street Funding determine the appropriate leverage and loan structure.

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All loans are subject to review and approval is not guaranteed.