Seeing a house go from junky, old, and dilapidated to a home that is beautiful, stunning, and finished is exciting, and that is why house-flipping TV shows are so popular today. House flipping is an activity that many people take part in as a way of making money, and it might be something you really want to do. The hardest part about it is finding a way to finance your projects. If you are running into problems trying to get started with this type of business, you should look for a fix and flip loan.

What are a fix and a flip loan?

There are a lot of different types of loans you can get, but one of the best types to finance a home-flipping project is called a fix and flip loan. This loan type is designed for this purpose and tends to work out great for this purpose.

Suppose you want to buy a house that is only $40,000 but needs $60,000 of work. Can you come up with this amount of cash? Would you be able to get a regular loan? If you do not have the cash to pay the full $100,000 for the project, you would have problems financing the deal. Lenders are leery of offering loans for rehab projects, so you should not expect to qualify for a regular loan either. You could, however, pursue a fix and flip loan, as this is the type of loan that would be ideal for you in this situation.

What kind of terms comes with a fix and flip loan?

There are several things to know about fix and flip loans, and while every lender has different terms, most lenders have some similarities with these types of loans. For one, they generally offer 90% of the costs, which include both the purchase price and the rehab costs. In the above example, you could borrow $90,000 for this project, which would mean you would only have to come up with $10,000.

The second thing to know is that there are short-term loans. You probably will have to pay off the loan within one year, so you should keep this in mind before you get the loan.

There are not a lot of lenders that offer a fix and flip credit line, but there are some. If you begin looking for a lender, you will find one. You can talk to that lender to learn more about getting approved for a fix and flip loan so you can get started flipping your first home.