House flipping has become a popular way to invest in real estate, especially in fast-growing markets. However, buying a property, renovating it, and selling it for a profit requires quick access to funds. That’s where flip loans—also called fix and flip loans—come in. These loans are short-term financing solutions designed for real estate investors who want to buy, fix, and sell a property quickly.
But getting approved for a flip loan isn’t automatic. Lenders need to see that you’re a reliable borrower and that the project you’re taking on is likely to be profitable. In this post, we’ll walk you through what you need to get approved for a flip loan, step by step.
A Clear Business Plan or Exit Strategy
The first thing lenders look for is your plan. They want to know how you’ll buy, renovate, and sell the property. This includes how long the project will take, what improvements you’ll make, and your estimated resale value. A solid exit strategy shows the lender that you’ve done your homework and are serious about the project.
In fact, many lenders prefer to see detailed breakdowns—how much you expect to spend on repairs, your estimated holding costs, and how long it’ll take to sell. All of this helps the lender understand your ability to repay the loan on time.
Property Information and Potential
The flip loan is tied directly to the property. That means the location, condition, and market potential of the property matter just as much as your personal financials. Lenders will often order a property appraisal or review recent sales in the area to ensure the investment makes sense.
For investors looking for a Professional Fix and Flip Loan Service in Baltimore MD, it’s especially important to highlight market trends, demand in the neighborhood, and recent comparable property sales. A property in a strong location with good resale value increases your chance of getting approved.
Experience in House Flipping
While not always required, having experience in flipping properties can greatly boost your approval odds. If you’ve successfully completed previous projects, lenders feel more confident that you understand what it takes to finish the work and sell the home quickly.
That said, first-time flippers can still qualify—especially if they partner with experienced contractors or have a strong plan and good credit history. Inexperienced investors should be prepared to provide more documentation and possibly face stricter terms.
Credit Score and Financial Standing
Although flip loans are asset-based (meaning they focus on the property itself), your credit and financial health still matter. Most lenders want to see a credit score of at least 620, though some may work with lower scores depending on other factors.
You may also need to show proof of income or assets, especially if the lender wants to verify your ability to cover renovation costs or any unexpected expenses during the project. Having some cash reserves is usually a plus.
Down Payment and Cash for Renovations
Most flip loans will require a down payment—often between 10% and 25% of the purchase price. On top of that, you may need cash on hand for repairs, holding costs (like taxes and insurance), and other out-of-pocket expenses.
Some lenders offer loan programs that include the rehab costs, but this varies. Make sure you understand what portion of the repairs will be covered by the loan, and how draws are distributed as work is completed.
Required Documentation
To get approved for a flip loan, you’ll typically need to provide:
- Purchase contract for the property
- Scope of work or rehab plan
- Budget estimates for repairs
- Contractor information (if available)
- Personal financial statement
- Credit report or score
- Proof of funds for down payment and reserves
Being organized and responsive with these documents can help speed up the approval process.
Choosing the Right Lender
Every lender has its own requirements, terms, and approval process. It’s important to work with a lender that understands real estate investment and has experience with fix and flip loans. Choose someone who offers clear terms, reasonable rates, and responsive customer support.
Investors in Maryland have found companies like Efundhomes LLC to be especially helpful. Known for working closely with both new and experienced flippers, they offer guidance and flexible loan options tailored to each project. Their understanding of the local market and strong lender relationships make them a preferred choice for many.
Final Thoughts: Preparation is Key
Getting approved for a flip loan isn’t as complicated as it might seem, but it does require preparation. If you have a strong plan, understand your numbers, and work with the right lender, you can position yourself for success.
Whether you’re flipping your first property or your fifteenth, knowing what it takes to get approved for a flip loan can save you time, stress, and money. Focus on building a strong project plan, keep your finances organized, and choose lending partners who understand your goals. With the right steps, you’ll be on your way to a successful real estate flip.