Pacific Equity & Loan

How to Finance a Fix and Flip Using Hard Money Loan

Flipping houses, or fix and flip, can earn you a lot of money. But to be successful, you need money to begin with. It doesn’t matter if you’re new or experienced in flipping houses, having money to fund your projects is the key to success. This money helps you buy the house and pay for the repairs. However, the most difficult part for any house flipper is often finding the money they need. In this blog post, we will find out more about how to get the money to finance a fix and flip project.

Financing a Fix and Flip

Raising enough money for your fix and flip projects may feel overwhelming, but there are ways to get the funds you need. One option is to work with lenders who specialize in rehab loans, also known as hard money lenders.

Don’t be fooled by the name, because hard money is actually the easiest way to finance your fix and flip. If you need money quickly for your project, working with hard money lenders is the best choice.

Conventional Lending vs. Hard Money Lending

Getting a loan from traditional banks is tough. They look at your credit, income, and down payment ability. Though they offer lower interest rates, these loans aren’t suitable for fix and flips.

First, traditional bank loans take too long. It can take 30-45 days to close, even if you meet all their requirements. Distressed sellers won’t wait that long when they have other interested buyers. Second, fix and flip houses aren’t usually livable. Most banks won’t give you a loan for such a house. Some loans may not care about conditions, but they demand a high down payment.

This is where hard money lenders fill in the gaps that conventional banks cannot. Rather than focusing on your personal merits, hard money lenders focus on the merit of the deal. They provide asset based loans, meaning the lender is primarily concerned about the property and not you personally. 

How to Finance a Fix and Flip Using Hard Money Loan

Hard Money Loan for Fix and Flip

Hard money lenders first look at the equity in the deal. If there’s enough equity, it’s considered safe. For example, if the house is worth $120K and needs $30K in repairs, you’ll invest $150K in total. After repairs, the home’s value becomes $200K ARV (after-repair value). The equity is $50K ($200K – $150K) and the LTV (loan-to-value) is 75% ($150K is 75% of $200K). This means if you default, the lender has a 25% safety margin. They can take back the property, sell it, and still be safe.

Hard money lenders close loans quickly, usually in 7-14 days. This helps you seal the deal as sellers want to sell fast.

Using hard money has pros and cons. It’s usually more expensive than conventional loans due to fees and interest rates. Also, hard money loans have shorter terms, around 6-12 months. This means you need to flip the house right away. Hard money lenders take on more risk, so shorter terms compensate for that.


How to Find a Hard Money Lender for Your House Flip

Now that you know why hard money lending is better for fix and flips, how do you find the right hard money lender?

Finding these lenders is just a Google search away. Simply type “hard money loans” in your search bar to get a list of lenders. There are two types: local and national lenders. National lenders usually offer better deals with more money, but they have stricter paperwork and processes. Local lenders may have higher rates, but they know the local market better and can offer more flexible terms.

To choose the right lender, ask questions about their terms, rates, and draw system. Each hard money lender is different, so research is important. Narrow down your options to find the best lender for your situation.


Let’s Break It Down

  • You need capital to fund your fix and flip project.
  • While banks are the most conventional lenders, they are not a suitable option to fund your fix and flips.
  • Hard money lenders are the best alternative to banks as they do not care about your financial situation or history but they care about the merits of the deal.
  • Hard money lenders have terms perfect for funding a fix and flip.
  • Hard money lenders are easy to find, you just have to do the proper research to find the right one for you.



When it comes to investment decisions, we all strive to be smart. One lucrative option is fixing and flipping homes to generate income. However, to make money in this venture, you need initial funds. The good news is that numerous hard money lenders specialize in fix and flip loans and believe in your potential to transform a property into a profitable investment. They are just a Google search away, ready to provide the capital you need for your next fix and flip project.

In this regard, Pacific Equity & Loan is worth considering. We specialize in fix and flip loans and offer a range of programs designed to accommodate borrowers with varying financial statuses and investment experiences. Our team of dedicated loan experts prioritizes our clients’ success, providing personalized guidance throughout the entire process. Contact us today to get started!


“Hard Money Lenders Explained – How To Properly Find & Utilize Them” YouTube, uploaded by Ryan Pineda, 22 July, 2020, https://www.youtube.com/watch?v=GICDUPAFtVo 

“How To Finance Fix And Flip” YouTube, uploaded by Kris Krohn, 28 September, 2018, https://www.youtube.com/watch?v=JrhdVeuqI2Y&t=80s 

“5 Ways To Fund A Fix And Flip” YouTube, uploaded by Flipping Mastery TV, 4 April, 2019, https://www.youtube.com/watch?v=0Cd8r85qgr4&t=116s 

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