Fix-and-flip hard money loan requirements: credit score, down payment, and what lenders really look at.

Ask five lenders what it takes to fund a flip and you'll get five different answers. That's not because the rules are secret. It's because hard money is underwritten deal-first, borrower-second, and every lender weighs the two a little differently. Here's how it actually works, so you can walk into your next deal knowing what to expect.

Credit score: 600+ opens doors, but many lenders skip it entirely

Traditional banks lean heavily on your credit score. Most hard money lenders set a floor somewhere between 600 and 680. But a large share of asset-based private lenders don't run credit at all. They're underwriting the property and your plan for it, not your FICO.

That matters more than it sounds. If you've got a credit blemish from a rough year, a divorce, or a past business, you are not locked out of this market. What replaces the credit score in those files is the strength of the deal: purchase price relative to after-repair value, a realistic rehab budget, and evidence you can execute.

The practical takeaway: know your score before anyone else pulls it, and don't let three lenders run hard inquiries trying to find out. A soft pull tells you where you stand without touching your credit.

Down payment reality: 10 to 25% is the new standard

Expect to bring 10 to 25% of the purchase price to closing. Most active lenders today land at 10 to 20%, with the exact number shaped by two things: your experience and the deal itself. A first-time flipper on a marginal deal sits at the top of that range. A proven operator on a deal with obvious spread sits at the bottom.

Some lenders also accept cross-collateralization, where equity in another property you own secures the new loan and stands in for cash at closing. If you already hold real estate, it's worth asking about deal by deal. It's how "no money down" actually happens in this market: not because someone is being generous, but because you're bringing equity instead of cash.

Cash reserves depend on your experience level

Beyond the down payment, lenders want to see that you can carry the loan while the work is being done. The usual expectation:

• Experienced flippers: roughly 3 to 4 months of loan payments in reserves.
• Newer investors: roughly 6 to 8 months.

It's a cushion, not a penalty. Rehabs run long, contractors get delayed, and a buyer falls through. Reserves are what keep a slow month from becoming a lost deal. And if reserves are the thing standing between you and your next loan, that is exactly the gap working capital between draws is built to cover.

ARV lending: how 65 to 80% loan-to-value actually works

This is the number that confuses most first-time investors. Hard money lenders don't lend against what the house is worth today. They lend against its after-repair value: what it should appraise for once the work is done.

Most lenders fund up to 65 to 75% of ARV, and some go to 80%. Say you find a property for $150,000, put $50,000 into it, and it's worth $280,000 finished. At 70% of ARV, the lender's ceiling is $196,000, which covers the purchase and most of the rehab. That's why a good deal can fund with a modest down payment: the spread is doing the work.

What drives the ARV calculation

Your lender's ARV is only as good as the comps behind it. Three things move the number:

• Recent sold comps for renovated properties in the same neighborhood, not listings and not un-renovated sales.
• The scope of your rehab. A cosmetic refresh and a full gut produce different finished values, and lenders will want the budget to match the claim.
• Market conditions. A cooling market gets a conservative ARV. An appreciating one still gets a haircut, because lenders plan for the exit, not the peak.

Bring your own comps to the first conversation. A lender who sees you've done the homework moves faster and often lends higher.

Experience and location change your percentage

Two investors can bring the same deal and get different terms. New investors typically qualify for 65 to 70% of ARV. Experienced flippers with a track record of completed projects often secure 70 to 75%, and sometimes more. Location matters too: dense, liquid markets with fast resale get better leverage than rural or thin markets, where the exit is slower and riskier.

If you're early in your track record, the fastest way to better terms is a clean, well-documented first deal. Every completed flip is leverage on the next one.

Real profits: what a flip actually returns

Nationally, average gross profit on a home flip has run around $72,000 in recent years, with 2024 reports landing between $66,000 and $73,500. That's gross, before financing costs, holding costs, and the surprises behind the drywall.

The flips that lose money almost never lose it on the purchase. They lose it on hidden renovation costs and interest that piles up while the timeline slips. Which is why the two things that protect your profit most are an honest rehab budget with contingency built in, and funding that's structured so a delay doesn't stop the work.

Speed: why private capital wins on timeline

A bank takes 30 to 45 days on a good day, and wants full income documentation, an appraisal, and a credit file that fits its box. Private lenders can fund in as little as 4 days, with most closings landing in 7 to 10, because the underwriting is the deal, not your tax returns. In a competitive market, that speed is the difference between winning the contract and watching someone else close it.

How to walk in pre-qualified

The investors who fund fastest aren't the ones with the best credit. They're the ones who show up with the file ready. Before your first conversation, have these on hand:

• Property: address, purchase price, and the loan amount you're requesting.
• Project: loan type (fix and flip, bridge, refinance, or ground-up), rehab budget, and your estimated ARV with comps.
• You: contact details, entity name if you use one, and a quick summary of past deals.
• Timeline: when you need to close.

That's it. No income verification, no full doc package. With those details, most deals get an initial answer within 24 hours.

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