Home / Loan programs / Fix and flip loans
Fix and flip loans in Washington, DC
Bridge financing for investors who buy, renovate and resell in the District, Maryland and Virginia. One loan covers up to 90% of the purchase and the entire rehab budget.
Fix and flip loan terms
| Purchase financed | up to 90% |
| Rehab financed | up to 100% |
| Cap on after-repair value | 70 to 75% |
| Credit scores from | 600 |
| Term | 6 to 24 months |
| Payments | interest only |
| Average closing | 21 days or less |
The 90% and 100% figures apply at a 720+ credit score. Below that, leverage and pricing adjust down to a 600 minimum.
How the loan amount is worked out
The loan is built from two numbers. The first is a share of what you pay for the property. The second is your renovation budget, which is held back and paid out in draws as each stage of work is finished. The two together are limited to 70 to 75% of the after-repair value (ARV): the price the property should bring once the work is complete.
Example
| You buy the rowhouse for | $520,000 |
| Your rehab budget is | $160,000 |
| Expected resale value (ARV) | $930,000 |
| 90% of the purchase | $468,000 |
| 100% of the rehab | $160,000 |
| Loan amount | $628,000 |
| 75% of ARV, the ceiling | $697,500 |
| Down payment, before closing costs | $52,000 |
How experience and credit change the terms
- First deal? You can still qualify. A new investor with a 720+ score is eligible for the full 90% and 100%.
- Five or more flips in the past two years? You can close with no inspection and no appraisal, up to 75% of ARV.
- Score under 720? Programs run down to 600, with less leverage.
Experience is counted as properties you bought and sold in the past 24 months that were acquired within the past 36 months.
Built around a resale
- Interest-only payments while you renovate
- 6 to 24 month terms
- No prepayment penalty: pay off the day you sell
- No income or job verification
When a project stalls: mid-rehab loans
If a renovation is under way and the money has run out, a mid-rehab loan lends on the property as it stands today and adds the funds to finish.
What a DC flip involves
- Permits from the Department of Buildings. Structural, plumbing, electrical and mechanical work needs a DOB permit, and larger jobs go through plan review. Carry the permit time in your budget and loan term.
- Historic districts. Much of central DC lies in historic districts, including Capitol Hill, Georgetown, Shaw, Logan Circle, Mount Pleasant and LeDroit Park. Exterior work there needs historic preservation review as well as a building permit.
- The vacant property tax. DC taxes most homes, rented or owner-occupied, at $0.85 per $100 of assessed value. The risk for investors is the vacant and blighted classes: a property left unoccupied for 90 days or more must be registered, and is taxed at $5.00 per $100 if vacant or $10.00 if blighted. A property under construction with permits from the last 12 months, or actively listed for sale or rent, can qualify for an exemption, but you have to apply for it.
- Lead paint and old systems. Most DC rowhouses were built long before 1978. Expect lead paint, knob-and-tube wiring, failing rear walls and party-wall issues, and price them into the scope.
- Recordation and transfer taxes. DC charges a recordation tax and a transfer tax on each sale, each at 1.1% of the price under $400,000 and 1.45% at $400,000 or more. Buyers customarily pay the recordation tax and sellers the transfer tax, so on a flip you pay one when you buy and the other when you sell.
- Tenants in place. Most single-family homes, including a home with one accessory unit, have been exempt from DC’s Tenant Opportunity to Purchase Act since 2018, though elderly and disabled tenants under older leases keep their rights. Buildings with two or more rental units can carry TOPA rights that add notice periods before a sale can close.
- Where the deals are. Petworth, Brightwood, Brookland, Trinidad, Eckington, Deanwood and Congress Heights in the District, and older neighborhoods in Prince George’s County across the line.
Documents we ask for
- Loan application
- Signed purchase contract, or the settlement statement from your purchase if you are refinancing
- A rehab budget broken into line items with a clear scope of work
- Contact details for your insurance agent and title company or settlement attorney
- For an LLC: articles of organization, EIN letter and operating agreement
- For experienced investors: your projects from the last 3 years with settlement statements
The full list is in our hard money loan document checklist.
Fix and flip loans: common questions
As much as 90% of the purchase price and 100% of the renovation budget, provided the total loan is no more than 70 to 75% of the after-repair value. Those figures apply to borrowers with a credit score of 720 or higher.
The average is up to 21 days. Once title work and insurance are ready, a loan can close in about 7 days. Closings are handled by a title company or settlement attorney.
No. First-time investors can qualify. Investors who have completed 5 or more flips in the past 2 years get a shorter process with no inspection or appraisal.
It can be if it is unoccupied for 90 days and not exempt. Keep your building permits current and apply to the Department of Buildings for the construction exemption, which needs permits issued within the last 12 months.
No. Fix and flip loans carry no prepayment penalty.
Yes. When the work is done, a DSCR rental loan can replace the fix and flip loan, with a cash-out refinance at up to 80% loan-to-value.
No. We lend on investment property only.
Under contract on a flip?
Send the address, the price and what you plan to do with the property. We will reply with the leverage and pricing that fit your deal.