Last updated: March 27, 2025
Our mission is to help you build wealth through real estate. We provide real estate investors with fast, reliable, low-cost capital to purchase and renovate 1-4 unit residential properties.
Let's explore the OfferMarket Fix and Flip loan program!
A Fix and Flip loan is a loan to purchase and renovate a property. Fix and Flip loans are commonly referred to a "hard money loan" or a "bridge loan" -- these names are used interchangeably among real estate investors and private lenders.
A Fix and Flip loan has two components:
Your exit strategy will either be to sell ("flip") the property for a profit, or to rent the property and refinance out of the fix and flip loan into a longer term loan such as a DSCR loan. It's not uncommon for real estate investors to switch their exit strategy based on market conditions and financial projections.
For example, you may go into a project thinking it's going to be a BRRRR (buy, rehab, rent, refinance, repeat), but when you complete the project you may realize rental demand is softer than you expected and the resale market would provide irresistible gain on sale profits.
Another common example: you go into a project expecting to flip the property but the housing market cools down so you rent it out and refinance into a DSCR loan with a low prepayment penalty, wait a couple of years and then sell once the market heats back up.
These examples illustrate the importance of focusing on projects that have dual exit strategy options to mitigate your risk.
As noted above, it's not uncommon for real estate investors to have a hybrid strategy where they fix and flip and fix and rent based on how scenarios play out, like a quarterback running an audible.
Criteria | Fix and Flip Loan |
---|---|
Loan amount (minimum) | $25,000 |
Loan amount (maximum) | $2,000,000 |
ARV (minimum) | $100,000 |
Experience | Not required |
Credit score (minimum) | 680 |
Borrowing entity | LLC or Corporation |
Initial advance | up to 90% |
Construction holdback | up to 100% |
LTARV (maximum) | 75% |
Interest rate | get instant quote |
Origination fee | 1.5 to 2 points |
Term | 12 to 24 months |
Points out | None |
Prepayment penalty | None |
Structure | Interest-only with balloon payment |
Recourse | Full (51% of borrowing entity must guarantee) |
Exit strategy: Sale | minimum 30% ROI |
Exit strategy: Refinance | minimum 1.1 DSCR after repairs |
Valuation | Appraisal report or In-house valuation |
SqFt (minimum) |
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Acerage (maximum) | 5 |
Interest accrual |
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Advanced draws | Lender discretion |
Down payment (minimum) | $10,000 |
Our mission is to help you build wealth through real estate and therefore our top priority is to help you manage risk. Across our lending business, less than 0.5% of all loans that we have ever originated have defaulted and required foreclosure. We take great pride in your success and we strive to achieve the lowest default rate in the private lending industry.
Low experience borrowers that take on projects with an objectively high degree of difficulty put themselves in the greatest financial danger. These "heavy" and "extensive" rehab projects tend to face the most delays, cost over-runs, and and adverse changes in market conditions which can put even high experience and high liquidity borrowers in a difficult position. This is especially true during periods of economic uncertainty.
To be clear, our role as your fix and flip lender is to partner with you on the deal as your deal advisor, risk manager and capital provider. Setting clear and consistent expectations is critical to empower you you safely grow your real estate business. Below, you will learn about our structured rehab scope classification system and eligibility based on rehab scope.
The initial advance is determined based on borrower-specific and deal-specific criteria. We look at the number of investment properties owned within the last 24 months and the number of similar verifiable completed rehab projects over the last 5 years. The minimum credit score is 680 and we strongly prefer the personal guarantor in the borrowing entity to have a credit score of 720+. We provide increased leverage to Realtors, General Contractors and Professional Engineers.
If the purchase price is greater than our appraisal report or in-house valuation's opinion of As Is value, then the initial advance will be based on the opinion of As Is is value, not the purchase price in your contract.
If your exit strategy may affect your initial advance. If your plan is to sell the property, there should be a minimum projected gross margin of 30% and a minimum projected profit of $15,000. If your exit strategy is to rent and refinance the property, or if your flip exit strategy is not passing at your desired loan amount, then the projected DSCR after repairs should be at least 1.1. Use our Fix and Flip Calculator and our DSCR Calculator to analyze your exit strategies.
If the property has a rural designation, then the initial advance will be limited and a minimum experience level of 3 will be required.
Tier | Verifiable experience |
---|---|
1 | 0 |
2 | 1 to 2 |
3 | 3 to 4 |
4 | 5 to 9 |
5 | 10+ |
Tier | Initial advance (% of purchase price) |
---|---|
1 | 80%* |
2 | 85% |
3 | 85% |
4 | 90% |
5 | 90% |
(*) 85% is available on an exception basis for borrowers with excellent credit and liquidity.
Below you will find the scenarios where your initial advance will be adjusted.
Scenario | Adjustments |
---|---|
Credit score less than 720 | -5% |
Full gut rehab | -5% |
New market | -5% |
Licensed Realtor | up to +5% |
Licensed General Contractor | up to +10% |
Licensed Professional Engineer | up to +10% |
Rural | -20% (3+ experience) |
Rehab Scope | Definition |
---|---|
Light | Rehab budget is less than 25% of purchase price |
Moderate | Rehab budget is 25% to 49.99% of purchase price |
Heavy | Rehab budget is 50% to 99.99% of purchase price |
Extensive (100%+) | Rehab budget is 100%+ of purchase price -- addition, expansion, ADU, low purchase price lopsided deal* |
(*) A low purchase price lopsided deal is when the As Is value or purchase price is less than the rehab amount. See LTFC Limits section below for for Tier and LTFC limits.
Your rehab scope eligibility is based on your experience tier and your rehab scope classification. In line with our focus on proper risk management, we advise our clients to focus on projects with lower rehab scopes, commonly referred to in the industry as "cosmetic" rehabs that can be completed quickly.
Tier | 1 | 2 | 3 | 4 | 5 |
---|---|---|---|---|---|
Experience | 0 | 1-2 | 3-4 | 5-9 | 10+ |
Light | Eligible | Eligible | Eligible | Eligible | Eligible |
Moderate | Ineligible | Eligible | Eligible | Eligible | Eligible |
Heavy | Ineligible | Eligible | Eligible | Eligible | Eligible |
Extensive | Ineligible | Ineligible | Eligible | Eligible | Eligible |
Your maximum loan-to-after-repair value (LTARV or ARLTV) is based on your experience tier and the rehab scope classification.
Tier | 1 | 2 | 3 | 4 | 5 |
---|---|---|---|---|---|
Experience | 0 | 1-2 | 3-4 | 5-9 | 10+ |
Light | 70% | 70% | 75% | 75% | 75% |
Moderate | Ineligible | 70% | 75% | 75%< | 75% |
Heavy | Ineligible | 70% | 75% | 75%< | 75% |
Extensive | Ineligible | Ineligible | 70% | 70% | 70% |
LTFC or "Loan-to-Full-Cost" is imposed on rehab scopes classified as Extensive which means the rehab budget is greater than the purchase price or As Is value of the subject property. An LTFC of 85% means the lender funds 85% of the project cost (purchase price + rehab budget), and the borrower covers the remaining 15% of the project cost. This ensures the borrower has skin in the game in projects with higher execution risk.
Tier | 1 | 2 | 3 | 4 | 5 |
---|---|---|---|---|---|
Experience | 0 | 1-2 | 3-4 | 5-9 | 10+ |
Light | N/A | N/A | N/A | N/A | N/A |
Moderate | Ineligible | N/A | N/A | N/A< | N/A |
Heavy | Ineligible | N/A | N/A | N/A< | N/A |
Extensive | Ineligible | Ineligible | 85% | 90% | 90% |
Our standard underwriting approach involves lending within your cost basis—that is, the total of the purchase price and sunk costs incurred. This methodology ensures that the borrower maintains equity in the transaction ("skin in the game").
For refinance scenarios where you have a seasoned property that is worth more (As Is value) than cost basis (purchase price + capital expenditures), and you are looking to obtain leverage against the As Is value and conduct renovation, OfferMarket will carefully analyze the request and require the following:
If the transaction involves a wholesaler, then the entire assignment fee or double-close price run up can be included in the value basis as long as the price run up is not more than 20% of the purchase price between the wholesaler and the seller (owner of record). You will be responsible for any additional component of the price run-up above this limit.
For example:
Wholesaler transaction guidelines:
The construction holdback component of your loan is provided via reimbursement for verified progress against your scope of work. If you have sufficient liquidity to float the rehab with your own capital and you do not want a construction holdback component of your loan, you can elect to have no construction holdback.
Note that if your total loan amount is $100,000 or higher, then you will not be charged interest on undrawn construction holdback funds (see "As Disbursed" interest accrual).
Criteria | Draw Processing Guideline |
---|---|
Minimum draw amount | None |
Maximum draw amount | 100% of remaining construction holdback |
Minimum number of draws | 0 |
Maximum number of draws | None |
Materials delivered but not installed | 50% (receipt or invoice required) |
Draw inspection | App-based (self-serve) |
Draw turnaround | 0 to 2 business days |
Draw fee | $270 |
Wire fee | $30 |
A valuation is required for all OfferMarket fix and flip loans. Depending on scenario, we will require a 3rd party interior appraisal, 3rd party exterior appraisal or in-house valuation.
Criteria | Eligibility requirement |
---|---|
Property type | Single family, Duplex, Triplex, Quadplex |
Tier | 4 or higher |
Credit score | 720+ |
Rural | No |
New market | No |
LTARV | 70% maximum |
For borrowers that meet the above criteria, OfferMarket reserves the right to require an interior appraisal or exterior appraisal per the below sections at its sole discretion.
Exterior appraisals are acceptable in the following scenarios:
Exterior appraisal must be dated within 120 days of settlement date. If 120 but less than 180 days, then recertification of exterior appraisal is required.
Any scenario not mentioned in the above 'Exterior appraisal' or 'In-house valuation' sections will require a full interior appraisal:
Property type | Appraisal forms |
---|---|
Single family | 1004 + 1007 ARV with As Is value included (non-gridded) |
2-4 Unit | 1025 + 216 ARV with As Is value included (non-gridded) |
Condo | 1073 + 1007 ARV with As Is value included (non-gridded) |
Unless in the case of appraisal transfer (see below), OfferMarket will be responsible for ordering the appraisal via appraisal management company (AMC). You will be responsible for completing the AMC's invoice. Loan requests with unpaid appraisal invoice will be moved to HOLD status until invoice is paid.
Appraisals not ordered by OfferMarket are eligible to be transferred to OfferMarket so long as the following conditions are met:
Parameter | Minimum / Maximum | Notes |
---|---|---|
Loan Amount | $50,000 – $1,000,000* | *Loans above $1M up to $3.5M require underwriter pre-screen; see property FAQ for details. |
Units per Property | 1 – 4 | |
Loan to Cost (LTC) | Up to 90% purchase, 100% rehab | Refer to leverage specifics for details. |
Loan to Value (LTV) | Up to 75% ARLTV | Loans above 70% ARLTV require additional eligibility review. |
Down Payment | Minimum $10,000 for purchase price under $100K | Structure loan amount net of seller credits/concessions. |
Loan Term | 12 months standard; 18-24 months available for specific projects | Extensions up to 50% of original term available (fee applies). |
Points (Broker + Lender) | Max 5 points total | Broker points must be ≤ lender points. |
Prepayment Penalty | No minimum interest earned |
*For loans over $1,000,000, see the Property FAQ section for details.
Category | Details |
---|---|
Occupancy | Non-owner occupied – business purpose only |
Transaction types | Arms-length purchase, refinance |
Eligible Property Types |
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Property Minimum Size |
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Geographic Region | All US states except AK, AZ, HI, MN, ND, NV, OR, SD, UT, VT |
Amortization | Interest-only with balloon payment at maturity |
Interest Accrual Method |
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The following property types are not eligible for funding in this program:
Item | Requirements / Eligibility |
---|---|
Borrowing Entities | Limited Liability Company (LLC) or Corporation; nonprofits are not eligible. |
Eligible Borrowers | US Citizens, US Permanent Residents, and qualified Foreign Nationals |
Foreign Nationals |
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Credit Requirements |
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Guaranty Structure |
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Reserves/Escrows | Minimum one month of Interest Reserves at close; additional IR months required based on FICO and late payment history |
Key Points:
(*) In states where NMLS license is required for business purpose lending or we do not directly lend, OfferMarket operates as a rate shopping service and refers your loan to a licensed capital provider.
Yes, you can have more than one fix and flip loan at a time. It is common for OfferMarket clients to have multiple fix and flip loans outstanding at any given point in time. This said, our number one priority is assisting you with risk management and if we feel as though your liquidity or pace of project execution does not support additional loans, we will raise this concern and work with you to safely manage your risk.
Yes. Fix and Flip loans are considered "business purpose" loans and accordingly, because they are issued to your business entity ("borrowing entity"), they are classified as commercial loans.
The minimum loan amount is $25,000.
We finance non‑owner occupied 1‑4 unit residential properties including single-family residences, townhomes, small multifamily (2‑4 units), and warrantable condos.
Note:
2-4 unit mixed use, 5-9 unit mixed use, and 5-9 unit multifamily projects are not eligible in this program but are available via their respective loan programs here at OfferMarket.
10+ unit residential and non-residential commercial (i.e. retail, office, industrial) are not eligible
For Fix and Flip loans, LTV most commonly refers to loan-to-after-repair-value (LTARV). LTV is loan-to-as-is-value. Our initial advance is based on the lower of the As Is value and the purchase price in your contract or the purchase price in your previous closing if this is a refinance transaction. LTARV is the total loan amount (initial advance + construction holdback) divided by the after-repair value determined in our appraisal report or in-house valuation.
A minimum FICO score of 680 is required. Borrowers with scores between 660 and 680 may be considered on an exception basis. We look at the credit score of each member of the borrowing entity that will be personally guaranteeing the loan. We do not look at the credit score of members who will not be personally guaranteeing the loan.
Experience is based on verifiable completed projects with rehab scopes similar or greater than the requested loan. Once you complete the Track Record section of your Loan File, our underwriting team will research each subject property. We may ask for supplemental documentation such as settlement statement(s), and operating agreement(s) so we can verify your involvement with the project.
Being a wholesaler in a transaction does not count towards your experience score because you were not financially responsible for successful completion of the rehab of the associated subject property.
Our Loan File system is designed to make it easy to complete processing items and expedite loan approval and funding. Documentation that can be used for future transactions will be securely stored in your OfferMarket account to expedite future loan applications.
Loan File sections: Purchase | Loan File |
---|---|
Purchase Contract | Fully executed by buyer and seller. |
Credit Report | Soft trimerge credit report for each member of the borrowing entity that will be a guarantor. |
Background Report | Required for each member of the borrowing entity. |
Track Record | Required for each member of the borrowing entity. |
ID Verification | Government issued ID (i.e. drivers license, passport, Green Card). |
Borrowing entity | Articles of Organization/Incorporation, Operating Agreement/Bylaws, Certificate of Good Standing, W-9 |
Scope of Work | A detailed rehab budget that will be used to determine ARV. |
Appraisal Report | You will be provided with a link to pay your appraisal invoice. Your appraisal will be uploaded to your loan file. |
Bank Statements | Two (2) most recent statements for each guarantor. Account(s) can be personal (i.e. bank, brokerage, retirement) do not need to be in the name of the borrowing entity. |
Letter of Explanation | If requested by our underwriting team. i.e. large deposits, late payments, background items. |
Loan File sections: Refinance | Loan File |
---|---|
Settlement Statement | Fully executed by buyer, settlement agent. |
Credit Report | Soft trimerge credit report for each member of the borrowing entity that will be a guarantor. |
Background Report | Required for each member of the borrowing entity. |
Track Record | Required for each member of the borrowing entity. |
ID Verification | Government issued ID (i.e. drivers license, passport, Green Card). |
Borrowing entity | Articles of Organization/Incorporation, Operating Agreement/Bylaws, Certificate of Good Standing, W-9 |
Sunk Costs | The line items and associated costs that have already been incurred. |
Scope of Work | Your detailed budget that will be used to determine ARV and guide your rehab of the property. |
Appraisal Report | You will be provided with a link to pay your appraisal invoice. Your appraisal will be uploaded to your loan file. |
Bank Statements | Two (2) most recent statements for each guarantor. Account(s) can be personal (i.e. bank, brokerage, retirement) do not need to be in the name of the borrowing entity. |
Letter of Explanation | If requested by our underwriting team. i.e. large deposits, late payments, background items. |
Loans over $1M (up to our $2M maximum) are subjected to the following adjusted guidelines:
Criteria | Explanation |
---|---|
Experience | Minimum experience of 3, similar or greater price point strongly preferred |
Market liquidity | Minimum of 3 comps within a 2 mile radius sold on the MLS in the last 6 months |
Credit score | Minimum 680 with a minimum of 5 trade lines with 24 month history |
[Rural designation](https://www.offermarket.us/blog/rural-designation-search-tool) | Not eligible if designated rural by CFPB and USDA or appraisal report |
Track Record | Required for each member of the borrowing entity |
Term | Definition |
---|---|
ADU | Accessory Dwelling Unit. This is a secondary, self-contained, housing unit located on the same tax parcel as a main single family home. |
Arms-length | An arms-length transaction is a deal between independent parties with no special relationship, ensuring fair market value. |
Non Arms-length | A transaction where a personal, financial, or business connection between the parties may affect fairness, pricing, or terms. |
Initial Advance | The component of the total loan that will go towards the purchase price. This amount is wired to the title company at closing. |
Construction Holdback | The component of the total loan that will go towards the purchase price. This amount is wired to the title company at closing. |
Interest Reserves | Reserves collected on the settlement statement and held in escrow for the servicer to pay one or more monthly interest payments. as determined during underwriting based on credit score and late payment history. |
LOE | Letter of explanation. A document that offers further details or clarification on particular issues, like a borrower's financial status, credit history, or background. |
LTC | Loan to Cost. Ratio of the loan amount to the purchase price and rehab costs. |
LTFC | Loan to Full Cost. Ratio of the total loan amount to the total cost, which includes both the purchase price and the construction budget. |
LTV | Loan-To-Value. This is the ratio of loan amount to property’s As-Is value. |
[LTARV](https://www.offermarket.us/blog/ltarv) | Loan-To-After-Repair Value. Also referred to as "ARLTV". This is the ratio of loan amount to property’s estimated value after rehab is completed. |
As Disbursed Interest | Interest is accrued only on the amount of the loan that has been funded (initial advance + drawn construction holdback). |
[Full Boat Interest](https://www.offermarket.us/blog/full-boat) | Also known as "[Dutch Interest](https://www.offermarket.us/blog/dutch-interest)". Interest is accrued on the entire loan amount (initial advance + total construction holdback). |
Lopsided deal | When the As Is value or purchase price is less than the rehab amount. In these scenarios, LTFC is limited to a maximum of 85%. |
GC Agreement | A contract with a general contractor outlining project management and execution responsibilities. |
DSCR | [Debt Service Coverage Ratio](https://www.offermarket.us/blog/debt-service-coverage-ratio). A measure of property income relative to debt obligations. The formula is Rent ÷ [PITIA](https://www.offermarket.us/blog/pitia) |
OfferMarket is a real estate investing platform. Our private lending division, OfferMarket Capital LLC, is a leading private lender for real estate investors and we specialize in Fix and Flip loans for 1-4 unit residential properties. Our mission is to help you build wealth through real estate and we would love the opportunity to partner with you on your next transaction.
Thousands of real estate investors get value from OfferMarket every month. Membership is entirely free and includes the following benefits:
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