3 Ways To Finance Your First “Fixer Upper” (and get $$$ for Repair Costs)

Sounds like a great plan right?

Buy a “Fixer Upper”

Fix it up.

And sell it for a BIG PROFIT.

Easy, right?

Well, maybe not…

Getting the funds for a fix and flip project can be challenging.

    • Many local banks won’t lend on properties that need a lot of work.
    • Programs that include the “cost of repairs” are limited.

And you’re likely going to have to put a little more “down” then you would with conventional (not fixer upper) financing.

That said, here are 3 ways you can obtain financing for your first “fixer upper” project.

FIXER FINANCING SOURCE #1 – The FHA 203k Program

 
If you’re a first time buyer (or you haven’t owned a home in the past 3 years), and you’re going to be living in the property then the FHA’s 203k Program might be a great “low down payment” Fixer Financing Option For You.

Here’s how it works:

  • Down payments are low, usually 3.5%
  • You can get your down payment from an external source, (like family)
  • You can have “less than perfect” credit.
  • Great for Properties where major renovations make a property “Livable” again.
  • “Streamlined 203k’s” are available for less complicated fixer uppers.
  • Property must have 1-4 Units To Qualify.
  • Only available to Owner Occupants (no investors)
  • Prior to purchase you’ll coordinate with a contractor to come up with an Estimate of Repair costs.
  • Repair funds will be placed in Escrow at closing.
  • Funds are released according to a draw as phases of the project are completed.

FIXER FINANCING SOURCE #2 – HomeStyle® Renovation Mortgage

 
Similar to the 203k Program, Fannie Mae’s HomeStyle® Renovation Mortgage allows you to finance the cost of repairs on your property.

But there are a few key differences.

  • You don’t have to “Owner Occupy” (You Can Be An Investor)
  • If you’re an Investor, your down payment will likely be in the 10-20% range.
  • And There’s No Limit On The Size Of The Project (Great if you want to do something “High End”)
  • Includes “Luxury Items”. Want a pool or BBQ pit? How about all new land or hardscaping, no problem. As long as it’s permanently fixed, it’s allowed!

FIXER FINANCING SOURCE #3 Private, “HARD” Money

Finally, if you want to avoid the hassle of dealing with banks, underwriters and complicated repair “draw” protocols, then “Hard Money” might be the right option for you.

Hard Money is basically a loan from a Private Investor who specializes in funding “Fix & Flip” or “Fix & Rent” Projects.

Typically a Hard Money transaction is WAY more convenient than the other 2 options on this page, But… a Hard Money Loan can be MUCH more expensive.

Many Hard Money Lenders will charge anywhere from 2-6 points (% of entire project cost) up front with High Monthly Interest rates for the duration of the loan term.

And with hard money, you’ll often have to “get the investor out” of the project by selling the property fast or refinancing with a conventional bank or mortgage company in 6-12 months.

That said, even with the expense Hard Money is a very popular option with many investors because it allows them to do more deals, quicker, and with less stress.

If you want to get a “Bond Street” Pre-Approval For Fix & Flip Or Other Investor- Type Financing Today, CLICK HERE NOW.

Schedule A FREE 1-On-1 “Fix & Flip Financing” Consult Now

Investment Property Mortgage Quote
At Bond Street we have access to a wide range of "in-house" and "partner" financing programs for Investors. After you submit this form you'll Instantly see more info about some of these programs, and a Bond Street Advisor will contact you with a few scenarios that might work for your situation.