Is Zero-Down Fix and Flip Financing Real?

Rarely. Most fix and flip lenders want you to put some of your own cash into the deal, so true 100% financing is the exception. What you can do is structure a deal so the cash you bring is as small as the numbers allow.

Why lenders want your money in the deal

A lender's protection on a flip is the property and the borrower's commitment to finishing it. When you have cash in the project, you have a reason to push through problems instead of walking away. That shared risk is why most programs lend less than the full cost of purchase plus rehab.

Leverage is usually measured as loan-to-cost (LTC), the loan divided by purchase price plus renovation budget, and capped by after-repair value (ARV), the projected value once work is done. RSC Private Lending's Fix & Flip loans go up to 95% LTV on the purchase price, 100% of the rehab budget, 95% of total cost and 75% of ARV. Reaching 95% of total cost on a light rehab requires 3+ completed projects. Even at the top of that range, the loan stops short of the full project cost.

What moves leverage up

A few things can push a lender toward the higher end of its range:

• A real discount on purchase. Buying well under market gives the lender built-in equity.
• Experience. A borrower with a long list of finished, profitable flips is a lower risk than a first-timer.
• A simple scope. Cosmetic work with clear bids is easier to underwrite than a full gut.
• Strong comps. Recent nearby sales that clearly support the ARV.

The "fully financed" deal people talk about

When investors say they flipped with no money down, the deal usually had a deep discount. The lender sized the loan to a percentage of cost or value, and because the price was so low, that percentage covered most of the cash needed. The leverage rules did not change. The deal was just that good.

Example (illustrative only): A house worth $300,000 after repairs is bought for $150,000 with a $50,000 rehab. Total cost is $200,000. If a lender capped the loan at a share of ARV, that cap could land close to the full cost, while a pure cost-based cap would still leave you bringing cash. Same deal, very different outcome, depending on which cap governs.

Even then, plan on covering closing costs and some early rehab out of pocket, plus monthly interest unless it is built into the loan as an interest reserve.

Where the money can come from

If you are short on cash, common options include bringing in a capital partner, using funds from a business line of credit, or starting with a smaller project. Be upfront with your lender about the source of funds. Lenders typically verify it.

What this means for you

Stop hunting for a 100% lender and start hunting for a better purchase price. A strong buy and a clean plan will improve your leverage more than any advertised program.

Want to see how your deal might size up? Send RSC Private Lending your scenario for a term sheet in 24 hours. All loans are business-purpose and subject to underwriting.