Inside a Flip Loan Review: What a Private Lender Checks

A private lender reviewing a flip wants to answer five questions. Is the property worth enough? Is the renovation plan realistic? How will the loan be repaid? How much of your money is in it? Can you pull it off? Credit gets checked too, but the deal carries most of the weight.

1. The property

The lender starts with value: what the house is worth as-is and what it should be worth after repairs, known as after-repair value (ARV). It also looks at location, property type, zoning and title. A great price on a house in a hard-to-sell spot, or with a title problem, can still be a tough loan.

2. The renovation plan

Your scope of work tells the lender whether the ARV is believable. A strong package usually includes:

• A line-item budget by trade or room
• Contractor bids or quotes, not round guesses
• A realistic timeline
• Finishes that match what nearby buyers pay for

Overbuilding for the neighborhood is a red flag. So is a budget that looks too small for the work described.

3. The exit

Most flips exit by sale. Some pivot to a rental and refinance. The lender wants to see your plan, the comps behind your price, a timeline that fits the loan term and a fallback if the market slows.

4. Your equity

Cash in the deal protects the lender. This is where loan-to-cost (LTC) and ARV-based limits come in. Deals with thin margins or very little borrower cash get more scrutiny.

Example: Two flips each need a $260,000 loan. On the first, total cost is $300,000 and ARV is $420,000. On the second, total cost is $290,000 and ARV is $330,000. The first has room for surprises. The second has almost none, so expect tougher questions or lower leverage.

5. You

Experience matters even in asset-based lending. Lenders often ask how many projects you've completed, what types and whether they came in on time and on budget. New investors can qualify, often with more cash down or a simpler scope.

Credit and background checks look for red flags like open bankruptcies, judgments or past defaults rather than a perfect score, though lenders do set a floor.

At RSC Private Lending, the Fix & Flip minimum is a 620 FICO, new investors are welcome on cosmetic projects, and experience moves the terms. For a 760+ FICO borrower on a light rehab at up to 80% of purchase and 70% of ARV, the rate steps from 11.250% with no completed projects to 8.000% with 12 or more. Reaching 95% of total cost on a light rehab requires 3+ completed projects.

What this means for you

Hand the lender a package that answers all five questions before they're asked: comps, scope, timeline, exit, cash position and a short track record. Complete files move faster and tend to get cleaner terms.

Ready to submit a flip? Send RSC Private Lending your deal package for a term sheet in 24 hours. Subject to underwriting.