Inside the Underwriter's Review of a Flip Loan File

An underwriter reviewing a flip loan is answering four questions. Can this borrower execute? Is the property worth what they say? Does the rehab plan hold up? And how does the loan get paid back? A strong application answers all four before anyone has to ask.

Question 1: Can you pull it off?

This covers you as the borrower.

• Experience. Past flips, rentals, construction or project management work. New investors can qualify, but may see more conservative terms. RSC welcomes new investors on cosmetic projects.
• Credit. Score, payment history and any recent bankruptcy, foreclosure or judgment.
• Cash. Money for the down payment, plus closing and holding costs, and a cushion if the rehab runs over.

Verified liquidity is often the single most persuasive item in a file. It shows you can absorb surprises.

Question 2: Is the property what you say it is?

Lenders look at the as-is value, the after-repair value (ARV), the location, the property type and the current condition. The ARV should be backed by recent, nearby sales of similar homes. The loan has to fit within the lender's leverage limits on cost and value. On RSC Private Lending's Fix & Flip loans, those limits are up to 95% LTV on the purchase, 100% of rehab, 95% of total cost and 75% of ARV.

Question 3: Does the rehab plan add up?

Underwriters want a plan they can test:

• A line-item budget, not a lump sum
• Contractor bids or solid estimates
• A clear description of each improvement
• A realistic timeline

A $40,000 budget for a full kitchen, two baths, a roof and HVAC in a high-cost market will draw questions. So will a vague one-line scope.

Example (illustrative only): Investor A submits "Rehab: $60,000." Investor B submits a two-page breakdown with bids for roof, electrical and flooring, plus a 10-week schedule. Both ask for the same loan. Investor B's file moves faster because the underwriter can check the math.

Question 4: How do you pay it back?

For most flips, the exit is a sale. Lenders want resale pricing supported by comps, a sale timeline that fits inside the loan term (12 months on RSC's Fix & Flip loans), and an awareness of how fast homes are selling in that area. A refinance into a rental loan can be a valid primary or backup exit.

The fine print: title

Before funding, the lender confirms clean title. Open liens, unpaid judgments, code violations, boundary disputes or lawsuits involving the property usually must be resolved before or at closing.

What this means for you

Build your application around those four questions. Organized numbers, real bids, honest comps and proof of cash do more for your approval than any pitch.

Ready to put a deal in front of an underwriter? Send RSC Private Lending your scenario for a term sheet in 24 hours. All loans are business-purpose and subject to underwriting.