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Do Investors Need a Good Credit Score to Get Fix and Flip Loans?

One of the biggest benefits of fix and flip loans is that they are based on the value of the property and not your credit score. But does this mean that you don’t need good credit to get approved for hard money? Not exactly.

Fix and flip loans are definitely more flexible than traditional bank loans, but there are still requirements you have to meet. Let’s talk specifics about what your credit score should be to get approved for hard money.

Why Your Credit is Less Important to Hard Money Lenders

The big banks rely on income, credit and ability to pay when weighing the risk of their borrowers. Hard money lenders base their loans on the value of the property. If you can’t repay the loan, the lender will take your real estate. This is why they care less about your credit and more about your property.

Nevertheless, hard money lenders still expect a decent credit score. Some lenders are willing to take people with credit scores of 600 or less, but most prefer lending money to borrowers with a credit score of 660 or more. Bankruptcies and foreclosures are often not a problem either.

Will My Credit Score Affect My Rates?

Unlike other types of loans, your credit score doesn’t directly impact your interest rates on hard money. Remember, your loan is backed by your investment property, so lenders aren’t as concerned with your income, tax returns and credit ratings. You can expect a similar interest rate as someone with perfect credit.

Also, lenders like First Funding Loans like working with new investors. We approve fix and flip loans even with little experience. You have to start somewhere! Because many of our borrowers are new to the real estate industry, we’re able to accommodate all types of financial situations.

Who are Hard Money Loans Best For?

If you have a credit score of 600+ and are interested in flipping houses, a hard money loan is a great option for financing. These loans are available for house flippers with all levels of experience and also for those who don’t qualify for other types of financing.

While hard money loans do have higher interest rates in general, they are still great loans to obtain. You can get approval in about three days and funding in about five days, regardless of your credit. You may be able to choose your loan terms as well - 12, 18 or 24 months.

If you need a more flexible loan option for your fix and flip project, contact First Funding Loans today. We have accessible hard money for people who need to finance their projects quickly, efficiently and with as few requirements as possible.


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