Is House Flipping Still Profitable? A 2026 Guide to Fix-and-Flip Loans and Other Financing Strategies | Mortgages

The golden age of house flipping seems to be over.

In 2012, investors could consistently purchase a home for less than $150,000, fix it up and sell it for a gross profit of 61.1%. In 2025, the typical return on investment for flipped houses dropped to 25.5%, according to property data firm ATTOM. That percentage is the lowest number since 2008, when a housing crisis spurred the so-called Great Recession.

That’s not to say there isn’t still money to be made in house flipping, a term that refers to the process of purchasing a home in need of repairs, fixing it and then selling it immediately. The typical flipped home resulted in a gross profit of $65,981 in 2025, ATTOM reports.

“This is not a dead strategy,” says Amanda Orson, founder and CEO of Galleon, an AI real estate platform that helps investors track their portfolio. However, she cautions that the money-making potential varies by market and will hinge on the price of a property and its renovation cost.

Selecting the right financing strategy is the first step toward keeping profits in your pocket. Here’s what rookie flippers need to know about fix and flip loans and their costs.

Before you can flip a house, you have to buy it. Since most people don’t have enough savings to purchase a property for cash, funds will need to be found elsewhere.

“The borrowing options for short-term investors tend to be very expensive,” says Andy Heller, president of real estate education platform Regular Riches. “Don’t commit yourself to an expensive borrowing vehicle.”

He thinks rookie flippers should concentrate on coming up with cash to purchase only one house to start and then recycle that money to fund future deals. That initial money could come from a private lender or from friends or family, but the easiest and cheapest option may be to tap the equity of an existing home.

Money from a home equity line of credit can be used to purchase a fixer-upper, and once the property sells, the loan can be repaid and the profits used for the next purchase. In the event a home can’t be flipped and must be rented instead, an investor could use a cash-out refinance to pull money from the value of the rental.

“It’s, in my opinion, one of the most amazing borrowing tools,” Heller says of cash-out refinancing.

Using a home equity line of credit can be simple and convenient, but investors shouldn’t take this approach lightly. If a deal goes south and you can’t make payments on it, you could face foreclosure.

“It’s definitely a risk anytime you leverage your personal house,” says Danny Pitcher, principal with D Gilpin Properties in Charleston, South Carolina. “This business is a little harder than it looks.”

Loans from nonbank sources are popular for fix-and-flip projects. These loans come from private lenders and are sometimes described as hard money loans.

“Our loans are not the traditional home loans,” says Debbie Fales, communication and marketing director for Navigator Private Capital, a private real estate lender. “We lend for homes that are not owner-occupied.”

Investor loans are only approved for businesses, so a novice flipper will need to set up a limited liability company, or LLC, to apply. They will also need to identify the property they wish to purchase prior to applying for the loan.

“The lender in this case is underwriting the deal more than the borrower,” Orson says.

No income documentation or tax returns are required, although some lenders, such as Navigator Private Capital, will pull an applicant’s credit score. The loan-to-value, or LTV, is the most important factor in evaluating an application, and this refers to the amount of the loan compared with the expected value of a property after repairs. The more experienced the investor, the higher LTV they may qualify for.

For example, Navigator Private Capital will extend loans up to 75% of the after-repair value through its fix-and-flip loan program. The company will finance 90% of the purchase price of a property and 100% of the repair cost. “We like to know they have some skin in the game too,” Fales says. However, if someone is a new flipper, the lender may only finance 80% of the purchase price.

Hard money lenders regularly fund fix-and-flip deals, so they are familiar with the ins and outs of these projects. “They are easier to work with but also have the highest rates,” according to Pitcher. “The biggest thing is your current experience.”

Lenders may use rate tiers based on an investor’s level of experience. With a decade of experience renovating homes for sale, Pitcher says he is often quoted 8.5% to 9.5%. Rates can be as high as 14%, though, according to Orson, and terms are short, such as six to 18 months.

Note that even if a private lender will finance 100% of repair costs, you may still need to cover that expense up front. Many lenders will require investors to submit receipts for work completed before they will disburse the funds.

The biggest misunderstanding new flippers have is the belief that getting a loan to flip and fix a property will be like getting a traditional mortgage, Orson says. “It’s much more of a business-type application.”

That isn’t to say more traditional mortgages can’t be used by investors, but they generally won’t work for a fast fix-and-flip. Orson said she took out an FHA loan for the first property she renovated, but she lived in the property for a year while she was repairing it.

If you don’t plan to live in the home, you could look for other real estate investment loans offered by traditional mortgage lenders. A debt service coverage ratio loan will qualify a mortgage based on the property and the borrower’s finances. However, these loans have longer terms, and their fee structure is better for those who intend to buy-and-hold a property rather than those who plan a quick sale.

To find the best deal on a loan, Orson recommends meeting with three to five lenders to discuss their terms and rates. What’s more, you should carefully consider all your costs and prepare for contingencies.

“It’s always going to be more expensive than you think,” Pitcher says. “It’s one of those businesses that rarely goes according to plan.”

Fales says her company provides a work template that can be used to plan out repairs, and she recommends getting estimates from several contractors. “One of the things we really work with our clients (on) is estimating their repair costs,” she says. What’s more, every flipper should have a contingency fund for the surprises that are invariably uncovered during renovation. “They take down a wall and see the electrical needs to be replaced,” Fales says as an example.

Even when everything is done right, you may find that your renovated house doesn’t have a buyer when completed.

“In real estate, you can’t predict the outcome of your investment,” Heller says. He estimates 25% to 35% of properties will need to be held by an investor and recommends people have a landlord strategy prepared for those instances.

Before you jump into house flipping, you need to carefully consider where to buy.

“It’s important to invest in an area that’s growing,” Fales says. She notes the Census Bureau maintains valuable information about population and job growth, which can help investors identify potentially profitable markets.

You’ll also want to keep an eye on overall economic conditions.

“Most investors think we’re on the verge of a reset,” Heller says. Foreclosure starts are at the highest level they have been since 2019, and the serious mortgage delinquency rate has climbed as well.

Heller likens the current economic and housing climate to that of 2007. Given that, he’s not sure now is a great time to buy, but he does think it’s a perfect time for future flippers to get their finances in order so they can be ready to move if and when the market turns.

Those who want to learn more about market conditions in their area or real estate investment in general may want to look for a local chapter of the Real Estate Investors Association.