Can You Flip a House with 10k
6 minute read
June 19, 2023


How much money do you need to flip a house? Is $20k enough? Can you flip a house with $10k?

There’s no clear-cut cash amount that you need to flip a house. But if you only have $10k in your bank account, here are some financing options you can combine with your fix and flip loan.

Qualify for fix and flip financing now.

How does fix and flip financing work?

A fix and flip loan is short-term financing that real estate investors use to purchase and renovate a property before reselling it for a profit. Not only do fix and flip loans cover purchase and improvement costs, but they also help fund the cost of marketing and selling the property.

Not all lenders offer fix and flip loans, and each lender has their own set of requirements to apply for a loan.

When you find a lender, you’ll discuss the project to determine what fix and flip loans you’ll qualify for. Your experience as an investor, finances and annual revenue, and credit score will all play a factor in whether you’re approved and how much you can borrow.

When you’re approved, the lender will offer a proof of funds letter to show the seller when you make an offer. You’ll send the lender your required documentation and then close in 5-7 days after completing the appraisal and title work.

After closing, you’ll pay for the first phase of the project out-of-pocket. The lender will inspect the first phase and reimburse you for that amount. Most investors will use that cash to finance any additional renovations.

Once renovations are complete and the home is sold, you can use the cash from the sale to pay off the loan.

The biggest costs in a house flip

Fix and flip financing can help you cover most purchase and renovation costs, but you need to bring some money to the table before a lender is willing to offer you a loan.

Generally, you’ll need:

  • 20% down on the property
  • Closing costs ( 4-5% of the home price)
  • Cash for the first phase of rehab

How much cash you need depends on several factors, and most lenders will cap their loan amounts based on cost or after-repair value (ARV), whichever is lower. Below is a breakdown of how much cash you’ll need for homes that cost between $100,000 and $300,000.

Home price$100,000$200,000$300,000
Down payment$20,000$40,000$60,000
Closing costs$5,000$10,000$15,000
First phase of project$5,000$5,000$5,000
Total cash needed$30,000$55,000$80,000

There could be properties under $100,000 where you would only need $10k to get started, but those are less common and often require a substantial amount of work.

See if you qualify for a fix and flip loan.

So can you flip a house with $10k? Here’s how it might be possible

A 100% fix and flip loan may not be possible, but you can combine this loan with other financing options to fill any gaps in funding. However, there are risks involved, and it’s important to weigh the risks and benefits before moving forward.

Here are some ways to flip a house with only $10k.

Finding a partner

You can partner with another investor to finance all or part of what the lender won’t cover. The best investing partner is one with different but complementary skills. This can help reduce your workload and lead to a smoother renovation process.

Investing with a parter usually works one of two ways. They can either provide the loan funds and get paid back with interest when you sell the home. Another option is for them to invest and receive part of the sale proceeds.

There are some drawbacks to finding a partner. You’ll have to share the proceeds from the sale, and you won’t have complete control over the project.

Using a credit card

A credit card can help you cover the cost of renovating the property. By using a rewards credit card, you can even earn cash back on your spending. When you sell the property, use the proceeds to pay off the credit card.

This strategy only works if you pay off the balance in full when you sell the home. Otherwise, you’ll end up paying more in credit card interest after the introductory period. Another potential downside is when you take on too much debt and use up your credit availability, it could impact your credit score.

Personal loan

An unsecured personal loan can fund the gap in financing. Because it’s unsecured, you don’t need any collateral to back the loan. However, you’ll need to rely on your creditworthiness and be in good financial standing to secure the best loan terms.

The amount you can borrow depends on the lender, but it can range up to $100,000. Personal loans also come with high-interest rates and origination fees. These fees range from 1-5% or are charged as a flat fee. For example, if you take out $10,000 with a 5% origination fee, you’ll only receive $9,500 when you get your funds.

Home equity loan

If you have enough built-up equity in your home, you can borrow against your property to fund your fix and flip project.

Home equity loans come with lower interest rates and the interest is tax-deductible, and most lenders allow homeowners to borrow 90-100% of their home’s value. So if your home is worth $350,000 and your mortgage balance is $200,000, you can take out 85% of your home’s worth minus what you owe on the mortgage — about $97,500.

This also puts your home at risk and you need a large amount of equity before this is an option.

401(k) loan

Investors can borrow against their 401(k) to help finance a fix and flip. This isn’t technically a loan, but it does give you the ability to access part of your retirement money on a tax-free basis up to $50,000 or 50% of the assets — whichever is less.

According to the IRS, you will need to repay the loan plus interest per the loan’s terms. Unpaid amounts become a plan distribution and your plan may require you to repay the loan in full if you leave your job.

Is $10k enough to flip a house? Maybe

How much money you need to flip a house depends on various factors, including the price of the property as well as your down payment, closing costs, and cash for the first phase of renovations.

Can you flip a house with 10k? It’s possible.

You don’t have to walk away from a good deal because you can’t afford the cash-to-close requirement. There are creative financing alternatives that you can combine with a fix and flip loan. Research what you can qualify for and find the best options that match your needs.

Qualify for fix and flip financing.

Our advise is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.

Share on LinkedIn
Email this Article
Print this Article

More on Mastering Fix and Flips with REInvestor Guide