Fix & Flip Loan Example

Here is a sample loan breakdown with our terms. Please note, the down payment requirement is subject to underwriting and may be lower or higher than in the example shown below.

Loan Example

Terms: Up to 90% of Purchase Price + 90% of Improvement Budget, or 90% LTC.

 CostLoan (90%)Equity (10%)
Purchase Price$250,000$225,000$25,000
Improvement Budget$50,000$45,00$5,000
Total$300,000$270,00$30,000
 Loan Summary 
Loan Amount (90%)$270,000
Borrower Down Payment (10%)$30,000*
Minimum Appraised Value Required (75% Loan to Value)$360,000

* Down payment from Borrower may come from a variety of sources (subject to Underwriting and Qualification) such as Cross-Collateralization; Down Payment Reserve Account: Home Equity Lines; Partner Funds; Gifted Funds. See our Benefits and Terms links.

More Options & Potential for your Fix & Flip Loan

Opportunity to use a 'Down Payment Reserve'

MMTC offers an innovative way to assist fix-and-hold real estate investors with their desire to add to their investment portfolio. This could mean obtaining a property with little to no cash out-of-pocket after the refinance is obtained.  Typically, MMTC will require 10% – 20% of the purchase price plus repair amount at the time of the property purchase and loan closing. 

If desired by the Borrower, MMTC will hold the down payment in a “Down Payment Reserve Account” and will make the loan for 100% of the costs of the project.  As soon as the loan is paid off, the Down Payment Reserve Account is refunded to the borrower

What’s the benefit?

When a borrower goes to refinance the loan, it will be possible to refinance for an amount equal to 100% of the costs without seeking a “cash out” refinance to recover their equity.

Additional Need to Know Items

The down payment reserve account is fully documented for the Borrower via a security agreement and is shown as a line item on the HUD closing settlement statement.

In the above example, the loan amount would be for $300,000 and the “Down Payment Reserve Account” would be $30,000. This amount would be held by MMTC until the loan is paid in full, and then refunded to the borrower.  It is highly recommended that someone wanting to use a Down Payment Reserve should be preapproved for it before they have a contract on a property. This should be done with not only MMTC, but with the conventional takeout lender as well. (MMTC can provide recommendations to take-out lenders if needed.)

Use of Cross-Collateralization for Down Payments

If the borrower already owns another real estate property, such as a primary residence, second home, or investment property, in an area that MMTC lends, there may be enough equity (at a proper loan-to-value percentage) in that property to use it as a the down payment for the new fix-and-flip property being purchased.

What’s the benefit?

The Borrower may not need to put any cash into their transaction. The equity from their other property can serve as the downpayment for our Fix & Flip loan.

Many of our clients have successfully used cross-collateralization. Ask a loan specialist for details.

Examples of Past Deals

Before & After

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