Frequently Asked Questions

Discover everything you need to know about our loan programs and the financing process in the sections below.

General

What types of loans does Merchants offer?

We are proud to offer a wide range of flexible loan programs designed to meet the needs of real estate investors throughout the United States. Our Loan Programs include: Fix & Flip, Ground-Up Construction, Multifamily, and DSCR.

What are your rates/fees/terms?

Rates, fees, and terms depend on a variety of factors including loan type, investment strategy, property type, and borrower qualifications. To learn more, visit our Loan Programs page.

Get started to learn more about how we can work with you.

How quickly can I close?

For Fix and Flip Loans, Merchants typically can close within 5 business days from the time of complete application, assuming the title company has all necessary documentation, there is access to the property, and the seller is ready to proceed. For other products, Merchants offers industry meeting closing timelines, which depend on the transaction and loan type.

Do you require tax returns?

Tax returns are generally not required, as there is no debt-to-income ratio on our loans.

What type of appraisal is required?

We obtain an “as if repaired” appraised value from one of our approved appraisers. Before closing, the borrower completes our budget form and questionnaire to detail the planned rehab work and its estimated costs. The appraiser reviews this information and appraises the property as if the work were completed, using comparable properties recently sold in the neighborhood or surrounding areas.

Do you allow properties to be titled in entity names, such as limited liability companies, partnerships, corporations, etc.?

Yes, the buyer can write the purchase contract in the entity name, allowing the property title to be held in the entity name. We then require the individuals signing the loan to guarantee it.

Do you allow double closings?

Yes. We will review and underwrite each deal on a case-by-case basis.

Can I work on the property myself or does it have to be contracted?

Merchants permits borrowers to perform work on their property themselves. However, for extensive construction projects, we require that a licensed general contractor be hired to complete the job.

Do you require a particular type of hazard insurance?

We require insurance based on industry standards for the proposed property type and loan product. Please contact us with your loan scenario to learn more.

Is it possible to get preapproved even if I have not located a property?

Yes, we highly recommend getting preapproved before submitting contracts. The preapproval process involves providing all necessary financial information for underwriting. Typically, within 24 hours of receiving a complete financial package, we can inform you of your qualification status, the amount you qualify for, and the current terms, and issue a pre-approval letter.

How does the improvement escrow work?

Merchants offers industry leading draw procedures. Our knowledgeable and experienced draw department is dedicated to assisting you, ensuring that your draw requests are handled promptly and efficiently. Whether it’s answering questions or guiding you through the submission of documentation, our team is here to support you every step of the way, ensuring the smooth progress of your construction project. For more information, visit our Draws page.

How do I apply?

Please visit our Loan Application page or Contact Us to get started.

Fix & Flip

Why should I choose fix and flip financing instead of a 30-year fixed-rate loan?

Conventional loans often fall short for fix and flip investments due to several key reasons. Here are the specific challenges and how Merchants can address them:

Eligibility and Flexibility:
- In today’s stringent mortgage lending environment, conventional loans typically do not support long-term financing for fix and flip investment properties. Conventional lenders focus on properties and borrowers that meet strict guidelines, often disqualifying many fix and flip projects
- At Merchants, we prioritize understanding your property plans and goals. We work diligently to accommodate and facilitate these objectives in a timely and efficient manner, providing the flexibility needed for fix and flip investments
Property Condition Requirements:
- Conventional mortgages require the purchased property to be in “move-in, habitable” condition because these loans are sold in the secondary market and must adhere to standard guidelines
- Many fix and flip properties do not meet these standards at the time of purchase. Merchants specializes in these types of properties, offering financing solutions tailored to their unique conditions
Funding for Repairs:
- Conventional lenders generally do not provide funds for property repairs, leaving investors to cover improvement costs out of pocket
- Merchants offers fix and flip financing that includes funding for property improvements, reducing the immediate financial burden on investors and facilitating smoother project progress
Speed and Efficiency:
- Conventional loans often come with extensive requirements and longer processing times, which can be a disadvantage for investors needing quick closings. Distressed property sellers usually favor buyers who can close quickly
- Merchants can close loans within 5 business days, giving you a competitive edge in securing properties and starting your renovations promptly

What are the down payment requirements for a fix and flip loan?

At Merchants, we take pride in providing flexible down payment options to suit the diverse needs of our clients.

Low Down Payment Options:
- We offer down payment requirements as low as 10% for qualified borrowers seeking financing for their fix & flip projects. This makes it easier for you to get started with a smaller initial investment
100% Financing Possibility:
- For those who qualify, 100% financing is achievable through cross-collateralization with other qualifying properties. This allows you to leverage the equity in your existing properties to cover the entire down payment for your new investment
Variety of Acceptable Down Payment Sources:
- We consider a wide range of sources for your down payment, providing you with greater flexibility:
  - Home Equity Lines of Credit (HELOC): Tap into the equity of your residence for the down payment of your new investment property
  - Funds from Partners: Utilize investment contributions from business partners
  - Cross-Collateralization: Use other qualifying properties as collateral to secure financing
  - Personal Funds: Include savings from checking and savings accounts, mutual funds, and other liquid assets

Are there any prepayment penalties on loans for house flipping?

No, we do not charge prepayment penalties on our fix and flip loans. DSCR and other loan products may have prepayment penalties.