Yes, you can flip a house with a conventional loan, but the terms are stricter than a primary-residence mortgage: plan on at least 15 percent down, a credit score of 620 or higher, and a property that is livable at closing. If the house needs work to reach that standard, a Fannie Mae HomeStyle Renovation or Freddie Mac CHOICERenovation loan can wrap the purchase and the repair budget into one mortgage. The strategy rewards borrowers with strong credit, real cash reserves, and a clear-eyed view of carrying costs.
What You Need to Qualify
Investment-property underwriting is tighter than owner-occupied underwriting across the board. Fannie Mae’s eligibility matrix caps loan-to-value at 85 percent for a one-unit investment purchase, so 15 percent down is the floor.1Fannie Mae. Eligibility Matrix Many lenders add their own overlays and require 20 or 25 percent, especially if your credit score is mid-range or your reserves are thin.
The minimum representative credit score for a conventional loan is 620, though pricing improves as your score climbs.2Fannie Mae. B3-5.1-01, General Requirements for Credit Scores Debt-to-income limits sit at 36 percent for manually underwritten loans, with an exception up to 45 percent if your credit and reserves are strong enough. Loans run through Fannie Mae’s automated Desktop Underwriter can go as high as 50 percent.3Fannie Mae. B3-6-02, Debt-to-Income Ratios
There is also a ceiling on how many financed properties you can carry. Fannie Mae limits borrowers to ten financed properties when the new loan is for a second home or investment.4Fannie Mae. B2-2-03, Multiple Financed Properties for the Same Borrower The more properties you already have, the more cash reserves your lender will demand — often six months of payments on each one.
The Rate Premium and Loan Limits
Investment-property loans price higher than primary-residence loans, and the difference matters when your holding period is short. Fannie Mae’s loan-level price adjustments for investment properties run from roughly 1.125 percent to 4.125 percent of the loan amount depending on LTV, and lenders generally pass those costs through as a higher interest rate.5Fannie Mae Single Family. LLPA Matrix In practice, investment-property rates in 2026 tend to sit 0.50 to 1.50 percentage points above comparable primary-residence rates. On a $300,000 loan, a single point of rate adds about $200 to your monthly payment. Multiply that by every month you hold the house.
Your loan also has to fit inside the conforming loan limits. The 2026 baseline for a one-unit property in most of the country is $832,750, and $1,249,125 in designated high-cost areas.6FHFA. FHFA Announces Conforming Loan Limit Values for 2026 Above those thresholds you move into jumbo territory, with separate underwriting and generally larger down payments.
The Property Has to Be Livable
A standard conventional purchase loan requires the home to be habitable at closing. Any deficiency that affects safety, soundness, or structural integrity has to be repaired before Fannie Mae will buy the loan.7Fannie Mae. B4-1.3-06, Property Condition and Quality of Construction of the Improvements A house with no working kitchen, no functional plumbing, or no operating heat and air will typically fail the appraisal. Serious foundation damage, major roof deterioration, mold, or lead paint can also disqualify the property.
That is a real problem for flippers, because those are exactly the properties where the margins live. If your target house won’t pass an appraisal in its current state, a standard conventional purchase loan won’t close on it. That is what renovation products are built for.
HomeStyle and CHOICERenovation: Financing the Fix
Two conventional products let you finance the purchase and the renovation together, using the projected after-renovation value as the basis for the loan instead of the current condition.
Fannie Mae HomeStyle Renovation
HomeStyle is available for one-unit investment properties. The loan amount is based on the lesser of the purchase price plus renovation costs or the as-completed appraised value, and renovation costs can make up as much as 75 percent of the completed value. Every improvement has to be permanently attached and add value: no financing furniture, non-fixed appliances, or anything else you could carry out.8FDIC. Fannie Mae HomeStyle Renovation Mortgage Work must be completed within 15 months of closing. Fannie Mae does not require a contingency reserve on a one-unit property, though your lender can choose to set one.9Fannie Mae Single Family. FAQs – HomeStyle Renovation
Freddie Mac CHOICERenovation
CHOICERenovation is Freddie Mac’s counterpart, also available for one-unit investment properties, and it uses the same overall underwriting framework as a standard conventional investment loan.10Freddie Mac. CHOICERenovation Mortgages The loan proceeds pay the renovation directly, so there is no separate interim construction loan to refinance. For smaller projects, Freddie Mac offers the CHOICEReno eXPress variant with streamlined requirements.
What Changes at Closing With a Renovation Loan
The application asks for more paperwork than a normal purchase. You submit a detailed scope of work listing every planned repair, the materials, and the labor cost per item. Your contractor has to be licensed and carry general liability insurance and workers’ compensation, and the lender reviews those credentials before approving the plan. The lender also orders an as-completed appraisal, where the appraiser estimates what the finished house will be worth based on your scope. That projected value drives the approved loan amount, so a scope that adds clear market value is worth building carefully.
After closing, the renovation money sits in an escrow account instead of coming to you as a lump sum. Your contractor completes a defined phase, submits a draw request, and a third-party inspector verifies the work before the lender releases payment for that phase. Each inspection carries a fee that comes out of escrow. The process repeats until a final inspection confirms the home meets local building codes and the project is done.
Reselling Fast: Seasoning Rules to Watch
No federal law prevents you from reselling quickly after buying with a conventional loan. But your buyer’s financing can be constrained by seasoning rules. FHA will not insure a mortgage on a property you resell within 90 days of your purchase date. For resales between 91 and 180 days, the property is generally FHA-eligible, but the buyer’s lender must obtain additional documentation if the resale price is more than double your original purchase price.11Federal Register. Prohibition of Property Flipping in HUDs Single Family Mortgage Insurance Programs After 12 months, FHA imposes no additional restrictions.
Fannie Mae and Freddie Mac do not impose a blanket seasoning period for conventional-to-conventional resales. Individual lenders, however, often apply their own overlays: some won’t finance a purchase if the seller has owned the property fewer than 90 days, and others stretch that window to 180. These overlays aren’t published in one place, so if a quick turnaround is central to your plan, call likely buyer lenders in your target market before you list.
Don’t Call It a Primary Residence
The gap between investment-property pricing and owner-occupied pricing tempts some borrowers to tell the lender they’ll live in the house. That’s occupancy fraud. Under 18 U.S.C. § 1014, knowingly making a false statement on a mortgage application can bring a fine of up to $1,000,000, up to 30 years in prison, or both.12Office of the Law Revision Counsel. 18 U.S. Code 1014 – Loan and Credit Applications Generally Even without prosecution, a lender who catches the misrepresentation can accelerate the full balance and foreclose, even if you’ve been current every month. The rate savings are not worth it.
The Numbers That Decide Whether the Deal Works
Purchase price plus renovation is only part of the math. Every month you hold the property, you owe the mortgage, property taxes, insurance, and utilities. With investment-property rates running 0.50 to 1.50 percentage points higher than primary-residence rates, those carrying costs compound fast when a renovation runs long. Building permits add another line item that varies widely by locality and can run from a few hundred to several thousand dollars, with separate trade permits often required for electrical, plumbing, and HVAC work.
Insurance is its own bucket. A standard homeowner’s policy won’t cover a vacant home under construction; most policies limit or exclude coverage after 60 days of vacancy. During active renovation, you generally need a builder’s risk policy, which can be written for terms as short as one month and is typically priced on the completed value of the structure. Between the end of renovation and closing a sale, a vacant dwelling policy fills the gap. Your lender will require proof of insurance before releasing renovation funds, and most will also require documentation of your contractor’s liability and workers’ comp coverage. Investors commonly carry a general liability policy of at least $1 million on top of the property coverage.
Then there’s tax. Because flips are held under a year, profits are short-term capital gains taxed at ordinary income rates, which reach 37 percent at the federal level in 2026. If the IRS classifies you as a real estate dealer rather than an investor — property held primarily for sale to customers in the ordinary course of a trade or business is excluded from capital-asset treatment — your profits become business income subject to self-employment tax (an additional 15.3 percent), and you lose eligibility for a Section 1031 like-kind exchange on property held primarily for sale.13Office of the Law Revision Counsel. 26 U.S. Code 1221 – Capital Asset Defined14Internal Revenue Service. Like-Kind Exchanges – Real Estate Tax Tips There’s no bright-line rule for that classification; the more properties you flip and the more improvements you make before selling, the more likely a dealer finding becomes.
Before you commit, run holding costs for the full renovation period plus a two-to-three-month buffer, and subtract them along with purchase and sale closing costs, agent commissions, and taxes from your projected resale price. What’s left is the real profit, and it’s often meaningfully smaller than the gap between purchase price and after-repair value.