Seller Second Mortgage for Fix and Flip
Seller Second Mortgage for Fix and Flip
Many investors have opportunities to dramatically grow their business with a Seller Second Mortgage allowing them to scale faster with less money and giving the seller what they want. In this article we will unlock the benefits and present how we help investors create wealth through and build real estate portfolio quickly with seller second mortgage financing.
Unlocking Opportunity: The Benefits of No Money Down Financing for Fix and Flip Projects with a Seller Second Mortgage
In the world of real estate investing, nothing sparks interest quite like the phrase “no money down.” For fix and flip investors, this financing strategy can turn a potential project from a dream into a done deal—especially when combined with a seller second loan. It’s not just about keeping cash in your pocket; it’s about multiplying opportunities, increasing returns, and scaling up without waiting on your savings to catch up to your ambition.
Let’s break it down.
What Is No Money Down Fix and Flip Financing?
In a typical fix and flip loan scenario, a lender will fund a percentage of the purchase price (commonly 75-90%) and 100% of the rehab budget. The borrower is generally responsible for the down payment, usually 10-25% of the purchase price, out of pocket. But with a no money down structure—specifically one that includes a seller second mortgage—that gap can be filled by the seller themselves, allowing the borrower to bring little or nothing to the closing table.
The seller “carries back” a second-position loan (often 10-25% of the purchase price), subordinated to the first lien from the fix and flip lender. The result: full financing for both acquisition and rehab with minimal cash investment.
The Benefits of Seller Second Mortgage
- Preserve Capital
You keep your cash available for emergencies, overruns, or—better yet—your next deal. In this business, liquidity is king. A Seller Second Mortgage no money down approach allows you to maintain flexibility and avoid tying up capital in a single project.
- Higher ROI
Return on investment is a key metric for any flipper. When you invest little or none of your own money, your ROI skyrockets. If a deal returns $50,000 in net profit and you only had $5,000 in closing costs out of pocket, that’s a 1,000% return. Yes, please.
- Faster Scaling
Want to flip two, three, or five properties at once? No money down seller second mortgage financing makes it possible. Instead of waiting to recoup profits from one flip to fund the next, you can leverage seller seconds to build a pipeline of ongoing deals.
- Motivated Sellers Make Good Partners
If a seller is willing to carry a second lien, they’re often highly motivated to make the deal work. This opens the door to favorable terms, more flexibility, and in some cases, even joint venture partnerships.
- Less Personal Risk
Because you’re using minimal personal funds, your financial exposure is limited. That doesn’t mean you can take unnecessary risks (you’re still responsible for the loan), but it does lower the financial barrier to entry.
The Guidelines
- Credit Score: 660
- Loan Amount: $100,000 to $1,500,000
- Minimum Purchase Price $85,000
- LTV: 70% to 90% depending on experience and location
- Seller Second Mortgage: up to 100% CLTV
- LTARV: 75%
- Liquidity: closing costs plus 3 to 6 months reserves
Proceed with Caution (and Competence)
Of course, no money down seller second mortgage financing doesn’t mean no responsibility. You still need a solid deal, a sound exit strategy, and a lender (FBC Funding) who allows creative financing. Not every seller will agree to a second lien, and most lenders won’t will allow one. But when the stars align, this strategy can be a powerful way to build momentum.
In the end, the real beauty of a no money down fix and flip deal isn’t just in the financing—it’s in the freedom it provides to do more, faster, with less risk and more reward.
And that’s worth flipping out about.
For more information or to get prequalified for a seller second fix and flip mortgage Call FBC Funding @ 888-848-3114 or email louisj@fbcfunding.com
