Greater Houston has a deep supply of houses built from the 1920s to the 1980s and a large pool of buyers for renovated ones. A flip here usually means new kitchens and baths, new systems, often foundation and roof work, and a house that sells to an owner-occupant. The financing has to cover the purchase and the whole renovation, and the plan has to account for costs that are specific to Houston, flooding above all.
How the loan is sized
A fix and flip loan combines a share of the purchase price with the renovation budget, and the total is capped at a share of the after-repair value (ARV).
| Purchase price | $260,000 |
| Rehab budget | $85,000 |
| After-repair value | $470,000 |
| 90% of purchase | $234,000 |
| 100% of rehab | $85,000 |
| Loan | $319,000 |
| 75% of ARV ceiling | $352,500 |
| Cash to close, before costs | $26,000 |
The rehab money is not paid at closing. It is held back and released in draws as each stage of work is inspected and completed, so you or your contractor need enough cash to start each stage.
Costs that are specific to Houston
- Flood history and floodplain rules. Check whether the house has flooded and whether it sits in a floodplain. Inside the city’s 100-year and 500-year floodplains, a substantial improvement means the house must meet the elevation rule, 2 feet above the 500-year flood level. See our guide to Houston flood rules for investors.
- Foundations. Clay soil swells and shrinks with moisture, and foundation movement is common in older slab and pier-and-beam houses. A foundation inspection belongs in your due diligence.
- Property tax while you hold. Combined rates are often 2% to 2.5% of value, more inside a MUD, and an investment property gets no homestead exemption. Carry the monthly tax in your holding costs.
- Low closing costs. Texas has no transfer tax and no mortgage recording tax. Title insurance is priced at rates set by the state, and closings run through a title company.
Permits, deed restrictions and historic districts
Houston has no zoning, but many neighborhoods have deed restrictions that limit what you can build, and the city enforces them. Permits for work inside the city go through the Houston Permitting Center. In historic districts such as the Heights, Freedmen’s Town and Old Sixth Ward, exterior work needs a certificate of appropriateness.
The exit
Most flips end in a sale to an owner-occupant, so your after-repair value should come from recent sales of renovated homes nearby. Buyers will see the seller’s disclosure, including any past flooding, and that affects the price. If the market slows, a DSCR rental loan can replace the flip loan and turn the house into a long-term rental, with a cash-out refinance at up to 80% loan-to-value.
Common questions
Up to 90% of the purchase and 100% of the rehab at a 720+ credit score, within 70 to 75% of the after-repair value.
Often, yes, if the repairs were done properly and the after-repair value reflects the flood history a buyer will see. Tell us up front.
No. Texas has no transfer tax and no mortgage recording tax.
Long enough to cover permits and the work, with a cushion. Our terms run 6 to 24 months with no prepayment penalty.