Question 1

I'm rehabbing a house near Baylor. What is the College and University Neighborhoods overlay and when does it apply to me?

Accepted Answer

It applies once your renovation budget crosses a set percentage of the building's appraised value, and the thresholds move with price. Under Waco Code section 28-832, a "substantial renovation" is renovation cost equal to 30% of appraised building value on buildings worth more than $200,000, 40% on buildings worth $100,000 to $200,000, and 50% on buildings under $100,000. Cross that line and the property must also comply with the overlay: one parking space per bedroom, a ten-foot pedestrian way along the street, four-foot landscape screening next to conforming single-family homes, and architectural review. Roof repair or replacement, HVAC work, electrical and plumbing repair, foundation stabilization, masonry repair, rotten-wood replacement, and window and door repair that doesn't change the building's look are all excluded from the ratio, so a heavy but code-driven rehab can often stay under it. On a $120,000 house, $48,000 of countable work is enough to trigger it, which is a routine budget for a rent-by-the-bedroom conversion. The city keeps the CU zone map on file rather than published online, so before you write a rehab budget on a Baylor-adjacent property, confirm both the appraised building value and the property's CU zone with the city.

Question 2

What should I budget for property tax carry on a Waco flip with no homestead exemption?

Accepted Answer

About 2.25% of value a year inside Waco city limits, and it's headed up, not down. The 2025 adopted rate stack for the city was 2.248379 per $100: McLennan County 0.334805, McLennan Community College 0.131974, City of Waco 0.755000, and Waco ISD 1.026600. Investment property gets no homestead exemption, so the full appraised value carries tax from day one. The county proposed a 6-cent increase for tax year 2026, to 0.394805, an 18% jump over the adopted 2025 county rate, citing sheriff, jail, and salary costs, so don't underwrite a flat tax line on a longer hold. City limits and school district aren't the same boundary here either. Confirm the actual ISD on the parcel's McLennan CAD account before you finalize carry.

Question 3

How much should I set aside for hail and wind damage on a Waco rehab?

Accepted Answer

Budget for a bad year, not an average one. McLennan County paid out $58.2 million in homeowners losses across 47,827 policies in 2025, or $1,216 per policy, with wind and hail at 53% of that total. In 2023, a heavier hail year, paid losses hit $120.6 million, or $2,575 per policy, with wind and hail alone at $1,986 per policy, more than double the 2025 figure. Set your roof and deductible assumptions to a 2023-shaped year rather than a 2025-shaped one. McLennan County is roughly 180 miles from the Gulf and outside the TWIA coastal wind pool, so there's no windstorm-association layer here, as of mid-2026 (data date 2026-08-13); the real underwriting question is roof age and hail deductible, not hurricane exposure.

Question 4

If my exit plan shifts from a sale to a Baylor-area rental, does Waco cap how many unrelated tenants can share the house?

Accepted Answer

No, not for a standard long-term rental. Waco's own zoning definition of "family" in Code of Ordinances section 28-1 covers "a group of unrelated persons living together as a single housekeeping unit," with no number attached, so by-the-bedroom leasing near Baylor isn't fighting a four-person cap the way it once did in some other Texas university towns. The only caps that exist: a small-lot single-family dwelling, under 50 feet wide and under 6,000 square feet, is limited to two unrelated occupants, and short-term rentals in the lowest-density zoning districts are capped at four unrelated occupants. For a standard long-term hold, Waco's own zoning code already answers the question. See our fix and flip loan terms if you're weighing a flip-to-rental exit.

Question 5

Is a Baylor-area Airbnb flip still a good exit plan in Waco?

Accepted Answer

Only if you check zoning before you buy: the classic non-owner-occupied Airbnb is not allowed in most of Waco's single-family neighborhoods. STR Type II, a non-owner-occupied single-family or duplex short-term rental, is flatly "Not Allowed" in the R-E, R-1A, R-1B and R-1C zoning districts, and the city removed the special-permit path for it effective June 15, 2021. It's permitted by right only in higher-density districts like R-2 through R-3E, the O districts, and C-4. And a license doesn't transfer with the sale: the city says on its own page that a new owner must qualify the property fresh, even if the current owner holds a valid license. If your flip's exit plan depends on short-term rental income, confirm the specific parcel's zoning district before you close, not after.

Question 6

How much of my fix and flip deal will USA Mortgage finance?

Accepted Answer

We fund up to 90% of the purchase price and up to 100% of your rehab budget, with the total capped against the after-repair value (ARV). Rehab money is released in draws as the work is completed.

Question 7

What interest rate and points should I expect on a flip loan?

Accepted Answer

Our fix and flip pricing starts around 9.99%, interest-only, with origination typically 1 to 3 points depending on your experience, leverage, and the deal, and every quote is subject to underwriting. Across the market most flip loans run roughly 9% to 12%. On most flip loans, including ours, interest is charged on the full loan amount, rehab budget included. Paying interest only on rehab funds as you draw them exists in the market, but it is the exception, not the rule.

Question 8

Do I need flipping experience to qualify?

Accepted Answer

No. We work with first-time flippers as well as full-time operators. Experience mainly affects your leverage and rate, since a longer track record earns higher loan-to-cost and better pricing. A newer investor can still get funded with a sound deal, a realistic budget, and a clear exit.

Question 9

How fast can a fix and flip loan close?

Accepted Answer

We can get you a term sheet the same day on a complete application, and we typically fund within 48 hours of clear title. The main variable is how fast title and insurance come together, which is why a full close usually runs 5 to 7 days. Because we are the lender and underwrite in house, there is no second layer of approval to wait on.

Question 10

Is there a prepayment penalty if I sell quickly?

Accepted Answer

No. Our fix and flip loans have no prepayment penalty, so paying off early when the property sells costs you nothing extra. Terms run 6 months, and because there is no penalty, selling sooner never costs you extra.

Question 11

Do you check credit or require income documents?

Accepted Answer

We run credit, but this is an asset-based loan, so the property, your budget, and the ARV matter most. We do not ask for W-2s or tax returns to qualify a flip. We will want to confirm you have reserves to carry the project to its exit.

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