Guide
How much cash you actually need
The down payment is roughly a third of what a leveraged flip requires in real cash. Here is the full list, with a worked total.
The most common planning error in this product is treating the down payment as the cash requirement. On a leveraged flip it is usually somewhere between a third and a half of what you actually need liquid.
Everything you have to fund
| Item | On a $250,000 purchase / $60,000 rehab | Notes |
|---|---|---|
| Down payment (10% of purchase) | $25,000 | At 90% LTC |
| Origination points (2% of $310,000) | $6,200 | Charged on the full facility |
| Lender flat fees | $2,000 | Underwriting, doc prep, processing |
| Appraisal | $750 | Paid up front, usually non-refundable |
| Buy-side closing costs (2.0%) | $5,000 | Title, escrow, recording, transfer |
| First rehab draw, funded by you | $12,000 | Reimbursed later, not advanced |
| Carrying costs, 7 months | $4,550 | Taxes, insurance, utilities |
| Interest payments, 7 months | $19,900 | Interest-only, monthly |
| Contingency at 10% of rehab | $6,000 | The one people skip |
The three that surprise people
- The first draw
- Rehab money is reimbursed after work is done, not advanced before. You fund stage one out of pocket and wait for the inspection. On a fast-moving crew that can mean funding two stages before the first reimbursement lands.
- Interest during the hold
- Interest-only still means monthly payments. Seven months at $2,845 is real money leaving your account while nothing is coming in.
- Contingency
- Not optional. Rehab budgets overrun; the question is by how much. Ten percent is a floor on a cosmetic job and light for anything structural.
A planning rule
The true-cost calculator breaks out cash to close separately from total cash into the deal, because they are different numbers and only one of them is due at the closing table.
Questions people actually ask
How much do you put down on a hard money loan?
Against as-is value, lenders typically go to 60% to 75%, so 25%-40% comes from you. On a purchase with rehab the more common framing is loan-to-cost: 80%-90% of the purchase price plus 100% of the rehab budget, held back and released in draws.
Do not confuse the down payment with cash to close. Points, flat fees, title, insurance and the first draw you fund yourself all sit on top. Ten to fifteen percent of purchase price is a realistic planning figure for total cash needed on a leveraged flip.
How much down do you need for a hard money loan?
See above - 10% to 20% of purchase is the usual range, before fees and reserves.
Does a hard money lender cover 100%?
Almost never on purchase price, and the offers advertising it usually mean something narrower: 100% of the rehab budget (common and real), or 100% of purchase where the purchase is far below as-is value and the loan is still inside the lender's ARV cap (rare and deal-specific), or 100% with cross-collateralisation against another property you own (real, and it puts a second asset at risk).
Treat a headline promising 100% financing with no cash as the marketing hook it usually is, and read what the offer actually caps at. See the truth about 100% financing.
How long do you have to pay off a hard money loan?
Terms run 6 to 24 months, with 12 months the most common. That is a hard deadline with a fee attached, not a guideline - which is why the exit matters more than the rate.
How do you pay back a hard money loan?
Three ways, and you should know which one before you sign. Sell the property and pay off from proceeds. Refinance into longer-term debt, usually a DSCR rental loan. Or pay it off from other capital. Most hard money loans are interest-only during the term with the principal due as a balloon at the end, so there is no amortisation quietly reducing what you owe.
What is a fix n flip loan?
A hard money loan structured for a buy-renovate-sell project: a purchase piece funded at closing, a rehab piece held back and released against completed work, interest-only payments, and a 12-month term timed to your renovation and resale.
What is the best loan for a fix and flip?
Whichever one has the lowest all-in cost for the months you will actually hold it, given the leverage you need. That is genuinely the answer, and it is not the same lender for every deal.
The structural things that decide it: whether interest accrues on the drawn balance or the full facility, whether there is a minimum-interest period, how many draws and at what fee, and what the extension costs. A lender quoting 11.5% on drawn balance with no minimum interest routinely beats one quoting 9.99% on the full facility with six months guaranteed.
Are fix and flip loans worth it?
They are worth it when the leverage lets you run more deals than your cash would, and the spread survives the financing cost with room left for the rehab running over. They are not worth it when the financing cost consumes a spread that was thin to begin with - which is most deals bought at retail. The financing is rarely what kills a flip; the purchase price usually already did.
How much money do I need for a fix and flip?
Plan on the down payment (10%-20% of purchase), plus points and flat fees, plus buy-side closing costs, plus the first rehab draw funded out of pocket, plus carrying costs for the whole hold, plus a genuine contingency. On a $250,000 purchase with $50,000 of rehab that is commonly $60,000-$80,000 of real cash, not the $25,000 the down payment alone implies.