Every investor knows they need a down payment. What blindsides people the first time, and sometimes the second and third time, is everything that stacks on top of it. The deals I see fall apart at the closing table are almost never about the deal itself. They are about capital that nobody planned for. So let me walk you through how cash to close actually works on a fix and flip, using real numbers and the way I explain it to every borrower I work with.

How Lenders Set Your Down Payment

There are three numbers that drive everything. Your purchase price, your rehab budget, and your after repair value. Add the purchase price and the rehab budget together first, because that is your total investment into the property. Then look at the ARV, which is what the property will sell for once it is fixed up and ready to go.

The lender lends against that ARV. In larger metros like Houston, Dallas, Austin, Denver, Miami, or Tampa, that is typically up to seventy-five percent of the ARV. In more rural areas, lenders usually cap closer to seventy percent. As long as your total investment fits under that number, the lender can cover the deal and let you bring the minimum down.

Purchase Price + Rehab Budget = Total Investment
Max Loan = ARV × 75% (large metro) or 70% (rural)
Down Payment = Minimum % of the Purchase Price

Here is the part most people get backwards. Your down payment is calculated off the purchase price, not the total project. The rehab budget is typically funded one hundred percent by the lender. On a strong deal in Texas, I have lenders who will let an investor bring as little as five percent of the purchase price. Nationwide, across the thirty-seven states I broker in, ten percent of the purchase price is closer to industry standard. Ten percent is also common for quick closings and for borrowers with no credit history.

Let me put real numbers to it. Say you buy at $200,000 with a $50,000 rehab, so your total investment is $250,000. Your ARV comes in at $350,000. Seventy-five percent of that is $262,500, which is more than your total investment, so the deal pencils for the lender. At ten percent down, you bring $20,000 on the purchase. At five percent in Texas, you bring $10,000. The rehab is funded. That down payment is the foundation of your cash to close, but it is not the whole number.

What Stacks On Top of the Down Payment

This is where the surprises live. On top of your down payment, your cash to close usually includes:

  • Title fees, which run anywhere from $2,000 to $4,000 depending on the loan size. I tell borrowers to budget around $3,000 as an average.
  • An agent finder's fee, if you are working with one. A lot of the agents I work with charge a flat finder's fee, often around $5,000, that gets added to the HUD (the closing settlement statement that lists every dollar in and out of the deal) and paid at closing.
  • Appraisal and inspection fees, which you want to ask about before closing. Some of the lenders I work with charge nothing for appraisal or inspection, which keeps your cash to close lower. Others do, so confirm it up front.
  • Origination points, covered next, since those depend on you.

Points, Origination, and My Broker Fee

Origination is not a fixed number. It moves with your experience level and how much leverage you want. The more money you put down, the lower your origination tends to be. The more you push your loan-to-cost (how much of the total project the lender is financing), the higher it goes. That tradeoff is real, and you should know it before you decide how much to bring down.

For new investors, origination typically lands somewhere between one percent and two and three-quarter percent of the loan. Experienced investors who know exactly what they want and need less hand-holding can often get into the zero to one and a half percent range, along with better rates. Experience pays you back here in real dollars.

I am going to be straight with you about my side too, because I think you should know exactly what you are paying for. My broker fee is typically around one percent, and it depends on the loan amount. On a larger loan, say six or seven hundred thousand dollars, I will often bring that down to half a point. I would rather earn a fair fee on a borrower who comes back to me ten times than squeeze one deal and never see them again.

Reserves: The Money You Need But Do Not Hand Over

This is the piece that catches new investors most, because it does not show up as a line item you wire at closing. It is liquidity you have to prove you have. Lenders want to see reserves, and there are two kinds.

First, rehab reserves. Lenders typically want to see somewhere between twenty and thirty-three percent of your rehab budget sitting in reserves. On a larger rehab budget, it trends toward the lower end, around twenty to twenty-five percent. On a smaller rehab budget, it trends closer to thirty-three percent. Second, interest reserves. Most lenders want to see roughly six months of interest payments available, so they know you can carry your position in the loan even if the project runs long.

Reserves are not money you bring to the table. They are proof of liquidity. But you have to actually have it, so treat reserves as part of the capital picture you plan for before you ever go under contract.

Run Your Own Cash to Close

Plug your deal into the calculator below. Move the sliders for purchase price, rehab budget, and ARV, and it builds a live deal snapshot in real time: estimated loan amount, down payment, origination and broker fees, title and legal, total cash to close, proof of funds required, and the monthly payment. This is the same tool I run on the phone with borrowers.

Your Cash to Close Is Not Lost Money

A lot of investors look at cash to close the wrong way. They treat the down payment like money that disappears. It does not. Whatever you put down at the closing table becomes equity in the property. When you refinance the property to hold it as a rental, or when you sell it on the market, you only pay your lender back the loan balance you owe them. Your down payment already went toward the purchase price, so you are not paying that back. It comes back to you as equity in the deal.

Your down payment is not gone. It is equity in the deal that comes back to you when you refinance or sell.

The Bait and Switch Nobody Warns You About

Here is what a lot of lenders will not tell you. They do not always educate borrowers on the risk attached to cash to close. A lender can advertise the optimistic ARV a borrower submitted, send a term sheet built on that number, and let the borrower walk through the entire process without ever sharing their own honest analysis of where the appraisal will land.

I have seen exactly how that plays out, with lenders I do not work with. I had an investor whose cash to close jumped ten to fifteen thousand dollars the day before closing. They came to me, and because they had a tight timeline, we were able to get them in with only five percent down and close in five days. They were thankful, because frankly they could not have afforded the higher number. If they had been forced to put that much more cash in, they would not have had enough left to start the rehab or make the monthly payments to keep the project moving. That is the real danger of a cash to close number that moves on you at the last second.

This is also why I run my own conservative analysis on every deal and show borrowers the range of where their cash to close could land, not just the rosy version. Nobody I work with should get surprised at the closing table.

Get the Real Number Before You Send Earnest Money

The single thing I wish every first-time investor had before they went under contract is simple. A good lender in their corner, and a clear handle on their own numbers. Before you send your EMD (earnest money deposit, the good-faith money you put down when you go under contract), it is worth a call to walk through the entire process from A to B. How closing works, how much capital is really required, and how every single fee breaks down, including my broker fee down to the dollar.

I want the investors I work with to win, because when they make money, they come back. Honest numbers and honest evaluations are how you build relationships that last for years, and that is the only way I want to do this business.

Frequently Asked Questions

What is cash to close on a fix and flip?
Cash to close is the total amount of money you actually wire to the closing table to fund the deal. It is your down payment plus the fees stacked on top, like title fees, origination points, an agent finder's fee if you have one, and any appraisal or inspection cost. It is almost always more than just the down payment, which is what surprises new investors.
How much down payment do you need for a hard money fix and flip loan?
On a strong deal in a larger metro, I have Texas lenders who will let an investor bring as little as five percent of the purchase price. Nationwide, ten percent of the purchase price is closer to industry standard. The rehab budget is typically funded one hundred percent by the lender, so your down payment is calculated off the purchase price, not the total project.
What costs are included in cash to close?
Your down payment on the purchase, origination points, title fees that average around three thousand dollars, an agent finder's fee if you are working with one, and an appraisal or inspection fee on lenders that charge it. Some lenders I work with charge no appraisal or inspection fee at all, which keeps your cash to close lower.
Do hard money lenders require reserves?
Most do. Lenders typically want to see reserves equal to roughly twenty to thirty-three percent of the rehab budget, plus around six months of interest payments in reserve. Reserves are liquidity you have to prove you have, not money you hand over at closing. They show the lender you can carry the loan if the project runs long.
Is the down payment on a flip lost money?
No. A lot of investors look at this wrong. The down payment you bring becomes equity in the property. When you refinance or sell, you only pay back the loan balance you owe the lender, not your down payment. That money comes back to you in the deal.

Want your real cash to close before you go under contract?

Send me the deal and I will break down every number with you, down to the broker fee, so nothing surprises you at the table.

Run my numbers