One of the first questions investors ask before buying a rehab property is simple: how big does the fix and flip loan down payment need to be? The honest answer is that it depends on the lender, the property, and your experience, but the total cash you bring to the table is usually more than just a down payment. It also includes a share of the rehab budget and closing costs.
What Counts as Your Fix and Flip Loan Down Payment
Most private lenders finance a fix and flip deal based on a percentage of the purchase price and a separate percentage of the rehab budget, rather than one blended number. The portion of the purchase price you pay yourself is commonly referred to as the down payment.
Lenders typically look at factors like the property's after-repair value (ARV), your experience level, and the overall strength of the deal when deciding how much of the purchase price they will finance. You can read more about how ARV is calculated in our guide on what ARV means.
How Rehab Draws Work (and Why They Affect Your Cash Needed)
Rehab funds are usually not handed over in one lump sum. Instead, they are released in draws as work is completed and verified, often through inspections. This protects the lender and helps investors stay on budget throughout the project.
Because draws are reimbursed after work is finished, investors often need to cover the first phase of construction costs out of pocket before requesting reimbursement. Understanding this timing is important when you plan your overall cash needs, not just your down payment.
If you're new to this structure, our article on how fix and flip loans work walks through the draw process in more detail.
Closing Costs You Should Budget For
Beyond the down payment and rehab contribution, investors should plan for closing costs. These commonly include items such as:
- Title and escrow fees
- Appraisal or valuation costs
- Recording fees
- Possible prepaid items like insurance
- Loan origination costs, which vary by lender and loan size
These costs vary by lender, property, and loan amount, so it's wise to ask for a full breakdown before you commit to a deal. A CPA can also help you understand how these costs may factor into your overall tax picture.
Worked Example: Cash to Close on a $200,000 Flip
Here is a simple illustration that pulls these pieces together. Remember, these numbers are for illustration only and do not reflect actual loan terms.
Purchase price: $200,000
Rehab budget: $50,000
Lender-funded purchase amount (85%): $170,000
Down payment required: $30,000
Rehab funded in draws: lender reimburses as work completes, but investor may front the first $10,000 phase
Estimated closing costs: $6,000
Total cash likely needed to close and start rehab: roughly $46,000
This is a simplified example. Your actual numbers will depend on the lender's terms, the property's condition, and your experience as an investor. Tools like our fix and flip calculator and deal analyzer can help you model your own numbers before you make an offer.
Ways Investors Reduce Upfront Cash
Some investors look for ways to lower the amount of cash needed at closing. Common strategies include:
- Choosing properties that need less upfront work before the first draw
- Negotiating seller concessions toward closing costs
- Using a bridge loan to move quickly on acquisition while rehab financing is finalized
- Building a track record, since experienced investors are often considered for different leverage levels than first-time flippers
None of these strategies eliminate the need for cash, but they may reduce how much you need upfront. Every deal is different, and results vary by lender, property, and borrower.
How Loan Programs Compare
Fix and flip loans are just one tool in an investor's toolbox. Depending on your strategy, you might also consider ground-up construction loans for new builds, DSCR rental loans if you plan to hold the property after renovation, or portfolio loans if you're financing multiple properties at once. Investors working on larger projects sometimes explore commercial and multifamily loans as well.
If you're planning a BRRRR-style strategy, where you refinance out of a flip loan into a rental loan, our guide on BRRRR financing explains how the pieces typically fit together. You can also learn more about overall costs in our breakdown of fix and flip loan costs.
What to Do Next
Every flip is different, and the exact down payment, draw schedule, and closing costs for your deal will depend on the property and your experience. The best way to get real numbers is to run your specific deal through our rate and loan estimator or review our full loan programs page to see which option fits your strategy. When you're ready, you can get a quote and talk through your numbers with our team.
Frequently asked questions
How much down payment do I need for a fix and flip loan?
It varies by lender, property, and borrower experience, but many fix and flip loans finance a percentage of the purchase price and a percentage of the rehab budget, with the investor covering the remaining down payment and closing costs.
Is rehab money given upfront or in draws?
Rehab funds are typically released in draws as work is completed and verified, rather than as a lump sum at closing. Investors often need to cover part of the early work before requesting reimbursement.
What closing costs should I expect on a fix and flip loan?
Common closing costs include title and escrow fees, appraisal costs, recording fees, and loan origination costs. These amounts vary by lender and loan size, so it's best to request a full breakdown for your specific deal.
Can I lower the cash I need to close on a flip?
Some investors reduce upfront cash by choosing properties needing less initial work, negotiating seller concessions, or building experience over time, but actual leverage and requirements vary by lender, property, and borrower.