CTC

Cash to Close

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How to use the Cash to Close

1
Enter the price and loan percentage
The share of the purchase price the lender funds sets your down payment.
2
Enter the rehab and how much is financed
If the lender funds only part of the rehab, you'll pay the rest.
3
Add lender charges
Points are often charged on the total loan, including the rehab holdback.
4
Add closing costs
Title, escrow and recording, usually 1–3% of the price.
5
Plan for reserves
Keep cash for several months of payments. Many lenders require it.

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Worked example

A flipper buys a house for $240,000. The lender funds 85% of the purchase and 100% of the $55,000 rehab through draws, with 2 points and $1,995 in fees. Closing costs are 2%.

At closing, the flipper brings about $48,000: a $36,000 down payment, $7,175 in points and fees and $4,800 in closing costs. Adding three months of reserves at $3,500 a month, the total cash needed is about $58,500.

The formula

Down payment   = Price × (1 − Loan %)
Total loan     = Price × Loan % + Rehab × Rehab financed %
Points         = Total loan × Points %
Cash at close  = Down payment + Points + Fees + Closing costs
Total cash     = Cash at close + Unfinanced rehab + Reserves

Common mistakes

Assuming draws arrive up front. Most lenders reimburse rehab work after it's done and inspected. You'll need cash to start.
Skipping reserves. Running out of cash mid-project is one of the fastest ways to lose a deal.

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