The down payment for a fix and flip loan depends on the purchase advance, approved rehab funding, the ARV cap, and cash needed beyond the financed project costs.
The short answer
Trato's Fix & Flip program offers 95% LTC plus 100% of rehab and is limited to 75% of after-repair value, subject to underwriting.
The lower supported calculation controls, and the borrower should also plan for closing costs, points, reserves, and unapproved costs.
Why There Is No Single Down Payment
There is no single down payment because two deals with the same purchase price can have different budgets, values, conditions, and risk. The lender tests cost-based leverage and the after-repair value cap, then uses the lower supported proceeds.
Purchase equity is only one part of cash to close. Title charges, insurance, origination, interest reserves when required, and costs outside the approved scope may also need borrower funds. Final figures are confirmed per deal.
A discounted purchase does not automatically remove the cash requirement. The appraisal, documented scope, borrower liquidity, and complete capital plan still matter.
Compare leverage and cash needs on our fix and flip loans page.
An Illustrative Calculation
Illustrative only, not a quote. Assume a $300,000 purchase, $100,000 rehab budget, and $550,000 appraised ARV. Applying the program's 95% purchase advance and 100% rehab funding produces a cost-based loan of $385,000.
The 75% ARLTV cap produces $412,500. The lower amount is $385,000, so borrower cash toward the purchase and rehab is $15,000 before closing costs, points, and reserves.
This example shows the mechanics only. Appraisal, eligible costs, underwriting, and the final approved structure control an actual transaction.
What Can Increase Required Cash
Required cash can increase when the appraisal does not support the expected ARV, the purchase basis is high relative to value, part of the scope is ineligible, or reserves are needed for execution risk. Existing liens, title charges, insurance, and changes to the renovation plan can also affect the final sources and uses.
A borrower should maintain contingency resources even when approved rehab costs are financed. Draws reimburse completed work, which can create timing needs for labor and materials. Cost overruns do not automatically increase the loan.
A clear budget and contractor schedule help expose cash needs before closing rather than during construction.
How to Plan Cash to Close
Plan cash to close by separating project equity from transaction costs and operating reserves. Start with purchase and renovation cost, subtract supported loan proceeds, then account for points, title, insurance, prepaid interest when applicable, and any lender-required reserves.
Ask how rehab draws are funded and released. The borrower may need enough liquidity to begin work before reimbursement. Also test carrying costs if construction or sale takes longer than expected.
Submit accurate figures early. A quote based on an incomplete scope or unsupported value can change when the appraisal and detailed budget arrive.
Keep a separate contingency after closing rather than treating every available dollar as acquisition equity. That cushion can cover ordinary timing differences, property carrying costs, and approved work awaiting reimbursement without forcing the project plan to change. Document the source of those funds with the initial submission.
Common Questions
Frequently Asked Questions
The program can fund draw schedule for rehab funds, within overall leverage and ARLTV limits and subject to underwriting.
No. Cash to close can also include points, closing costs, reserves, prepaid items, and costs outside approved proceeds.
The lower supported amount controls, so the borrower contribution increases.
Approved rehab funds are generally reserved and released through draws after completed work is documented and inspected.