Separate the down payment from the project cash plan
The down payment is one component of a transaction. Buying costs, points, lender fees, prepaid items, renovation spending, carrying costs, and reserves can also require cash. Ask which costs are included in the proposed loan and which remain your responsibility.
Check the down-payment basis
A percentage of purchase price produces a different contribution from the same percentage of purchase plus renovation cost. On a hypothetical $400,000 purchase with an $80,000 rehab, 20% of purchase is $80,000; 20% of total project cost is $96,000. The actual structure depends on the approved program.
Understand when renovation funding is available
A rehab holdback is not cash freely available at closing. Approved renovation funds are commonly released through draws under the funding program’s requirements. The timing of contractor payments and draw reimbursements can create cash needs even when the budget is financed.
Review points, fees, and interest together
Ask what amount the points apply to, whether they are paid in cash or added to the loan, and whether interest applies to the full commitment or funds drawn. Financing a fee does not eliminate the cost; it changes how and when it is paid.
Plan for ownership costs and the sale
Taxes, insurance, utilities, HOA costs where applicable, and loan interest continue during the hold. Selling costs reduce proceeds at exit. Include these in the project economics, while distinguishing cash spent before sale from costs settled through closing.
Use the analyzer as a starting point
Our Deal Analyzer shows modeled investor contributions across the project. That total is not the same as cash required at closing or peak cash needed on a specific date. Review the proposed term sheet, settlement figures, and draw timing before committing.
Educational information. Examples are illustrative, not approved terms or a commitment to lend. Program requirements, costs, and availability vary by transaction and funding source.