One of the most common questions from real estate investors is:
Can I get a 100% funded, no money down hard money loan?
The down payment needed depends on a number of factors including the purchase price, rehab scope of work, LTV ratio, exit strategy, and other variables.
While it may be possible to buy real estate with little to no money down, the borrower will always need some money into the deal for the appraisal fee, loan document preparation fee, closing costs, etc.
Will you need any money down?
Here’s how to estimate if you may need to bring money to closing.
Step 1: Calculate Gross Loan
The Gross Loan will be up to 65% LTV of the ARV
Example: $100,000 ARV = $65,000 Gross Loan
Step 2: Calculate Costs
Add Purchase Price + Rehab Costs + Estimated Closing Costs (title, etc) + Points (loan fee) + Interest Reserve = Total Costs
Step 3: Estimated Cash to Close
Gross Loan – Total Costs = Estimated Cash to Close
Example: $85,000 Total Costs – $65,000 Gross Loan = $20,000 Estimated cash from borrower to close.