How much money do you need to flip your first house?
2 min read
"How much do I need to get started?" is the question I hear most from new investors. The honest answer: less than buying with all cash, but more than just the down payment. Here's how to figure out your number.
The cash you'll need
With a hard money loan, you're typically responsible for:
- Down payment on the purchase: the part of the price the lender doesn't fund. If the lender funds 80% of the purchase, you bring 20%.
- Closing costs to buy: attorney and title fees, lender points and prorated taxes.
- Any rehab the lender doesn't fund, plus money to start work before your first draw is paid.
- Carrying costs: monthly interest payments, utilities, insurance and HOA dues until you sell.
- Reserves: a cushion for surprises. Plan on something.
A sample deal
- Purchase price: $220,000
- Rehab budget: $45,000
- Lender funds 80% of the purchase and 100% of the rehab
- Hold time: 7 months
| Cash item | Estimate |
|---|---|
| Down payment (20% of $220,000) | $44,000 |
| Closing costs and points | about $5,000 |
| Monthly payments (at 11%) and utilities for 7 months | about $16,000 |
| Reserves for surprises | about $8,000 |
| Total cash to have available | about $73,000 |
These numbers are only an example. Your rate, points, hold time and costs will change the total, so run your own deal through the fix & flip calculator.
Ways to need less cash
- Find a lender that funds more of the purchase or 100% of the rehab
- Bring in a partner for part of the down payment (my calculator lets you add a second loan)
- Shorten your hold time with a tight rehab schedule; every month saved is a payment saved
- Start with a smaller, simpler rehab for your first deal
Frequently asked questions
Can I flip a house with no money?
It's very difficult to flip with none of your own money. Most lenders want you to have some cash in the deal, and you'll need money for closing costs and monthly payments. Partnering with someone who brings the cash while you bring the work is a common alternative.
Do I have to pay hard money loan payments while I renovate?
Usually yes. Most hard money loans are interest only with monthly payments during the renovation, so budget for those payments until you sell or refinance.
How much should I keep in reserves for a flip?
Many investors keep 10% to 15% of the rehab budget as a contingency, plus a few months of payments, so a delay or surprise repair doesn't put the deal at risk.
Want to know if you're ready to fund your first deal? Take the 2-minute Loan-Ready quiz.
Written by Jasmine Brown
Jasmine specializes in financing flips, new construction, DSCR, and multifamily nationwide. As an investor, she brings first-hand experience and strategic insights to her clients. Fund your next deal