--- title: Commercial Loans and Fun Blog | fix and flip downpayment description: fix and flip downpayment | George Blackburne, owner, offers insight into the commercial loans and mortgage industry in this Commercial Real Estate Loan Tips blog. --- [![c-loans-logo-2025](https://info.c-loans.com/hs-fs/hubfs/images/c-loans-logo-2025.png?width=183&height=86&name=c-loans-logo-2025.png)](https://c-loans.com) [Terms of Use](https://www.c-loans.com/terms-of-use) | [Disclaimer](https://www.c-loans.com/disclaimer) | [Blog](https://info.c-loans.com/) # Commercial Loans and Fun Blog ## [Fix and Flip Loans and the Minimum Skin in the Game](https://info.c-loans.com/fix-and-flip-loans-and-the-minimum-skin-in-the-game) Posted by [George Blackburne](https://info.c-loans.com/author/george-blackburne) on Tue, Nov 21, 2017 - [Tweet](https://twitter.com/share) ![Interior renovation-1.jpg](https://info.c-loans.com/hs-fs/hubfs/Interior%20renovation-1.jpg?width=278&height=181&name=Interior%20renovation-1.jpg)One of the most important questions asked by fix and flip borrowers is, "How much cash do I have to bring to the closing table?"  The good news is that fix and flip loan borrowers ("renovators") need far less cash than home builders or commercial real estate developers.  In fact, I promise you that you will be thrilled and pleased with how little cash a renovator has to bring to the table. *Hooray!  J*ust be patient. Before we get into exactly how much cash a renovator needs to qualify for a fix and flip loan, let's use this opportunity to review commercial construction loans and the [Loan-to-Cost Ratio](https://info.c-loans.com/bid/85569/loan-to-cost-ratio-and-commercial-construction-loans).   [![Apply For a Fix and Flip Loan](https://no-cache.hubspot.com/cta/default/37671/34756fb9-253d-4e2f-bbad-d33aeb18ed9d.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/34756fb9-253d-4e2f-bbad-d33aeb18ed9d)   ![Ice Cream.jpg](https://info.c-loans.com/hs-fs/hubfs/Ice%20Cream.jpg?width=373&name=Ice%20Cream.jpg)   The ***Total Cost*** of a commercial construction project is calculated as follows: **Land Cost** plus **Hard Costs** (brick and mortar) plus **Soft Costs** (governmental fees, interest reserve, etc.) plus **Contingency Reserve** (5% of hard and soft costs) equals _______________________________________________ **Total Cost** When underwriting commercial construction loans, banks usually require that the Loan-to-Cost Ratio not exceed 75%.  In other words, if the total cost of the project is $1 million, the developer must contribute *at least* $250,000 in cash to the project.  Ouch.   [![Earn 7% to 12% Interest](https://no-cache.hubspot.com/cta/default/37671/6d2a63a5-1ad1-4f12-8358-531b994d05b5.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/6d2a63a5-1ad1-4f12-8358-531b994d05b5)   ![Drit-1.jpg](https://info.c-loans.com/hs-fs/hubfs/Drit-1.jpg?width=404&name=Drit-1.jpg)   Prior to the Great Recesssion, when banks got killed on their commercial construction loan portfolios, most banks would happily lend up to 80% loan-to-cost.  In other words, the developer only had to come up with 20% of the Total Cost of the project.  Some banks were even going 90% loan-to-cost.  After commercial real estate collapsed by 45%, Dr. Phil might have asked the banks, "How did that work out for you?"  Ha-ha!   Having learned their lesson painfully, **banks now require that commercial real estate developers contribute at least 25% to 35% of the Total Cost of the project**.  But you and I don't care!  Our fix and flip loans are ***residential loans***, not commercial loans, and the secondary market is absolutely ravenous for fix and flip loans.  You or your renovator will NOT need to contribute 25% to 35% of the Total Cost of the project.  No-no-no.   [![Free List of 3,159 Commercial Lenders Sort By Your Own Criteria](https://no-cache.hubspot.com/cta/default/37671/edc33fe8-9d87-477b-bf2f-07a33d3d2d24.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/edc33fe8-9d87-477b-bf2f-07a33d3d2d24)   ![Single.jpg](https://info.c-loans.com/hs-fs/hubfs/Single.jpg?width=486&name=Single.jpg)   So how much cash will a renovator need to contribute to qualify for a fix and flip loan?  Well, the first wonderful thing to appreciate is that fix and flip lenders do not even use the Loan-To-Cost Ratio. **To qualify for a fix and flip loan, the renovator only has to come up with  ****20% *of the price of the dilapidated house* being purchased!** Please note that we are NOT talking about 20% of the Total Cost of the project.  We are only talking about 20% of the property purchase price.   [![Nine-Hour Video Training Course How to Broker Commercial Loans](https://no-cache.hubspot.com/cta/default/37671/2fa994cb-f6ac-4671-821f-b4bd48cb5f1f.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/2fa994cb-f6ac-4671-821f-b4bd48cb5f1f)   ![Moose.jpg](https://info.c-loans.com/hs-fs/hubfs/Moose.jpg?width=455&name=Moose.jpg)   **Example:** John Renny is buying a rundown house in a nice area for $100,000.  He will need another $60,000 to renovate the property.  **John only has to come to the closing with $20,000 - 20% of the purchase price of the rundown house! ** His fix and flip lender will loan him 100% of the dough to effect the repairs and upgrades.  Wow.  Is this a great country or what?   [![Become a Hard Money Lender. Approve Your Own Deals!](https://no-cache.hubspot.com/cta/default/37671/247e2ace-c2a5-450b-ae3e-291f280f1d14.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/247e2ace-c2a5-450b-ae3e-291f280f1d14)   ![Smart Water.jpg](https://info.c-loans.com/hs-fs/hubfs/Smart%20Water.jpg?width=415&name=Smart%20Water.jpg)   Just for fun, let's compute the Loan-to-Cost Ratio of John Renny deal above - a fairly typical residential fix and flip deal. **House Purchase Price** (in a dilapidated condition) *plus* **Hard Costs** (of renovation) *plus* **Soft Costs** (closing costs, report fees, 4 mo's interest reserve) *plus* **Contingency Reserve** (5% of hard and soft costs) *equals* ______________________________________________________ **Total Cost** Now let's plug in the numbers.  C'mon, guys, don't zone out on me here.  This is fourth grade math.  Maybe third grade math.   House Purchase Price = $100,000 Hard Costs = $60,000 Soft Costs = $16,000 Contingency Reserve = $3,800 __________________________ Total Cost = $179,800 In our example, John Renny is bringing only $20,000 in cash to the closing table, which is the magical 20% of the cost of the dilapidated house.  Therefore his fix and flip lender will make him a loan for the difference - $179,800 minus the $20,000 downpayment equals $159,800. Okay, so what is the Loan-to-Cost Ratio of John Renny's imaginary fix and flip loan? $159,800 / $179,800 x 100% = **88.9% Loan-to-Cost!!!**   **[![Get Both Video Training Programs For Just $849.](https://no-cache.hubspot.com/cta/default/37671/d0fb44bc-2893-4551-8a92-6a5080c4296e.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/d0fb44bc-2893-4551-8a92-6a5080c4296e)**   **![Bears.jpg](https://info.c-loans.com/hs-fs/hubfs/Bears.jpg?width=479&name=Bears.jpg)**   Wow.  Nowhere else in the civilized world can a real estate developer get this kind of leverage.  This is why successful fix and flippers are making incredible retuns on their money.   [![Apply For a Fix and Flip Loan](https://no-cache.hubspot.com/cta/default/37671/979fe35a-8fa0-4c94-b577-2b38c134e58e.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/979fe35a-8fa0-4c94-b577-2b38c134e58e)   ![More Moose.jpg](https://info.c-loans.com/hs-fs/hubfs/More%20Moose.jpg?width=450&name=More%20Moose.jpg)   [![Apply to 218 Different SBA Lenders  Using the Same Four-Minute Application](https://no-cache.hubspot.com/cta/default/37671/021eee15-e2fd-4518-a9ab-7d26584681f1.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/021eee15-e2fd-4518-a9ab-7d26584681f1)   I met a nice lady from Alaska a few years ago who lives in Anchorage.  Every year several people in Alaska are stomped to death by a moose, so finding one in your swimming pool is not really a laughing matter.  A college classmate (interestingly she is white) of my daughter is from Swaziland, and she is crashing with us over the Thanksgiving holiday because its too far to travel back to Africa.  When I asked her about wild lions and tigers and bears, she said that the hippo's are the big killers in Africa.  Huh.  Who would have thunk it.  Such friendly looking animals.  And don't *even* get me started on the dangers of Porky Pig...  :-)   [![Apply For a Fix and Flip Loan](https://no-cache.hubspot.com/cta/default/37671/979fe35a-8fa0-4c94-b577-2b38c134e58e.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/979fe35a-8fa0-4c94-b577-2b38c134e58e)     1 Comment [Click here to read/write comments](https://info.c-loans.com/fix-and-flip-loans-and-the-minimum-skin-in-the-game#comments-listing) Topics: [fix and flip downpayment](https://info.c-loans.com/topic/fix-and-flip-downpayment) [All posts](https://info.c-loans.com/all) ### George Blackburne III Owner of C-Loans, Inc. ![George Blackburne III C-Loans Owner](https://info.c-loans.com/hs-fs/hubfs/George%20Head%20Shot%20Small%205%20by%207%20copy.jpg?width=158&name=George%20Head%20Shot%20Small%205%20by%207%20copy.jpg) ### Subscribe via E-mail ### Connect with C-Loans ## [![Get the Latest Scoop on C-Loans Inc.](https://no-cache.hubspot.com/cta/default/37671/bacfb58b-143e-40d7-b126-33c182b5b90b.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/bacfb58b-143e-40d7-b126-33c182b5b90b) C-Loans.com® is sponsored by  C-Loans, Inc. — For more information, contact Tom Blackburne 555 University Ave., Suite 150, Sacramento, CA 95825 Telephone: (916) 338-3232 x 317 * Tom Blackburne in Indiana: (574) 210-6686 * Fax: (916) 338-2328 Real Estate Broker -- California Department of Real Estate -- License Number 01330173 Arizona Dept. of Financial Institutions – License Number 0909472 The Florida Mortgage Brokers License Number: 0708758 [Read our many client Success Stories](https://c-loans.com/mortgage-brokers-overview/success-stories/) » © 2025 C-Loans, Inc. 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