How Much Cash Will You Need?

Start with the purchase gap

Purchase price minus initial acquisition funding shows the purchase amount the illustration does not cover. Closing charges, fees deducted from funding and reserves can increase the cash needed. A deposit already paid is part of your contribution, not an extra purchase expense.

Plan for paying before reimbursement

With reimbursement-based renovation financing, you initially pay for work. After the work is reviewed, a draw may reimburse eligible spending. Renovation funding does not eliminate the need for cash while you wait. Delays, held-back payments, ineligible costs and overruns can increase that need.

Keep cash set aside separate from expenses

An interest reserve is your cash set aside for future interest payments. It is not a second interest charge. Count interest once and track the use of reserved cash. The maximum cash you need depends on when payments and reimbursements occur, not simply the purchase gap plus the permanently unfunded renovation costs.

Your quick checklist

• Separate cash needed at closing from cash needed during renovation.
• Include closing costs, fees, carrying costs and contingency.
• Enter a work-spending schedule before relying on a cash-timing estimate.
• Keep unknown expenses blank instead of treating them as zero.