What is cash-to-close on a hard money loan?

Cash-to-close is the total amount a borrower must bring to the hard money loan closing table. It includes the down payment (purchase price minus loan amount), lender points, broker fee, appraisal, title and escrow costs, recording fees, and any lender processing charges. Knowing the estimated cash-to-close before submitting a deal is critical — a borrower who cannot cover it is not a fundable deal.

What does a lender accept as proof of funds for closing?

Most hard money lenders accept recent bank statements (2-3 months), investment account statements, and in some cases retirement account statements as proof of funds. The funds must be liquid, in the borrower's or entity's account, and not contingent on the sale of another property (unless that sale is already in escrow). Gift funds from family members are accepted by some lenders with a gift letter.

How can borrowers reduce their hard money cash-to-close?

Legitimate ways to reduce cash-to-close include: qualifying for higher LTC (which reduces the equity gap), rolling certain fees into the loan (if the lender allows), applying the earnest money deposit already paid toward closing, negotiating seller concessions on the purchase contract, or using an experienced co-borrower to unlock a higher LTC program. The cash-to-close cannot go to zero — lenders require the borrower to have equity in the deal.

Glossary › Glossary

Cash-to-Close in Hard Money Lending: What It Is and How to Calculate It

By Broker Cheetah Editorial Team · April 2026

Direct Answer

Cash-to-close (CTC) is the total amount of money a borrower must bring to the hard money loan closing table. It includes the down payment (purchase price minus loan amount), lender points, broker fee, title and escrow costs, appraisal fee, and any other closing charges. Knowing cash-to-close before submitting a deal is essential — surprises at the closing table kill deals and damage relationships.

What Goes Into Cash-to-Close

Cash-to-close is everything the borrower pays out of pocket at closing. On a fix and flip loan, this typically includes:

1. Down payment (equity contribution) The difference between the purchase price and the loan amount.

Example: $200,000 purchase, 85% LTC on $280,000 total project cost = $238,000 loan. But only the acquisition portion funds at close. If the lender funds $200,000 for acquisition (representing the acquisition component of the 85% LTC loan), the down payment is $0 — the full purchase price is covered. In practice, LTC caps often mean the borrower funds a portion of the purchase price.

Simpler example: $200,000 purchase, lender funds $160,000 (80% of purchase) = $40,000 down payment.

2. Lender points / origination fee 2 points on a $280,000 loan = $5,600

3. Broker fee 1.5 points on $280,000 = $4,200

4. Appraisal fee Paid upfront or at closing, typically $500-$1,000 for residential properties.

5. Title and escrow costs Varies by state and transaction size — typically $1,500-$4,000 for residential purchases.

6. Recording fees and transfer taxes Varies significantly by state and county.

7. Lender underwriting / processing fees Some lenders charge administrative fees in addition to points — $500-$1,500 is typical for those that do.

8. Interest reserve (if applicable) If the borrower is including an interest reserve in the loan, it is funded from loan proceeds at close. This may appear on the settlement statement but does not increase cash-to-close unless the reserve exceeds available loan proceeds.

Typical total cash-to-close example:

Down payment: $42,000
Lender points (2): $5,600
Broker fee (1.5 pts): $4,200
Appraisal: $700
Title/escrow: $2,800
Recording: $400
Total CTC: $55,700

Why CTC Matters Before Submission

The borrower needs to have the cash-to-close before the deal closes. If the borrower discovers their CTC is $55,000 when they only have $30,000 available, the deal collapses at the worst possible time — potentially costing them their earnest money deposit and their lender relationship.

Qualify cash-to-close as early as possible:

Estimate the CTC before submitting to any lender
Confirm the borrower has the liquidity to cover it
Revisit after the term sheet is received (the actual closing cost figures may differ from estimates)

A borrower who cannot cover CTC is not a fundable deal, regardless of how good the property is.

Proof of Funds for CTC

Most hard money lenders require proof that the borrower has the funds to close. Acceptable proof typically includes:

Recent bank statements (2-3 months, showing consistent balance)
Investment account statements
401(k) or IRA statements (less preferred due to withdrawal penalties and liquidity considerations)
Gift letters (from family members contributing funds — accepted by some lenders, not all)

Funds must be in the borrower's (or entity's) account — not in transit, not contingent on the sale of another property unless that sale is already in escrow.

Reducing Cash-to-Close

Ways borrowers legitimately reduce their required CTC:

Increase the loan amount (if the deal supports higher leverage)
Roll the appraisal and certain fees into the loan (some lenders allow this)
Include an earnest money deposit credit (the deposit already paid counts toward CTC)
Negotiate seller concessions (on some purchase transactions, the seller credits a portion of closing costs)
Use an experienced co-borrower to qualify for higher LTC (reduces the equity gap)

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