Fix-and-Flip Down Payment Funding

Fix-and-flip down payment funding is the personal check a short-term file still needs after hard money is approved. Jaken Finance Group originates the fix-and-flip or hard money loan on the house — typically up to 90% LTC, 8.99%–13.5% interest-only, 7–10 business days on a complete file. The remaining equity, points, and interest reserve are your problem. When that gap is $50,000–$500,000, an unsecured business-purpose term loan can fill it in 3–10 business days. Terms are 3, 5, or 7 years. Pricing is quoted per file in an approximate 6%–18% band by Preferred Funding Group.

A renovation draw advance is the same product used a different way: cash you float so the contractor starts before the first hard-money rehab draw. The property lender still inspects and reimburses. You still owe the unsecured installment until sale or refinance pays it off.

The educational test is not “can I close.” It is does the sale still leave a profit after both notes. If the answer is no, do not borrow the down payment.

Pre-qualify for flip down payment or draw-advance funding →

Parent product: unsecured term loans. Broader equity-gap guide: real estate down payment funding. Short-term spoke: down payment funding for short-term loans. Long-term DSCR equity: DSCR down payment funding.

Why flippers run out of cash on approved files

Hard money underwrites the asset. It does not put cash in your checking account for the 10% LTC gap. Four common bottlenecks:

• LTC is not 100%. A $370,000 project at 88% LTC still needs $44,400 of equity before points. 100% financing exists for elite files; most first and second flips do not get it.
• Draws lag the GC. Week-one demolition is not a reimbursable draw. Crews will not wait three weeks for an inspector.
• Two projects overlap. Property one is listed; property two is under contract. Sale proceeds are not in hand.
• Reserves were spent on earnest money. EMD funding can cover the deposit. It does not cover the equity check at closing.

None of those is a reason to lever a thin flip. If ARV minus selling costs minus both payoffs is a rounding error, borrowing the down payment just finances a loss.

Property debt vs the personal note

Layer	Who underwrites it	What it covers	Rate / structure
Hard money / fix-and-flip	Jaken Finance Group (property)	Purchase + rehab holdback	8.99%–13.5% interest-only
Down payment / draw advance	Preferred Funding Group (referral)	Equity gap and/or cash ahead of draws	Approx. 6%–18%, 3/5/7-year amortizing
Gap funding	Jaken Finance Group (2nd lien)	Property-side second	Separate product — gap lending

CFPB Ability-to-Repay describes owner-occupied mortgage credit. A flip is business-purpose property debt. The unsecured note is also business-purpose. A house you will live in is the wrong file for both.

The FTC has published staff notes on small-business financing. Read them before you stack this note on top of a merchant cash advance you already cannot service.

Model the exit before you apply

Load a $275,000 purchase, $95,000 rehab, $465,000 ARV, 88% LTC, 8-month hold at 11.5% interest-only, and 8% selling costs. The hard-money loan is about $325,600. The equity gap is about $44,400. Add a $25,000 draw advance and the unsecured layer is $70,000. At an illustrative 12% over 5 years you carry that installment through the hold, then pay it off at sale. The calculator shows whether net proceeds still clear both payoffs.

Project-only math without the unsecured layer: fix and flip calculator. Offer ceiling: 70% rule / MAO calculator. Tool-only unsecured payment: unsecured term loan calculator.

Worked example: Cleveland bungalow that still profits

Purchase $275,000. Rehab $95,000. ARV $465,000. Hard money at 88% LTC / 11.5% IO for 8 months. Selling costs 8%. Unsecured $45,000 down plus $25,000 draw advance at 12% over 5 years.

• Hard-money payoff at sale is principal plus accrued IO (unless an interest reserve already prepaid it).
• Unsecured payoff is remaining balance on the 5-year amortizing note — not eight months of payments only. You may keep the note if you have other income, but the honest test is can sale proceeds retire both.
• If net to seller after commission, transfer tax, and both payoffs is still five figures, the stack can make sense.
• If it is under $15,000, one overrun or one extra month of hold wipes you. Do not add personal debt to a razor file.

Cleveland bungalows with a kitchen/bath scope and a documented buyer pool are the kind of file this page is for. A wholesale assignment with no rehab and a $12,000 spread is not.

Worked example: Atlanta heavy rehab that should not borrow the gap

Purchase $210,000. Rehab $180,000. ARV $445,000. That is a $390,000 total project against a $445,000 exit before selling costs. At 8% cost of sale you net about $409,000. Hard money at 90% LTC is $351,000. Equity needed is $39,000 plus points. After eight months of IO and a $40,000 unsecured note, leftover profit is a hope, not a margin.

Do not take the unsecured note. Either cut basis, cut scope, wait for a fatter ARV, or pass. Borrowing the down payment does not fix a 70% rule miss. Run the MAO calculator before you bid.

Down payment vs renovation draw advance

Use	When it shows up	What to model
Down payment / equity check	Closing table	LTC gap + points + prepaid interest reserve
Renovation draw advance	Week one of rehab	GC deposit, dumpsters, first payroll before inspection
Both	Overlapping projects	Combined amount must stay inside $50,000–$500,000

A draw advance is not a substitute for a poorly structured rehab holdback. If the hard-money lender will not fund rehab at all, that is a property-file problem. Unsecured cash can bridge timing. It cannot replace a lender who does not believe the scope.

Fix-and-flip down payment vs other equity tools

Need	Better first call
Personal LTC gap or draw timing on a flip	This page
30-year rental, not a 6–18 month hold	DSCR down payment funding
Mixed-use or 5+ unit commercial	Commercial property down payment funding
Second lien on the same property	Gap lending
Earnest money only	EMD funding
Elite file that can take 100% LTC	100% financing
You already own the rental and want cash-out	Second-position DSCR

What the application asks

Expect two years of personal tax returns, a FICO 8 report, identity, entity documents, and a use-of-funds statement that says investment-property equity or rehab float. There is no published FICO floor on the unsecured file. The property file still needs a supportable ARV, a scope, and an exit. Address-level underwriting stays on the fix-and-flip submission.

Risks that show up after closing

• Two clocks. Hard money is often 6–18 months. The unsecured note may be 5 years. If the house does not sell, you still make the personal payment.
• Draw advances are not free float. Every month the GC is slow, you pay both IO and the unsecured installment.
• Rate is quoted per file. Do not lock a spreadsheet at 6% because 6% is the bottom of the illustration band.
• Owner-occupancy kills the stack. If you move in, you have the wrong hard-money disclosure and the wrong unsecured use of funds.

How to apply

1. Run the calculator until net profit after both payoffs is a number that survives one extra month and a 10% rehab overrun.
2. Submit the flip or pick a loan type for the property with Jaken Finance Group.
3. Submit the unsecured financing form for the equity check and/or draw advance.
4. Keep the two closing tables separate so the hard-money desk is not asked to swallow a personal installment as if it were LTC.

Pre-qualify for fix-and-flip down payment funding · Fix and flip loans · (833) 264-7776

Sources

• CFPB — Ability-to-Repay and Qualified Mortgage standards
• FTC — small business financing staff perspective

Hard-money terms stay on the property file. Unsecured down-payment and draw-advance pricing is quoted per file by Preferred Funding Group. Sale-proceed math in the calculator is an estimate — confirm ARV, selling costs, and remaining balances before you bind.