Glossary
Delayed financing
Delayed financing is a refinance soon after an all-cash purchase that lets you pull your cash back out. The loan is usually capped at what you paid plus documented closing costs.
It is an exception to normal cash-out seasoning. Without it, a cash buyer often has to wait months before a cash-out refi is allowed.
It suits investors who buy with cash to win a deal or close fast, then want that cash back to fund the next one. The tradeoff is that the loan is based on cost, not the new value.
How it works
Run The Deal's conventional delayed financing program is modeled this way: the purchase was all cash, the refi closes within 6 months, and the new loan is capped at the documented purchase price plus closing costs. The loan is also limited by LTV on the appraisal. Rehab costs are not included by default, though some lender overlays allow it.
- Cash purchase price
- $150,000
- Documented buy closing costs
- $4,500
- Delayed financing cap
- $154,500
- Appraised value
- $220,000
- 75% LTV limit
- $165,000
Illustrative. Caps, timing and LTV vary by lender and program.
In this example the LTV limit is higher, so the cost cap decides the loan. Your rehab money stays in the deal until a later cash-out refi.
Common mistakes
- Not keeping the paper trail. Lenders want the settlement statement and proof the cash was yours.
- Missing the window. Past the deadline, normal seasoning rules apply.
- Expecting rehab to count. Under many programs it does not.
Compare delayed financing against DSCR and limited cash-out options in the BRRRR calculator.
Questions
Does delayed financing include rehab costs?
Often not. Many programs cap the loan at the purchase price plus documented closing costs. Some lenders allow rehab; ask yours.
How soon can I use delayed financing?
Right after closing in many cases, as long as the refi closes within the program window. Run The Deal models a 6-month window. Rules vary by lender.
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