Refinance proceeds & equity gap
Estimate cash available after loan costs and the existing payoff.
Your scenario
Value/LTV sizing only. DSCR, debt yield, reserves and loan eligibility can reduce actual proceeds. A negative net amount is a funding gap.
How the model works
Net proceeds = value × LTV × (1 − financing cost %) − existing payoff.
Worked illustration
A $1.95 million refinance with 2% costs and a $2 million payoff produces a $89,000 equity shortfall before reserves.
Reconcile the payoff and all deductions
Enter the amount required to retire the existing obligation, rather than an old statement balance. Confirm accrued interest, prepayment treatment, release requirements and other payoff components with the actual documents and closing team. The percentage cost input represents the costs you choose to include on the new gross loan; a fixed reserve or a charge based on the old loan requires a separate line outside this simplified model.
A positive result is cash before omitted deductions and ownership decisions. It is not necessarily available for immediate distribution. Required repairs, operating cash, lender holdbacks, taxes and partnership restrictions can retain proceeds within the transaction or entity. Document each item before treating a refinance as cash-out.
A value-based ceiling can overstate proceeds
This tool deliberately isolates LTV. It does not calculate DSCR, debt yield or program eligibility. Run the maximum-loan-sizing model using the proposed financing terms and lender-adjusted cash flow. If that result is lower than the value-based loan, substitute the lower executable financing in a complete closing model.
Test a lower valuation and higher costs separately, then together. A negative result identifies new cash needed under these assumptions; it does not disappear because the lender is willing to refinance some of the debt. If equity is unavailable, examine a smaller payoff negotiated with all necessary parties, a sale, new capital or a different plan. None of those outcomes is assumed by this calculator.
What to check before relying on the result
This tool uses only value/LTV sizing. Run the maximum-loan tool to consider cash-flow constraints.
Model an adverse scenario as well as the expected outcome. Change one assumption at a time to identify what drives the result, then test combinations that could occur together. A property can meet a modeled financial threshold and still fail diligence, legal requirements or lender approval.
Keep the cash-flow definitions consistent
Distinguish recurring property operations from tenant improvements, leasing commissions, capital expenditure, financing costs and entity-level distributions. Verify whether reserves are expenses, funding requirements or cash movements in the documents you are analyzing. A cash-flow convention must remain consistent across the model and the comparison.
Research context
Consult the source material for this topic. The model is an original educational calculation, not a reproduction of a lender’s underwriting system. The initial numbers are hypothetical inputs rather than current market terms. No scenario inputs are transmitted or saved by this calculator.