Your rehab money is approved at closing but paid out in stages. How well you set up the budget and document the work decides how fast those funds reach you.
In short: On a fix and flip loan, the rehab budget is held back at closing and released in draws. You complete a phase of work, request a draw, an inspector confirms the work, and the lender reimburses that portion of the budget. LendingStreet can finance up to 100% of the approved rehab budget, paid in draws after work is completed and inspected. Because draws reimburse finished work, you need enough cash to front at least the first phase.
Before closing, you submit a scope of work: a line-item list of what will be done and what each item costs. This becomes the draw budget. Every draw request is measured against it.
A vague budget, such as "kitchen: $30,000," leads to vague draws and slower approvals. Break it down into cabinets, counters, appliances, plumbing and labor. Our rehab budgeting guide and rehab cost estimator can help you build it.
The exact process varies by program, but most follow the same pattern.
Turnaround depends on how quickly the inspection is scheduled and how complete your request is. Clean requests move faster.
Inspections are usually done by a third party. Some programs allow photo or video inspections, others send someone to the property. The inspector confirms that work on each line item is complete, or estimates the percentage complete.
The inspector is not judging finish quality the way a buyer would. They are confirming that the work you billed for exists. If a line item is half done, expect about half of that item to be released.
Most draw delays are avoidable. They usually come from paperwork, not the lender's clock.
Changes to the scope also slow things down. If you need to move money between line items, ask before the work is done, not after.
This example is illustrative and not a quote. A flip has an $80,000 approved rehab budget, split into five draws that follow the natural order of the work. The investor fronts $15,000 for the first phase and is reimbursed after inspection, then uses those funds for the next phase.
The five draws total $80,000, matching the approved budget. Smaller, more frequent draws keep less of your own cash tied up, though each draw may carry a fee.
| Draw | Work completed | Amount | Cumulative | Share of budget |
|---|---|---|---|---|
| 1 | Demo, roof, framing repairs | $15,000 | $15,000 | 18.75% |
| 2 | Rough plumbing, electrical, HVAC | $20,000 | $35,000 | 25% |
| 3 | Insulation, drywall, windows | $15,000 | $50,000 | 18.75% |
| 4 | Kitchen, baths, flooring | $22,000 | $72,000 | 27.5% |
| 5 | Paint, fixtures, landscaping, final | $8,000 | $80,000 | 10% |
Treat every draw request as if the inspector has never seen the house. The easier it is to match your request to the budget, the faster it gets approved.
Our construction draw schedule calculator can help you plan how much cash you need between draws.
Because draws reimburse finished work, you carry the cost of each phase until it is inspected and paid. Plan for the largest single phase in your schedule, plus a cushion.
Tell your contractor how the draw process works before you hire them. Contractors who expect payment on a set calendar, rather than at completed milestones, can cause friction mid-project.
It varies by program and depends on inspection scheduling and how complete your request is. A clean request with clear photos and matching line items moves fastest.
Usually not. Rehab funds are typically released after work is completed and inspected, so plan to front the first phase yourself.
Many programs charge a draw or inspection fee. Ask for the amount up front and factor it into your budget.
Often yes, with approval. Request reallocations between line items before the work is done, and expect the total budget to stay the same unless re-underwritten.
The inspector may approve a percentage of that item. You can request the rest once it is complete.
Some programs require them and others don't, but collecting them protects you either way. They show your contractor and subs have been paid for the work.
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