Draw Schedule
The plan for releasing rehab funds in stages as construction milestones are completed and inspected, rather than all at once. Standard on fix-and-flip and construction loans.
A draw schedule is the agreed plan for how a rehab or construction loan releases its renovation budget — in installments tied to completed work, not as a single lump sum at closing. Each release is called a draw.
On a fix-and-flip loan, the lender funds the acquisition portion at closing but holds the rehab portion in reserve. As you complete phases of the renovation, you request a draw; the lender verifies the work (usually with a photo inspection or third-party inspector) and reimburses you for that portion.
Why lenders use draws
Releasing rehab money in stages protects both sides:
- The lender never advances more than the property's in-progress value supports, limiting loss if the project stalls.
- The borrower isn't paying interest on the full rehab budget from day one — many loans only accrue interest on funds actually drawn.
A typical draw schedule
| Draw | Milestone | % of rehab released |
|---|---|---|
| 1 | Demo + rough framing/structural | 25% |
| 2 | Mechanicals (plumbing, electrical, HVAC) | 25% |
| 3 | Drywall, flooring, cabinets | 25% |
| 4 | Final finishes, punch list, CO | 25% |
Schedules vary — some lenders use 3 draws, some 5+, and percentages flex with the scope of work.
How the draw process works
- Complete a phase of the work outlined in your scope.
- Request a draw, often through the lender's portal.
- Inspection confirms the work is done (in-person or photo/video).
- Funds release, typically within 1–3 business days.
Managing draws on a flip
Most lenders require you to front the first phase of work from your own funds and get reimbursed via the first draw — so budget for that working capital. Sequence your subcontractor payments around the draw timeline so you're not stuck floating large bills between inspections. Fast, reliable draw turnaround is one of the most important things to vet when choosing a fix-and-flip lender — slow draws can stall a job and blow your holding-cost budget. The total rehab funded is capped against ARV and loan-to-cost.
Frequently asked questions
How does a rehab draw work?
You complete a phase of the renovation, request a draw, the lender inspects the work (in person or via photos), and then releases that portion of the held-back rehab budget — usually within 1–3 business days. You typically front the work and get reimbursed.
Do I pay interest on the full rehab budget?
Often not. Many fix-and-flip lenders only charge interest on funds you've actually drawn, so your carrying cost rises as the project progresses. Others charge interest on the full committed amount — confirm which model your lender uses.
How fast are draws released?
With a responsive lender, draws release within 1–3 business days of a passed inspection. Draw speed varies widely between lenders and is one of the most important things to vet, since slow draws can stall your job.