Draw Schedule
Quick Answer
A structured plan for disbursing rehab loan funds in installments as renovation work is completed and verified.
Definition
A draw schedule is the disbursement structure for renovation funds in a fix-and-flip or construction loan. Rather than releasing the entire rehab budget upfront, lenders disburse funds in draws — typically 2 to 5 installments — as specific scopes of work are completed and verified, usually by an inspector or the lender's draw team. Each draw request must document completed work with photos and invoices.
Why It Matters for Flippers
Draw schedules protect both the borrower and the lender. For borrowers, draws ensure the lender stays aligned with project progress. For lenders, they prevent funds from being used before work is done, reducing the risk of project abandonment. Understanding how to manage the draw process — submitting requests quickly, having documentation ready — directly affects how fast your project moves.
Example in a Flip Deal
A flipper's $60,000 rehab budget is split into three draws: Draw 1 ($20,000) after demolition, framing, and rough plumbing/electrical; Draw 2 ($25,000) after drywall, windows, and HVAC; Draw 3 ($15,000) after cabinets, flooring, and final finishes. Each draw is released within 3–5 business days of inspection approval.
Related Terms
Rehab Budget
The estimated total cost to complete all planned renovations on an investment property.
Fix and Flip Loan
A short-term real estate loan designed for investors who buy, renovate, and resell properties for profit.
LTC (Loan-to-Cost)
The ratio of the total loan amount to the total project cost (purchase price + rehab budget).