How do rehab draws work?

You complete a stage of work, pay for it, request a draw, the lender inspects, and the money arrives some days later. It is a reimbursement, not an advance. At every point you are carrying the stage you just finished plus anything still unreimbursed behind it.

How much cash do I actually need for a rehab?

Far more than the unfinanced share. On the default scenario a 90% financed $85,000 rehab looks like $8,500 of cash and peaks at $26,775 out of pocket — 3.15 times — before draw fees. Add the fees and the working capital requirement is $28,900. That gap is why rehabs stall halfway with a fully approved loan.

What is peak exposure?

The most you are out of pocket at any single point in the schedule. It is not the unfinanced share and it is not the largest stage — it is cumulative spend less cumulative reimbursement, which typically peaks near the end when the biggest stages have been paid for and the last reimbursement has not landed.

Yes, in three ways. More stages, smaller each, lowers the peak because less work sits unreimbursed at once. Faster reimbursement shortens the float. And a lender that advances rather than reimburses removes the problem entirely — tick the box above and peak exposure drops to exactly the unfinanced share. That last one is rare, and worth asking about specifically.

Individually no, cumulatively yes. At $250 a draw plus $175 for the inspection, five draws is $2,125 — and it argues against splitting the job into ten stages purely to reduce peak exposure. There is a genuine trade between fewer, larger draws with a higher peak and more, smaller draws with more fees.

What happens if a draw is rejected?

The clock restarts on that stage, and this calculator does not model it. An inspector who wants something corrected turns a 12-day float into a 30-day one while you keep paying subcontractors. Build slack into the working capital figure rather than treating it as a floor.

Rehab Draw Schedule Calculator

A 90% financed rehab does not need 10% in cash. Here is what it actually needs.

The rehab loan

Rehab budget

Lender funds

Fee per draw

Inspection per draw

Lender advances each draw before the work

Rare. Almost all rehab lenders reimburse after an inspection, which is what creates the gap below.

5 draw stages

$12,750

$21,250

$8,500

Assumptions

Reimbursement takes12 days

Peak out of pocket

$26,775

At "Kitchen & baths" — 3.15× the unfinanced share

What people budget

$8,500

10.00% of the rehab the lender does not fund

You need $28,900, not $8,500. Draws are reimbursements. You pay for each stage and get it back days later, so at the peak you are fronting 3.15 times what the unfinanced share suggests — before draw fees.

Exposure through the schedule, stage by stage
Demo & haul	$12,750$12,750 of work · $12,750 spent · $11,475 back
Rough-in	$22,525$21,250 of work · $34,000 spent · $30,600 back
Drywall & finishes	$24,650$21,250 of work · $55,250 spent · $49,725 back
Kitchen & baths	$26,775Peak$21,250 of work · $76,500 spent · $68,850 back
Punch & clean	$16,150$8,500 of work · $85,000 spent · $76,500 back
Lender funds in total	$76,500
Draw & inspection fees	$2,125
Working capital needed	$28,900Peak exposure plus every draw fee
Days of float	60 days

Estimates only. Draw schedules, inspection timing and reimbursement speed vary by lender and by project, and a stage that fails inspection restarts its own clock. Not a loan commitment or an offer of credit.

1-PAGE REPORT

Get the one-page report when it lands

The link carries your numbers. Nothing is sent to us.

Draws are reimbursements, and that changes everything

A lender funding 90% of an $85,000 rehab sounds like you need $8,500. That is the number people budget, and it is wrong by a factor of three.

Rehab draws are reimbursements. You complete a stage, pay your subcontractors, request a draw, wait for an inspection, and the money arrives a week or two later. At no point does the lender fund work that has not been done. So at every moment you are carrying the stage you just finished, plus whatever is still unreimbursed behind it.

Follow the default schedule. Demo costs $12,750 and you front all of it — nothing has been reimbursed yet. Rough-in costs $21,250 and by the time you have paid for it only demo has come back, so you are out $22,525. It keeps climbing. At kitchen and baths you are fronting $26,775 — the peak — which is 3.15 times the $8,500 you planned for.

Add five draws at $425 each and the real working capital requirement is $28,900. That is the number that decides whether you can run the job, and it is not on any term sheet.

This is the arithmetic behind rehabs that stall at 60% complete with a fully approved loan. Nothing went wrong with the financing. The investor simply ran out of the cash needed to reach the next reimbursement, and a stalled rehab compounds — carrying costs continue, subcontractors move to other jobs, and the schedule slips further.

Three things reduce the peak, and they trade against each other.

More stages, smaller each. Less work sits unreimbursed at once. It also means more draw fees, so the saving is not free — try both and compare.
Faster reimbursement. Worth asking a lender about specifically: how many days from inspection request to wire, in practice, not in the brochure.
A lender that advances rather than reimburses. Tick the box above and peak exposure drops to exactly the unfinanced share. This is rare, and it is the single largest structural difference between two otherwise identical rehab loans.

One thing deliberately not modelled: a rejected draw. An inspector who wants something corrected turns a twelve-day float into thirty while subcontractors still expect paying. Treat the working capital figure as a floor, not a budget.

Build the stage costs properly with the scope of work calculator, and price what the money costs while it is outstanding with the cost of capital calculator.

Methodology

Stage cost = budget × the stage percentage. Lender portion = stage cost × financed percentage.
Exposure at a stage = cumulative spend less cumulative reimbursement at that point. Under the normal reimbursement model the draw for a stage lands only after that stage is complete, so it is not counted until the following one.
Peak exposure is the maximum of those. Working capital needed adds every draw and inspection fee.
When the lender advances instead, each draw is available before its stage, and peak exposure collapses to the unfinanced share.

Not modelled: rejected or partial draws, retainage held back until completion, holdbacks on the final draw, interest accruing on the drawn balance, or paying subcontractors on terms rather than on completion — which is the main way experienced operators reduce the peak.

Frequently asked questions

How do rehab draws work?: You complete a stage of work, pay for it, request a draw, the lender inspects, and the money arrives some days later. It is a reimbursement, not an advance. At every point you are carrying the stage you just finished plus anything still unreimbursed behind it.
How much cash do I actually need for a rehab?: Far more than the unfinanced share. On the default scenario a 90% financed $85,000 rehab looks like $8,500 of cash and peaks at $26,775 out of pocket — 3.15 times — before draw fees. Add the fees and the working capital requirement is $28,900. That gap is why rehabs stall halfway with a fully approved loan.
What is peak exposure?: The most you are out of pocket at any single point in the schedule. It is not the unfinanced share and it is not the largest stage — it is cumulative spend less cumulative reimbursement, which typically peaks near the end when the biggest stages have been paid for and the last reimbursement has not landed.
Can I reduce it?: Yes, in three ways. More stages, smaller each, lowers the peak because less work sits unreimbursed at once. Faster reimbursement shortens the float. And a lender that advances rather than reimburses removes the problem entirely — tick the box above and peak exposure drops to exactly the unfinanced share. That last one is rare, and worth asking about specifically.
Do draw fees matter?: Individually no, cumulatively yes. At $250 a draw plus $175 for the inspection, five draws is $2,125 — and it argues against splitting the job into ten stages purely to reduce peak exposure. There is a genuine trade between fewer, larger draws with a higher peak and more, smaller draws with more fees.
What happens if a draw is rejected?: The clock restarts on that stage, and this calculator does not model it. An inspector who wants something corrected turns a 12-day float into a 30-day one while you keep paying subcontractors. Build slack into the working capital figure rather than treating it as a floor.

Put this calculator on your site

Free to use on any site, no permission needed and no attribution requirement beyond the credit line included below. Paste this wherever the calculator should appear.

Embed code

<iframe src="https://investorlabs.io/embed/draw-schedule-calculator/" title="Rehab Draw Schedule Calculator by InvestorLabs" width="100%" height="720" loading="lazy" style="border:1px solid #e5e7eb;border-radius:8px;max-width:100%"></iframe>
<p style="font:14px/1.5 system-ui,sans-serif;margin:8px 0 0">Calculator by <a href="https://investorlabs.io/tools/draw-schedule-calculator/">InvestorLabs</a></p>
<script src="https://investorlabs.io/embed.js" async></script>

The last line is optional — it resizes the frame to fit the calculator as answers appear. Without it the frame keeps the fixed height above and scrolls instead.