The Quick Read: Put every lender’s draw mechanics on one grid, one row per term and one column per project, then add up the cash you must front and the fees you will pay across all projects at once. Judge each term by its effect on your cash and your schedule, not by the headline leverage figure.
- Draw rules are written into each loan agreement, so no two lenders are guaranteed to match.
- Rehab money is usually held back and released after work is done and inspected.
- Inspection fees, wire fees and retainage recur with every draw, so they scale with draw count.
- Running several rehabs at once multiplies your first-phase cash gap, so reserves must cover the combined peak.
- Everything varies by lender, property, and experience, and nothing here is a commitment to lend.
Key Terms Defined
Draw: A release of rehab money from the lender after a phase of work is finished and verified.
Holdback: The part of the loan set aside at closing for the rehab budget and paid out in draws.
Reimbursement (in arrears): Payment after the work is done, rather than before. You usually front the cost first.
Retainage: A percentage held back from each draw until the project is fully complete.
Lien waiver: A signed statement from a contractor or subcontractor that they were paid and will not claim a lien on the property. A lien is a legal claim against the property for unpaid work.
Percent complete: The share of a budget line that is actually finished. Many lenders pay only that share.
Cash gap: The amount you must fund yourself between starting a phase and receiving its draw.
What this loan actually costs to carry.
Hard money is sized against the project and priced by time. Enter the deal and see how much the program will lend, the cash required at closing, the carry while you hold it, and what is left at the exit.
Leverage tiers on the current program: 85% with fewer than 2, 90% with 2 or more, 93% with 5 or more completed projects — every tier capped at 75% of after-repair value. Loan amounts up to $5,000,000, larger by exception; terms of 6 to 18 months, interest-only, no prepayment penalty. The rehab portion funds in draws against completed work, not at closing.
Program parameters shown update from Lendmire’s centralized guideline source. Rate, points, and months are editable assumptions, not quoted terms.
Cost cap sets the loan · positive spread
Illustrative estimate only — not a quote, Loan Estimate, approval, or commitment to lend. Rate, points, and months are editable assumptions. Hard money is business-purpose financing for real estate investors, not a consumer mortgage. Leverage on the current program tops out at 93% of project cost for investors with a documented track record, capped at 75% of after-repair value, with rehab funding up to 100% of the documented budget released in draws; actual terms vary by lender, borrower experience, property, and exit. Lendmire is a mortgage broker, not a lender.
Why Multiple Projects Change the Comparison
Comparing draw terms on one deal is a checklist exercise. Comparing them across several deals is a cash-flow problem. Each project needs its own first-phase float, and those floats stack. Inspection requests can also land in the same week and compete for the same inspector.
Most lender comparisons stop at leverage. That misses the real cost. Across the lenders in Lendmire’s wholesale network, hard money fix-and-flip leverage is usually tiered by completed projects and measured against project cost. Typical tiers run 85% of project cost with fewer than two completed projects, 90% of project cost at two or more, and 93% of project cost at five or more. Every tier is capped at 75% of after-repair value. Up to 100% of the rehab budget funds through draws against completed work, which is a rehab-budget figure and not a purchase LTV. All of it varies by lender, property, and experience.
Two lenders can quote the same tiers and still treat your cash very differently. One may fund rehab money at closing into escrow. Another may pay only in arrears. That difference shows up in your reserves, not on the term sheet’s front page.
How a Draw Cycle Works, Step by Step
Draw rules are contractual. There is no industry standard, so read the loan agreement as the controlling document. The sequence below is the common pattern.
1. Budget approval. The lender builds draw milestones from your line-item scope of work. Keep the same line items in every draw request so the reviewer can reconcile them.
2. Closing. The purchase portion funds. The rehab portion sits in holdback.
3. First phase. You usually pay for this phase yourself, which creates the cash gap.
4. Draw request. Expect a request form, contractor and subcontractor invoices, photos, and a percent-complete certification. DealRun’s construction draw schedule glossary lists these package contents.
5. Inspection. A third-party inspector confirms the work exists. That is a progress check. It does not replace a permit or code sign-off.
6. Lien waivers and title check. UNI-CM’s draw schedule guide explains that conditional waivers cover the current draw and unconditional waivers confirm earlier draws were paid.
7. Release, less retainage. Many lenders pay only the finished share of each budget line. If half the fence is up, you receive half of that line.
8. Final draw. It is usually tied to a final inspection and final waivers.
The Terms to Put on Your Grid
Build one row per term and one column per project or lender quote. Every term below is a lever on cash or schedule.
| Term | What it controls | Question to ask |
|---|---|---|
| Number of draws | Fees and cash gap per phase | Is there a cap or minimum draw size? |
| Trigger type | Milestone vs percent complete | What counts as a finished phase? |
| Initial advance | Cash needed at closing | Does any rehab money fund up front? |
| Inspection cadence | Fees and queue exposure | Per draw, once, or photos only? |
| Inspection and wire fees | Cost per draw | Where is the fee schedule in writing? |
| Retainage | Cash held until completion | What percent, and what releases it? |
| Turnaround | Contractor and carry risk | How long from request to funds, in writing? |
| Interest treatment | Carry cost | Does interest accrue only on drawn funds? |
| Change and extension fees | Surprise cost | What does a scope change trigger? |
| Stored materials | Long-lead items | Are they payable before installation? |
Inspection costs vary widely. DealRun’s glossary puts a single draw inspection in the range of $100 to $250. The larger point is that the fee recurs. A lender may call it an inspection fee, a draw fee, or both, and some borrowers only discover a per-draw charge after closing. Get the fee schedule before you sign.
Retainage runs 5% to 10% per draw in the practitioner guides, according to Dwellsy IQ’s draw schedule explainer. That is a market figure, not a Lendmire network figure. Ask each lender for theirs, because retainage is cash you cannot use for the next phase.
Worked Example: Three Projects at Once
These inputs are illustrative modeling assumptions, not market data. Picture an investor running three concurrent rehabs under a rehab budget funded in draws against completed work:
- Project A: cosmetic refresh, two draws.
- Project B: mid-level rehab, three draws.
- Project C: structural rehab, four draws.
Fee roll-up. The investor has nine draws in total. Each draw carries an inspection fee and a wire fee. Total draw cost is nine times the per-draw cost. A lender with a lower per-draw fee but a rule forcing four draws on every project could cost more than a lender with a higher per-draw fee and flexible draw counts. Run both on your actual scope.
Cash timing. Assume each project’s first phase equals roughly one quarter of its rehab budget. Stagger the starts and watch when the floats overlap.
| Month | Project A | Project B | Project C | Combined float |
|---|---|---|---|---|
| 1 | Phase 1 funded by you | Not started | Not started | Low |
| 2 | Draw 1 pending | Phase 1 funded by you | Phase 1 funded by you | Peak |
| 3 | Phase 2 funded by you | Draw 1 pending | Draw 1 pending | High |
| 4 | Final draw pending | Phase 2 funded by you | Phase 2 funded by you | High |
The peak comes in month two, when A’s draw is still pending and B and C both need float. Your reserves must cover that peak, not the average. If a lender’s draw turnaround slips in that window, the contractors wait, the schedule slips, and carry cost grows on all three loans.
Fewer, larger draws cut fees but raise the cash you front per phase. More draws smooth cash flow but add inspections. The grid shows you where your own tolerance sits.
Which Terms Matter Most for Which Investor
Not every term deserves equal weight. A rough scorecard follows.
| Investor type | Weight most heavily | Weight least |
|---|---|---|
| First few flips | Initial advance, retainage, turnaround | Draw count |
| Scaling with overlapping projects | Inspection queue, draw caps, turnaround | Single-draw fee |
| Ground-up or structural work | Stored materials, draw count, change fees | Photo-only review |
| Tight-liquidity operator | Cash gap and retainage | Total fee count |
For a deeper look at how volume changes this weighting, see Lendmire’s piece Hard Money Rehab Draw Terms for an Experienced Flipper Scaling Volume.
Here is the honest tradeoff. A slightly weaker headline structure with predictable, quick-to-document draws can beat a stronger one with slow, fee-heavy releases. That is especially true once you run three projects at the same time. A first-time investor with one project might reasonably choose the other way.
Where the General Rule Breaks
Blanket or cross-collateralized loans. A single loan covering several properties may pool the holdback, so one property’s draw can be funded from another’s. Separate loans per property do not do this. Pooling can help cash flow, but a problem on one property can also affect the others. Verify the cross-default language in the loan documents.
Stored materials. Some lenders will not pay for materials until they are installed, and others require extra verification, as Dwellsy IQ notes. Long-lead items such as windows or custom cabinets can strain your float.
Forward draws. Some private lenders will advance money for long-lead items. Yieldstack’s fix-and-flip draw schedule post treats this as an exception, so do not plan around it unless it is in writing.
Remote sites. If you invest out of town, get the inspection and access process in writing. A promised inspector who does not show up stalls the draw.
Borrower equity at closing. Some lenders require rehab funds in escrow at closing, not just proof of funds. That changes cash to close even when the leverage tier looks identical.
Commercial mechanics. Large-project loans use in-balance tests and title date-downs, as Yieldstack’s commercial draw schedule post describes. Do not expect those on a small-balance 1-4 unit rehab loan.
What to Get in Writing Before You Sign
Use this as a checklist for every lender and every project:
- Number of draws allowed, any minimum draw size, and any cap.
- Whether any rehab money funds at closing.
- Inspection method, who pays, the fee per draw, and the wire fee.
- Retainage percentage and the event that releases it.
- Stated turnaround from complete request to funds.
- How interest accrues on drawn and undrawn money.
- Fees for change orders, scope changes and extensions.
- Whether photo or virtual review is available and how it can be revoked.
- Cross-default language, if more than one property is involved.
Terms on these programs generally run 6 to 18 months, interest-only, with no prepayment penalty, though that varies by lender, property, and experience. A slow draw eats the runway before your exit. Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized and rented, and Lendmire brokers that path. Lendmire’s complete DSCR loans guide explains how the rent-coverage test works at that stage.
Keep the Paperwork Organized Across Projects
Run one folder per project with the same structure every time: budget, invoices, photos, lien waivers, change orders, and a draw log. Use identical line-item names across projects so each request reconciles cleanly. Log the date you submit each request and the date funds arrive. After two or three draws, that log becomes your real turnaround data for each lender, and it is better evidence than any promise.
Frequently Asked Questions
Do all hard money lenders release rehab funds the same way?
No. Draw rules are written into each loan agreement, and lenders differ on draw count, inspection method, fees, retainage and turnaround. Most hold the rehab budget back and release it after verified work, but the details are not standardized.
Do I have to pay for the whole rehab before I get any money back?
Usually not the whole rehab, but you normally front at least the first phase. Some structures fund a portion up front. Under the programs Lendmire sees, up to 100% of the rehab budget can fund through draws against completed work, subject to lender guidelines.
Are more draws better?
Not always. More draws smooth your cash flow but add an inspection and a wire fee each time. Fewer draws save fees but raise the cash you front per phase. Match the draw count to your reserves and your scope.
Does an inspector’s approval mean my work passes code?
No. The inspector confirms that the work exists and matches the draw request. A permit or code sign-off is a separate process.
Can one lender’s problem on one project affect my other projects?
It can if the loans are cross-collateralized or carry cross-default language. Separate loans on separate properties usually keep problems contained. Read that language before you sign.
Next Step
If you are buying, rehabbing or refinancing an investment property on a short timeline and want to see how the numbers work, Lendmire can help you compare hard money options based on the project, the exit plan, leverage, and your goals. Lendmire is a broker arranging financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. Nothing here is a commitment to lend.
About Lendmire
Lendmire is a DSCR-focused mortgage brokerage, NMLS# 2371349, placing investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed by the lender around a property’s rental income rather than personal income documentation, which fits LLC-held rentals, self-employed investors, and portfolios scaling past conventional financed-property limits. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. DealRun: Construction Draw Schedule
2. UNI-CM: Construction Draw Schedule Guide
3. Dwellsy IQ: Construction Draw Schedule
4. Yieldstack: Fix and Flip Draw Schedules
5. Yieldstack: Commercial Construction Draw Schedule
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Much a Hard Money Lender Will Lend on a Fix-and-Flip · How a Hard Money Lender Sizes a Blanket Loan Across Properties · How to Cover Your Down Payment on a Hard Money Flip
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.