Ask any experienced flipper what tripped them up on their first deal, and there's a good chance the answer involves draws — not the purchase, not the loan approval, but the process of actually getting rehab dollars released while the project is underway. If you're financing renovation costs with a fix and flip loan, understanding how draws work before you close is one of the highest-leverage things you can do to keep a project on schedule.
What Is a Draw Schedule?
On a fix and flip loan, the lender typically doesn't hand over your full rehab budget at closing. Instead, rehab funds sit in reserve and get released in installments — draws — as work is completed and verified. The purchase price (or a large share of it) funds at closing like a normal loan; the rehab budget funds in pieces, tied to progress.
This isn't the lender being difficult. It protects everyone in the deal: the lender isn't funding renovation work that hasn't happened yet, and you're not carrying interest on rehab dollars sitting untouched in an account.
How Draws Are Typically Structured
Most fix and flip draw schedules break the rehab budget into three to five stages, usually tied to logical construction milestones rather than arbitrary dollar amounts or calendar dates. A common structure looks like:
- Demo & rough-in — demolition complete, framing, plumbing, and electrical rough-in done
- Finishes — drywall, flooring, cabinets, fixtures installed
- Final punch list — paint, trim, cleanup, and any remaining items before listing
Larger projects, like ground-up builds, often use more stages (framing, mechanicals, drywall, finishes, final inspection) since there's simply more sequential work to verify along the way.
What Triggers a Draw Release
Each draw is released after two things happen: the work tied to that stage is verified — usually through a third-party inspection or photo documentation — and the request is submitted with any required paperwork (contractor invoices, lien waivers, etc.). Once verified, funds should move quickly. On Blink Capital Partners' fix and flip program, draws are typically released within 48 hours of a passed inspection, which is the difference between a contractor crew that keeps moving and one that sits idle waiting on money.
Why speed matters: Every day a crew waits on a draw is a day of carrying costs — interest, insurance, utilities — with no work getting done. On a 12-month rehab loan, a few weeks of draw delays can quietly erase a meaningful chunk of your margin.
Common Mistakes That Delay Draws
- Requesting a draw before the full stage of work is actually complete, triggering a failed inspection and a re-inspection wait
- Missing or incomplete contractor invoices and lien waivers submitted with the request
- Change orders or scope changes that aren't communicated to the lender before the work happens
- Assuming draws fund on a set calendar rather than on verified milestones
Most of these come down to communication. A quick heads-up to your loan officer before a scope change, or before you think a stage is close to done, avoids the back-and-forth that actually causes delays.
Why This Matters More Than It Used To
Margins on flips have gotten tighter industry-wide. ATTOM's Q1 2026 home flipping data put the typical gross profit margin at 25.4% — up slightly from the prior quarter, but still below the 29.6% margin investors were seeing a year earlier. And that gross figure is before rehab, financing, holding, and selling costs; after real project expenses, a typical flip nets somewhere in the $20,000–$40,000 range, with plenty netting less. In a market like that, avoiding avoidable delays on your draw schedule isn't a nice-to-have — it's part of protecting what margin is left.
The Bottom Line
A draw schedule isn't a hurdle the lender puts in your way — it's the mechanism that keeps your rehab budget matched to real progress on the ground. Understanding the structure, knowing what triggers a release, and communicating early with your loan officer are the three things that keep draws — and your project — moving.