A flip note does not drop the whole rehab budget into the LLC account on the day you close. Purchase money and rehab money are not the same check. The rehab side moves in draws: scheduled releases tied to work that is actually in place. This page is how that schedule works — the order of the money, what an inspection holdback is, when a draw freezes, what a scope change does to the next release, and what to do on the file if the contractor stops. It is not a rewrite of Fix & Flip loans through an LLC. It is not the stall where a bank denies cash-out because the house is still unfinished, which lives on cash-out denied because the property is mid-rehab. It is not a ground-up construction draw. And it is not another explainer of what a DSCR loan is.
Funded Funding is a national private-money brokerage. We are not a bank. We are not an NMLS-licensed consumer mortgage lender. The loan is business-purpose, closed in an LLC or another business entity, underwritten on the asset and the deal. The desk floor is $100k. No owner-occupied. Start on the Funded Funding homepage if you need the product list first, or read what the desk is.
A draw is one release, not the budget
A draw is one release of rehab funds against a piece of the agreed scope. The note names a rehab budget. That budget is not a checking account you can spend in any order. It is a line the lender releases as stages of the work are done and accepted. Closing can fund the purchase so the entity takes title. The rehab line stays on a schedule.
The stages are whatever the lender and the scope agree to. Demo, rough-in, drywall, finishes, and a final are common stops on a house that is already standing. They are a map, not a promise that every file uses the same stops. A cosmetic refresh and a full gut do not share a calendar just because both are called a flip. Your draw schedule is the one on your term sheet. The loan pays for work in place. It is not the contractor’s deposit account.
How the money actually moves
Read the schedule as an order of operations.
- Before close. Scope, budget, and who is doing the work. The lender is reading whether that rehab number can finish the house you described. A thin budget does not become a generous one because the purchase cleared.
- At close. Purchase funds so the LLC can take title. Some notes also name a small initial release. Do not assume one exists because another file had one. Money a crew wants before the first inspection is liquidity on your side.
- A stage gets built. The contractor does the work that line item names, not the work you wish were next.
- You request the draw. Photos, invoices, lien waivers when the note asks, and an inspection when the note requires one. “We’re close” is not a request.
- If that stage is in place, that draw releases. The next stage starts. Repeat until the rehab line is used or the agreed work is done. The last release waits on the finished scope, not on materials that are still on a truck.
Plan the contractor and your own cash around that order. The schedule is doing its job when it refuses to fund work that is not there yet.
What an inspection holdback means
Holdback is the plain word for money that stays unreleased until someone confirms the work. An inspection holdback means that slice of the rehab line does not wire until an inspection — the lender’s inspector, or the inspection the note names — says that stage is actually in place. It is the order of payment. It is not a fine invented after you closed.
The inspector matches what is built to what the draw is paying for. If the stage is incomplete, that draw waits. You do not skip ahead to the finish money because a later trade is ready. Photos help. They do not replace the inspection when the note requires one. If the inspector cannot get in, or the work is covered before anyone looked, the holdback stays until that condition is fixed.
This page does not quote a holdback percentage. Programs differ. The figure that matters is the one on your note. Ask for that schedule before you promise a crew a date the wire cannot keep.
When draws freeze
A freeze is a pause. The next release stops until the condition that stopped it is fixed, or until the lender accepts a written change. Sending the same request again with a longer email does not clear it. The usual reasons are mechanical:
- The inspection did not clear. Work is missing, the photos do not match the request, or the stage you asked to fund is not the stage that is built.
- The scope changed and nobody wrote it down. The draw still points at the old budget. The house no longer matches it.
- The remaining rehab line no longer covers the remaining work. Spending out of order, or a budget that was thin before close, leaves a hole. The lender does not invent a new budget in the middle of a draw.
- A condition on the note is open. A permit, a required city inspection, or insurance the documents say must be current before the next release. A request from the wrong entity, or a loan in default, stops the wire the same way.
- Nobody is left to finish the stage. The contractor stopped, and there is no one under contract to do the work the draw would pay for.
The freeze lifts when that named condition is fixed, or when the lender accepts a written change. Finish the stage, document it, or amend the scope. Then ask again.
Scope changes
A scope change is a different house than the one the budget described. Swapping a fixture inside an allowance is a contractor conversation. Adding a room, moving a wall, or changing the footprint is a file conversation. One stays inside the line you already agreed to. The other changes cost, time, and what the finished property is.
Write the change down before the next draw follows the new plan. Bring the change order, the revised budget, and what it does to the exit — sell, or stabilize and hold. If the new scope needs more money than the remaining rehab line, that is a capital question, not a draw the old schedule can stretch. When the hole is the space between what the first lien will do and what the project now costs, say GAP on the file. Do not hide it inside a draw request.
If the contractor walks
Contractor failure is a file event. Stop requesting draws for work that is not happening. Write down what is complete, what has been paid, which invoices are still open, and what rehab budget remains. The remaining line is for the remaining agreed scope. It does not become a blank check for a replacement crew, and it does not vanish because the first contractor left.
A new contractor has to finish inside what is left, or you have a budget gap to solve before the next release makes sense. Lien waivers matter so the lender is not asked to fund the same stage twice. Get who-is-owed-what on paper before you ask for the next wire.
If the stall runs so long that you are asking a bank to cash out a house with the work still open, you have left this page. That problem is cash-out denied because the property is mid-rehab. If the work is already finished and a bank will not refinance because the file is too new, that calendar is why the bank will not refinance the flip yet. Seasoning is a wait after the work. Draws are how the work gets paid while it is open.
Flip draws, bridge, and construction are not the same loan
Fix & Flip is the product this schedule belongs to: a standing property, purchase plus rehab, closed in an LLC or another business entity. That page is the product. This page is how the rehab money moves inside it.
Bridge is short-term capital to a sale, a refinance, or another takeout. Some bridge files have little or no rehab line. If the work is the point of the loan, do not label it a bridge and hope a draw schedule appears. If you need a short span and the house is already the collateral story, say bridge.
Construction is ground-up: land plus a build. Those draws follow a build, not a rehab of a house that is already standing. Calling a gut rehab ground-up, or a new build a flip, is how the schedule on the note stops matching the job site.
What this desk is — and is not
Funded Funding is a national private-money brokerage. We are not a bank. We are not an NMLS-licensed consumer mortgage lender. This is a national desk, not a Phoenix-only shop. We do not publish an office address. Terms vary by lender, property, and borrower entity. Not available in every state. We do not warehouse the loan. A draw schedule on a blog is not your term sheet.
The desk floor is $100k. Files under that are not this desk. Borrowers close in an LLC or another business entity. We do not stretch a flip into an owner-occupied renovation loan we are not licensed to do. If you will live in the house, this site is the wrong desk.
This desk reads 1–4 unit investor files differently from 5+ unit and commercial files. Put the true unit count, the purchase, the rehab budget, and the exit on the application. Business-purpose does not mean “no documents,” and it does not mean every file funds. We will not invent a rate, a credit cutoff, a leverage figure, or a holdback percentage. Those numbers are the ones on a real note, or they are not numbers.
How to put the file here
- Confirm it is investor property. If you will occupy it, this site is not your lender.
- Entity ready to close. LLC or other business entity that can take title and the loan.
- Deal on paper. Address, purchase, rehab budget, the exit, and whether you are changing the footprint. If you already have a draw schedule or a contractor bid, bring that.
- Name the actual problem. You need the rehab line to move in draws. You are not asking a bank to cash out an unfinished house, and you are not asking for a ground-up build unless the structure is not there yet.
- Apply. Same intake as the rest of Funded Funding: the application. Apply here if the file is a flip and the rehab money has to move on a draw schedule.
Still unsure whether the file is a Fix & Flip, a bridge with little work, a ground-up build, or a mid-rehab cash-out a bank already refused? That is what the intake is for, including the answer “this is still a bank file” or “this budget cannot finish the house.”
Frequently asked questions
Do you get the full rehab budget at closing?
No. Purchase funds can close so the LLC takes title. Rehab funds release in draws as agreed stages are in place. The full rehab budget is not a day-one wire.
What is an inspection holdback?
It is the part of a rehab draw that stays unreleased until an inspection confirms that stage of work is actually in place. It is the order of payment, not a penalty. This page does not quote a holdback percentage. The figure is the one on your note.
When do rehab draws freeze?
When the next release cannot be matched to work that is in place: a failed or incomplete inspection, an unwritten scope change, a remaining budget that no longer covers the remaining work, an open permit or insurance condition the note requires, a default, or no contractor left to finish the stage. The freeze lifts when that condition is fixed or the lender accepts a written change.
Is this the same as a mid-rehab cash-out denial?
No. A mid-rehab cash-out denial is a bank refusing to lend against a house that is still unfinished. This page is how draws move on a flip note that is already funding the rehab. If you are trying to cash out open walls, the mid-rehab note is the better map.
What happens if the contractor walks?
Treat it as a file event. Stop draws for work that is not happening. Document what is done, what is owed, and what budget remains. A replacement has to finish inside what is left, or the gap is a new capital question. The note does not automatically fund a new crew.
What is the minimum to fund?
The desk floor is $100k. Files under that are not this desk.
Ready to get funded?
If you have an LLC, a standing house, and a rehab budget you can explain, send the file. Draws pay for work in place. They do not wire the whole rehab line on day one, and they do not replace a scope. No fake funded counts. No stock testimonials. No owner-occupied stretch. No teaser rate that is not your file.
Ready to get funded?
Apply on the same intake we use live, or call or text (520) 552-7065.