Loan Programs
Short-term capital for acquisition and renovation, sized on the finished value rather than the current one. High leverage on the purchase, 100% of the renovation funded through draws, and a permanent DSCR takeout underwritten at the same time.
Rehab program terms
- 85–90% of loan-to-cost (purchase price plus rehab budget)
- 70–75% of after-repair value, whichever binds first
- 100% of renovation funded via reimbursement draws
- 12–24 month interest-only terms with extension options
- 660 FICO typical; experience improves both leverage and pricing
Two constraints, and only one of them binds
Every rehab loan is sized against both loan-to-cost and after-repair value. You receive the lower of the two figures, and which one binds tells you a great deal about the deal.
When LTC binds, the deal is priced tightly relative to its finished value — healthy. When ARV binds, you are paying near retail for the property and the renovation is not creating enough lift to justify the leverage. That is the signal to renegotiate rather than to shop for a lender who will stretch. Model both on the BRRRR calculator.
How draws actually work
Renovation funds are not advanced at closing. They sit in a holdback and are released against completed work, which shapes your cash management for the entire project.
- Scope approved at underwritingA line-item budget with contractor bids. Vague allowances get trimmed; specific line items survive.
- You fund the work firstEach draw reimburses completed work. You need working capital to get from one inspection to the next.
- Inspection orderedA third-party inspector verifies completion, typically within 48 to 72 hours of request. Some lenders accept photo or video documentation on smaller draws.
- Funds releasedWire in one to three business days after inspection clears. Budget three to five business days end to end per draw.
- Final draw at completionOften held until final inspection and, where required, the certificate of occupancy.
Three or four draws is typical. Ask what each inspection costs and whether unused draws carry a fee — on a project with six small draws, inspection fees quietly become a real line item.
What it costs to hold
Rehab loans are interest-only on the drawn balance, which keeps the carry manageable early and rising as the holdback releases. On a $250,000 loan at 10.5%, fully drawn interest runs about $2,188 a month. A six-month project carries roughly $10,000 to $13,000 in interest alone, plus origination points, insurance, utilities, and taxes.
That entire figure belongs in your all-in cost before you evaluate the deal, not after. The most common flip modelling error is treating carry as an afterthought and then discovering the project needed eight months rather than five.
Flip or hold, decided in advance
The exit determines the structure, and it should be settled before the bridge closes.
| Sell on completion | Refinance and hold | |
|---|---|---|
| Bridge term needed | Rehab plus 60–90 days to market | Rehab plus seasoning period |
| Seasoning | Not applicable | Usually 6 months from deed recording |
| Key risk | Market softens during listing | Appraisal or rates move before takeout |
| Tax treatment | Typically ordinary income | Refinance proceeds generally not taxable |
If the plan is to hold, we size the DSCR takeout at the same time as the bridge, so the short-term loan is structured around a permanent loan we already know clears. That sequencing is the difference between a BRRRR that recycles your capital and one that leaves you refinancing under time pressure.
Price the acquisition and the exit together
Send the address, the purchase price, your scope of work, and your ARV comparables.
Get a term sheet Model the dealBusiness-purpose loans on non-owner-occupied investment property. Leverage, pricing, and draw procedures vary by lender and borrower experience. Not tax advice and not a loan commitment.