Are hard money rehab draws paid after the work is done?

The reimbursement draw, step by step.

1. At closing, the lender funds the purchase and keeps the renovation budget back as a construction holdback.
2. The borrower or contractor completes a phase, such as demolition, rough-ins or finishes, and pays for it first.
3. The borrower submits a draw request against the budget lines.
4. The lender orders a draw inspection, which documents percent complete line by line with photos.
5. The lender reviews the report and releases what the documented work supports, less any fee or retainage the loan agreement sets.

Why lenders pay after the work.

Paying for work already in place keeps each advance backed by collateral that exists. The same idea runs through bank examination: the FDIC's construction and land development procedures ask whether funds go out only after management reviews written inspection reports. Private lenders are not examined under those procedures, but the logic carries over.

Where the exceptions are.

Reimbursement is hard on borrowers with thin cash, so some lenders advance an initial draw at closing, pay a contractor deposit, or fund materials delivered to the site. Each exception sends money out before the work exists, which is why lenders that allow it usually ask for invoices, delivery evidence or a closer inspection schedule. The loan agreement says which advances are allowed. See stored materials in a construction draw.

Why it matters for lenders.

Draw speed matters on a rehab loan: while a draw waits, the crew may wait too, and the borrower carries interest on a project that is not moving. The inspection is the step between request and funding that a lender relies on someone else to complete, so how it is ordered and how fast the report arrives shape the borrower's experience of the loan.

How RAZE handles it.

Private lenders order inspections in the Ordering Engine. Through RAZE it is a flat $125 per single-family inspection when RAZE sends the inspector, or $25 per request with the lender's own inspector, at any U.S. address, per the RAZE Rate Card. RAZE averages 1.1 days from request to submission on residential draw inspections nationwide, an average rather than a promise for any one order. RAZE documents the work; the lender decides what to fund.