Texas Rehab Loans for Flips: Budget, Draws, Timelines

You found a great flip in Texas. The GC’s number slipped since last week. Your bank wants tax returns and weeks of underwriting. You need funding that matches your scope, draw pace, and sale timeline so profit stays intact.

Build a lender-ready budget that locks profit

Start with ARV (After Repair Value). Then back into safe leverage and cash needs. LTP (Loan to Purchase) is the percent of the price a lender funds. Many fix and flip loans offer up to 90 percent LTP with 100 percent of rehab paid through draws. That can protect cash if your budget is tight.

Set a line-item budget with at least a 10 percent contingency. Include soft costs to avoid shortfalls.

• Permits, engineering, surveys, and utility fees
• Insurance, inspections, title updates, and recording fees
• Temporary power, dumpsters, porta-johns, and security
• Coastal windstorm items where required. Some Texas counties need TDI certificates

Use recent unit costs and vendor quotes. Update numbers after every close. For a quick framework, see our guide on accurate rehab cost estimates. It helps you dial in labor, materials, and staging draws that clear fast.

Cost-saving tradeoffs that still sell in Texas

Trim scope where buyers do not pay extra. Spend only where comps demand it. These moves often save thousands without hurting ARV.

• Flooring: quality LVP at $2 to $3 per foot beats mid-grade tile on cost
• Baths: tiled shower in the primary, fiberglass tub-shower in secondaries
• Kitchens: shaker cabinets with soft-close hardware. Quartz level one instead of premium slabs
• Systems: repair existing ductwork instead of full replacement when static pressure tests pass
• Exterior: paint and light landscaping instead of full siding replacement when boards are sound

Match finishes to the neighborhood. Do not overbuild. Use repeatable spec packages to speed orders and cut change orders. You can borrow ideas from our playbook on spec packages that boost ARV.

Work the draw like a pro with Texas lenders

Your cash flow lives or dies on the draw plan. A clear construction draw schedule Texas lenders can approve early keeps crews moving and interest costs down.

• Break the job into 5 to 7 milestones with verifiable items
• Schedule big-ticket rough-in items before finishes to unlock larger draws sooner
• Expect 24 to 72 hours for third-party inspections after a draw request
• Expect 2 to 4 business days to fund after inspection and title updates
• Collect conditional and final lien waivers with every payment to avoid title holds

A simple example many lenders like:

• Draw 1: Demo, framing, exterior repairs. 15 percent
• Draw 2: MEP rough. Plumbing, electrical, HVAC. 20 percent
• Draw 3: Insulation, drywall hang and tape. 15 percent
• Draw 4: Cabinets, tile, interior doors, trim. 20 percent
• Draw 5: Paint, flooring, fixtures, punch. 20 percent
• Draw 6: Final clean, landscaping, CO if needed. 10 percent

Front-money for materials is common. Plan a small borrower-funded deposit or vendor credit lines. For more structure, use our draw schedule and contract guide to align your GC, scope, and lender.

Pick realistic timelines for TX flip loans

Bid a timeline you can hit with inspections and draws baked in. Add buffer for weather and backorders. Here is a simple starting point.

• Light cosmetic. Paint, flooring, fixtures. 4 to 6 weeks
• Medium rehab. Kitchens, baths, some MEP. 8 to 12 weeks
• Heavy rehab. Layout changes, full MEP, roof. 16 to 24 weeks

Permit timing varies by city. Simple over-the-counter permits can clear in days. Full plans and structural items can take weeks. Order long-lead items at contract signing. Windows, exterior doors, and panels can run 3 to 6 weeks. Weather matters. Texas heat and storms can stall exterior work, so stage site tasks early in the day and protect materials.

Texas rehab loan requirements and how to prepare

Hard money construction loans Texas investors use are business-purpose only. Not for owner-occupied homes. Your package should be clean and lender-friendly. You may qualify if you have:

• FICO at 620 or better for many flip loans
• Up to 90 percent LTP and 100 percent of rehab funded by draws
• A detailed scope, line-item budget, and a defendable ARV with 3 to 5 comps
• GC license or resume, insurance, W9, and signed contractor agreement
• Photos and a simple two-path exit plan. Sell or refinance

Most TX rehab loans do not need tax returns or W-2s. Lenders focus on the asset, your plan, and your past projects. Choose partners who communicate clear inspections and title processes. That is what the best Texas hard money lenders for flips deliver. For help keeping crews on schedule and draws clean, use our checklist on rehab contractor management.

Plan exits early to protect ROI

Have two exits before you close. List for sale on completion, or refi to a rental. A DSCR loan works when DSCR is strong. DSCR, or Debt Service Coverage Ratio, is rent divided by loan payment. Many rental loans cap at 80 percent LTV and allow 30-year fixed terms. Borrowers typically need a 660 FICO or higher. Some lenders want 0 to 6 months of seasoning. Set your rent pro forma now, then confirm with property managers during rehab.

Frequently Asked Questions

How do Texas construction loans release rehab funds?

Most Texas construction loans use 3 to 7 draws tied to milestones. You submit photos and an inspector visits in 24 to 72 hours. After clear title and lien waivers, funds usually wire in 2 to 4 business days. Plan deposits for materials since lenders reimburse completed work, not future buys.

What credit and leverage can I expect on a fix and flip construction loan Texas?

Borrowers typically need a 620 or higher FICO to qualify for many flip loans. You may see up to 90 percent LTP on the purchase and 100 percent of rehab paid in draws. Loan sizes often reach $3,000,000 for bigger projects. Close times can be 7 to 14 days when your file is complete.

What are common Texas rehab loan requirements?

Expect a detailed scope, a line-item budget, comps supporting ARV, and GC documents. Insurance, entity docs, and a clear exit plan are also typical. Title will check liens on every draw in Texas, so gather conditional and final lien waivers. Photos and permits help clear inspections quickly.

What is a realistic construction timeline for TX rehab loans?

Light cosmetic projects often finish in 4 to 6 weeks. Medium rehabs take 8 to 12 weeks. Heavy rehabs can run 16 to 24 weeks, especially with structural work or panel upgrades. Add a 10 to 20 percent buffer for weather, inspections, and backordered items.

Can I refinance to a rental loan after my Texas flip?

Yes, many investors move to a DSCR rental loan. DSCR is rent divided by the loan payment. Typical caps are 80 percent LTV up to $2,000,000, with 30-year fixed options. Some lenders allow no tax returns and may accept 0 to 6 months seasoning, depending on the file and appraisal.

How do I keep cash out-of-pocket low during rehab?

Use supplier lines for windows, cabinets, and flooring. Front-load rough trades in early draws to unlock larger reimbursements. Many lenders fund every 2 to 4 business days after inspection, so submit weekly. Keep a 10 percent contingency to avoid change orders draining cash.

If you want to talk through your specific deal, our team can review your scenario and tell you what fits. Reach out to Diplomat Property Loans to start the conversation.