Investor guide
Building a Construction or Rehab Budget a Lender Can Use
By REI Capital Consulting LLC · Updated
Why the budget matters to the lender
The renovation or construction portion of an investor loan is usually funded in draws. The lender’s inspector compares completed work to your budget lines. If a line says “interior — $40,000,” there is no way to measure 50% complete. If it says “kitchen cabinets and counters — $9,500,” there is.
Common rehab budget categories
| Category | Examples |
|---|---|
| Demolition and cleanup | Haul-off, dumpsters |
| Structural | Foundation repair, framing, roof structure |
| Exterior | Roofing, siding, windows, doors, paint |
| Mechanical, electrical, plumbing | HVAC, panel, rewiring, water heater, supply and drain lines |
| Interior | Drywall, flooring, trim, interior paint |
| Kitchen and baths | Cabinets, counters, fixtures, tile |
| Site | Landscaping, driveway, fencing |
| Soft costs | Permits, plans, inspections |
| Contingency | Commonly 5–15% depending on scope and age of property |
Construction budgets add phases
New construction budgets usually follow build phases: site work and utilities, foundation, framing and dry-in, rough mechanicals, insulation and drywall, finishes, and final. Many lenders tie draws to these milestones.
Tips that prevent problems
- Get written bids for major trades and keep them
- Keep the budget consistent with the ARV comps: luxury finishes in a starter-home neighborhood raise cost without raising value
- Show who is doing the work and whether you self-perform
- Do not leave contingency at zero; lenders read that as risk
Next step
Read how interest reserves and draw schedules work, then submit your scenario.
Related loan programs
Keep reading
This guide is general education, not legal, tax, or financial advice, and not an offer to lend. Lender requirements vary and change.