Rehab capital is usually split: an initial advance against the purchase, then a holdback that funds the work as inspections clear. That is why this desk puts contingency on the worksheet and models interest on average outstanding — not as if the whole loan were outstanding from the first day.
Contingency
Contingency is a percent of the rehab budget, not of the purchase. Educational chips on the calculator default to 10–15%. That is a working cushion for hidden scope — not GI policy and not a quote. You can edit it. Twenty percent is a heavier cushion, not a requirement.
Project cost for the LTC cap is purchase + rehab + that contingency. Leaving contingency at zero makes the LTC look fatter than the job will tolerate.
Draws
The rehab holdback is the part of the dual-cap loan that is not funded at close. Capital sources typically inspect, then advance. The borrower still carries any unfunded rehab in cash until a draw reimburses it. The worksheet labels that gap.
Average-draw interest
Full-loan interest-only assumes the entire balance is outstanding for the hold. Rehab files rarely work that way. The educational model:
avg outstanding = initial advance + rehab holdback × avg-draw %; monthly IO = avg outstanding × rate / 12
Fifty percent avg-draw is a common mid-job assumption. Raise it if the heavy trades hit early. Lower it if the holdback stays unused until the end. Hold months drive carry, not just the note term.
Run it on the Rehab & Renovation Loan Calculator. The results pane shows avg-draw monthly IO and a full-loan IO comparison so you can see the difference.
What this is not
This is not a construction-draw schedule, a lender inspection calendar, or FHA 203(k) / HomeStyle. Those consumer rehab products are the wrong occupancy and the wrong desk.