Construction Draw Schedule
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How Construction Draws Work

Construction loans don't fund everything at closing. Instead, funds release in draws as work is completed and inspected. This protects the lender (work is verified before payment) and the borrower (you don't pay interest on unused funds).

Typical structure:

• Land + soft costs funded at closing (if land is being acquired with the loan)
• Construction draws released after each stage is completed and inspected
• Final draw released at certificate of occupancy (CO)
• Loan converts to permanent financing or you refinance into a take-out loan

Standard Draw Stages

Draw Process Timeline

Each draw takes 7-14 days from request to funding:

1. You complete work to a draw stage
2. You request inspection from the lender's inspector
3. Inspector visits within 3-5 days and verifies work completion
4. You submit lien releases and invoices from subs and material suppliers
5. Lender reviews and approves within 3-5 days
6. Funds wire to you or directly to subs

Plan ahead — you'll need cash to fund work between draws while waiting for funding.

Common Construction Loan Pitfalls

• Underestimated build time: 9 months becomes 14. Bake in slack to your interest budget.
• Draw delays: if inspector is busy or paperwork is missing, draws can take 3+ weeks. Have working capital reserves.
• Lien risk: unpaid subs can file mechanic's liens. Require lien releases with every payment.
• Material price increases: commodity volatility can blow your budget. Lock material orders early.
• Permit delays: can push back the entire project by months. Apply early.
• CO delays: final inspection issues can delay the final draw. Don't plan for it to fund the same day as completion.

Frequently Asked Questions