Understanding Construction Loan Draws

Construction loan draws are the mechanism by which your lender releases funds as your build progresses. Instead of receiving the full loan amount upfront, you draw against a budget as each phase of construction is completed and inspected.

Typical draw schedules are tied to inspections at key milestones: foundation, framing, rough-in MEP, drywall, and final. Each draw requires a site inspection and documentation that work is complete per spec.

To keep your build on schedule, communicate draw timing needs to your lender early, keep your contractor on a milestone-based contract, and maintain a contingency reserve of at least 10%. Delays in draws often signal project management issues — the best builders never run out of cash between milestones.