Draw schedule

What is a draw schedule: the agreed plan that splits a construction loan into stages and states what work must be complete before each portion of the money is paid out

A draw schedule is the payment plan behind a construction loan. Instead of handing the builder the full amount on day one, the lender agrees a series of draws, each tied to a milestone: foundation complete, framing complete, roof on, mechanicals roughed in, and so on through to the final draw at completion. The builder requests a draw when the milestone is reached, the lender checks that the work is in place, and the money for that stage is released.

It matters because the security for a construction loan is a building that does not fully exist yet. The schedule keeps the money and the work moving together, so the lender is never funding far ahead of the asset and the builder is never building far ahead of the cash. The term is American. In the UK the same mechanism appears as a drawdown schedule on development finance, and on a self-build mortgage as stage payments, released either in arrears after each stage is built or, with some lenders, in advance of it.

How a draw schedule works

• It is agreed before closing. The lender, the borrower and the builder sign off the schedule as part of the loan package. Changing it mid-project usually needs the lender's consent.
• Each draw has a trigger. Either a named milestone (roof complete) or a percentage of the budget line items, often set out in a schedule of values.
• The builder submits a draw request. The request states which lines are complete and to what percentage, and asks for the matching amount.
• The lender verifies. Most lenders order a draw inspection so an independent party confirms the work is in place before funds move. Lien waivers and a title update usually travel with the request.
• Funds are released against the schedule. Verified amounts are paid, disputed lines are held, and a retention (often 5 to 10 percent) may be held back until completion.

What goes in a draw schedule

• The number of draws. A simple custom home often runs 5 to 7 draws; a larger commercial project can run monthly draws for the life of the build.
• The trigger for each draw. Written so that two people reading it reach the same answer. "Framing complete" is checkable; "good progress" is not.
• The amount or percentage per draw. Weighted to when costs actually land, so early draws cover sitework and foundation and later draws cover finishes.
• The evidence required. Inspection, photographs, invoices, lien waivers, and who supplies each.
• Retention and the final draw. What is held back, and what has to be true (certificate of occupancy, final inspection, punch list closed) before the last payment.

Draw schedule example: a six-draw custom home

A borrower takes a construction loan of $400,000 for a single-family build. The agreed schedule, purely as an illustration: 10 percent at foundation complete, 20 percent at framing complete, 20 percent at roof and exterior shell, 20 percent at mechanical rough-in, 20 percent at interior finishes, and the final 10 percent at completion with the certificate of occupancy in hand.

At the third draw the builder requests $80,000 for the shell stage. The inspection finds the roof on but the windows not yet installed. The lender funds the roofing lines, holds the window line, and releases the balance two weeks later when the windows are in. The schedule did its job: nobody argued about opinions, only about what was visibly in place on each date.

What a draw schedule does not do, and the mistakes people make

It is not a construction contract. The contract governs scope, quality and remedies. The schedule only governs when money moves.

It does not verify anything by itself. A schedule is a promise structure. Without an inspection or evidence requirement behind each draw, it funds whatever the request claims.

It is not a construction programme. It says what must be built before payment, not when the builder must build it. Timing lives in the contract and the loan term.

The common mistakes: front-loading the schedule so the builder holds more cash than work in place, which removes the incentive to finish; vague milestone wording that turns every draw into a negotiation; skipping verification on small draws, which is where a stalled project first shows up; and treating deposits on materials as completed work without any record of what was ordered or delivered. A clear inspection scope per draw prevents most of the arguments.

Where the draw schedule goes

Into the loan file at closing, and then into use: every draw request, every inspection report and every release is filed against its line. Read in order, the schedule and its paper trail are the financial history of the build, and the final draw closes it out.

Where a lender accepts photo and video evidence from the site between or alongside formal inspections, Venta Capture, a product of VentaVid, is one way to collect it against the schedule. The builder or borrower receives a link and follows guided steps in the mobile browser with no app, one step per milestone or budget line, and the submission arrives timestamped, located and digitally sealed on a case. The funding decision stays with the lender; the capture shows what was in place when the submission was received. See Venta Capture.