Construction Loan Draws Explained
How draw schedules, inspections and holdbacks work on construction and rehab loans — and how to keep your project funded.
By the CFUND advisory team · 6 min read
Why lenders use draws
A lender won't hand over the full construction budget on day one. Funding in stages protects both sides: the money always matches the value that's actually been built.
A typical draw cycle
- Complete a line item on your budget (for example: foundation)
- Submit a draw request with photos and invoices
- An inspector visits or reviews photos to confirm the work
- The lender releases funds, minus any retainage
- Repeat through completion
Plan your cash around the gap
Draws are usually reimbursements, so you or your contractor carry the cost of each stage until it's funded. Underestimating this gap is one of the most common reasons good projects stall.
- Keep reserves for at least one full stage
- Build a realistic budget with a contingency (often 5–10%)
- Ask about inspection turnaround times before you close