Construction loan funds are not handed out in one lump sum at closing. They are held by the lender and released in draws as your builder completes milestones, passes inspections, and submits documentation. Materials and labor are paid according to the approved draw schedule — with contingency held back until the home is finished.
At closing, your total construction budget is approved and escrowed — but only a portion may be available for early draws based on your schedule. As each phase completes (foundation, framing, mechanicals, drywall, finishes), your builder requests a draw with invoices and lien waivers where required.
A third-party inspector or the lender’s construction administrator verifies that the work matches the budget line items and building plans. Once approved, the lender releases funds — typically via joint check to builder and borrower, or directly to the builder per program rules.
Ryan and Steve review your draw schedule at pre-approval so you know how cash flow will work before the first shovel hits dirt.
Draws protect you, your builder, and the lender by tying dollars to verified progress.
Exact percentages vary by lender and builder contract — this is a common framework.
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Related guides on inspections, cost overruns, payments, and build timelines.
Foundation, framing, mechanical, and final inspections tied to each draw release.
Contingency reserves, change orders, and borrower cash for overruns.
Interest-only during construction vs. full P&I after permanent conversion.
Typical build timelines and program completion windows.
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Ryan & Steve map milestone draws, contingency holdbacks, and payment timing to your builder contract — so there are no surprises when invoices come due.