How Do You Set Up a Draw Schedule for a Home Build?

By Wyatt Cooper · Published October 10, 2026 · 6 min read

Key takeaways

A draw schedule splits the contract price into payments, each released when a milestone an inspector can see is complete.
Set each draw's percentage from your own cost to reach that milestone, so you aren't paying for the job out of pocket between draws.
Lenders usually release draws only for work in place, after an inspection and often a title update, so build the wait into your cash flow.
Agree the schedule with the owner and the lender before the loan closes; changing it mid-job means paperwork with both.

To set up a draw schedule for a home build, break the job into milestones a lender's inspector can verify, such as foundation complete or dried-in. Give each milestone a share of the contract price based on your cost to reach it, check that the shares add to 100% and that you are never far behind on cash, and agree the schedule with the owner and lender before closing. Then request each draw only for work in place.

How draws work on a construction loan

On a home build financed by a construction loan, the lender pays out the loan in stages ("draws") as work is completed, rather than all at closing. Fannie Mae's Selling Guide describes it for single-closing construction-to-permanent loans: the lender "will be responsible for managing the disbursement of the loan proceeds to the builder, contractor, or other authorized suppliers."

Before each draw, someone checks the work. HUD's handbook chapter for its 203(k) rehabilitation loans (4240.4, chapter 5, an older HUD handbook; HUD's current rules are in later handbooks) shows a typical set of controls: funds are released after a draw request, a compliance inspection, a "title update, where necessary" and the inspector's bill; funds "may be partially released based on the percentage of completion of each line item"; and "under no circumstances is a draw request to be approved for work that is not yet complete, including materials that have been paid for but not yet installed." Your lender's rules will differ, so get them in writing.

Pick milestones an inspector can see

A good milestone is a state of the house that anyone can confirm in a site visit: the foundation poured and backfilled, the house dried in, rough-ins passed inspection. Avoid milestones that depend on paperwork or on materials sitting in the garage. Tie each to the building department's inspections where you can, since a signed inspection card is hard to argue with.

The fictional Brightwater Lane house: a $480,000 contract in seven draws
Draw	Milestone	Share	Amount	Builder's cost to reach it	Builder's cash after the draw
1	Site work and foundation complete	12%	$57,600	$60,000	−$2,400
2	Framed, sheathed and dried in	22%	$105,600	$92,000	$11,200
3	Windows and exterior doors in; rough plumbing, electrical and HVAC inspected	18%	$86,400	$76,000	$21,600
4	Insulation, drywall and exterior finishes	16%	$76,800	$68,000	$30,400
5	Cabinets, trim, interior doors and flooring	15%	$72,000	$58,000	$44,400
6	Fixtures, finish trades, final grade	10%	$48,000	$32,000	$60,400
7	Certificate of occupancy and walkthrough list complete	7%	$33,600	$14,000	$80,000
Total		100%	$480,000	$400,000

Check the percentages against your cost

Brightwater Lane — draw schedule check

Shares: 12 + 22 + 18 + 16 + 15 + 10 + 7 = 100%
Amounts: $57,600 + $105,600 + $86,400 + $76,800 + $72,000 + $48,000 + $33,600 = $480,000
Draw 1: 12% of $480,000 = $57,600, against $60,000 of cost: the builder is $2,400 short until draw 2
Draw 2: $105,600 − $92,000 = $13,600; running cash −$2,400 + $13,600 = $11,200
Final position: $480,000 − $400,000 of cost = $80,000, matching the last line of the table

Checking the Brightwater Lane schedule.

The table shows the builder's cash after each draw is paid. Draw 1 comes in below cost, so the builder carries $2,400 plus every day between finishing the foundation and getting paid. That gap is normal; what matters is that you know its size. If an early milestone runs far below cost, move a little of a late draw forward, and be ready to explain it: lenders resist front-loading, because a draw ahead of the work leaves less loan to finish the house.

Also plan for money the schedule doesn't show. Some lenders or contracts hold back a share of each draw until the end, much as commercial jobs hold retainage: HUD's 203(k) chapter required "a holdback of 10 percent (10%)" on intermediate draws, released after final inspection. Ask your lender whether it holds anything back.

What to send with each draw request

The lender's draw request form, line by line against the approved budget. HUD's 203(k) draw request form lists each construction item with its total, previous draws and this request.
Proof the milestone is done: inspection cards, photos, and a time for the lender's inspector to visit.
Lien waivers from you and your subs and suppliers, if the lender or your state requires them.
Signed change orders that moved the contract price, so the draw is against the current number (see how to price a change order).

If the job is a remodel, check your state's consumer rules too. In California, for instance, the state's licensing board says a home improvement down payment can't exceed "$1,000 or 10 percent of the total contract price, whichever is less", and that later payments must be based on "the actual value of work already completed or on materials that have been delivered" (CSLB). Check your contract and your state's law.

The bottom line

Build the draw schedule from milestones an inspector can see, set each share from your cost to reach it, check the shares add to 100% and your cash never falls too far behind, and agree it with the owner and the lender before closing.

Conflo is built for commercial construction today, where GCs and subs bill through its pay applications; it has no homeowner or lender draw tools. Join the waitlist to hear when residential tools arrive, and see the residential builder's guide for the rest of the job.

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Sources

Handbook 4240.4 REV-2, Chapter 5: Endorsement Through Completion of Rehabilitation (Section 203(k)) — U.S. Department of Housing and Urban Development. Read October 16, 2026.
Draw Request, Section 203(k), form HUD-9746-A — U.S. Department of Housing and Urban Development. Read October 16, 2026.
Selling Guide B5-3.1-02, Conversion of Construction-to-Permanent Financing: Single-Closing Transactions — Fannie Mae. Read October 16, 2026.
Rebuilding After the 2025 LA Wildfires: Important Contract and Payment Rules — California Contractors State License Board. Read October 16, 2026.

Questions

What is a draw schedule in construction?

The agreed list of payments on a construction loan or contract: each a share of the price, released when a set stage of work is complete and, on a loan, after the lender's inspection. It is set before the loan closes.

How many draws does a home build have?

It depends on the lender and the job; the lender sets the number, and HUD's 203(k) chapter, for one, capped intermediate draws at four, with more allowed on jobs over $10,000 if the lender and borrower agreed in writing. Fewer draws means longer gaps between payments, so the builder carries more cost between them.

How long does a construction draw take?

From your request to money in the bank, plan for the lender's inspection, any title update and its processing. HUD's 203(k) handbook chapter asked lenders to release funds within 24 to 48 hours of a complete package; many lenders take longer. Ask yours for its timeline.

Can a builder draw for materials delivered but not installed?

Often not on a loan. HUD's 203(k) rules barred draws for materials paid for but not installed, with narrow exceptions such as ordered cabinetry. Some contracts and lenders allow stored materials with proof; ask before you buy ahead.

Who approves a draw?

On a loan, the lender, after its inspector confirms the work; the owner usually signs the request too. On a cash job, the owner approves under the contract's payment terms.