How construction loan funds get released as work is completed.
A draw schedule is the milestone-based disbursement plan for a construction or rehab loan. Rather than funding the entire construction budget at closing, the lender releases funds in tranches (draws) as specific work milestones are completed and verified. This protects the lender against funds being diverted and provides structured cash flow against the project.
Draw schedules align lender risk with construction progress. At closing, the lender funds land acquisition (if applicable) and an initial advance for permits and mobilization. As work progresses, the borrower submits draw requests detailing what work has been completed; the lender (or a third-party construction inspector) verifies the work is in place; funds are then released against the budget line items.
A typical ground-up single-family construction uses 4–6 draws: (1) site work / foundation, (2) framing, (3) MEP rough-in, (4) drywall / interior finishes, (5) exterior finishes / landscaping, (6) final / CO. A larger commercial project might use 8–15 draws across more granular milestones. Rehab projects on existing buildings might use 3–4 draws aligned with renovation phases.
Inspections are central to the draw process. Most lenders use third-party construction inspectors who visit the site, photograph work completed, verify against the budget, and report to the lender. Inspections typically run $500–$1,500 per visit (sometimes more on larger commercial). Inspection delays are the most common source of draw friction — projects that submit complete, accurate draw requests with photos avoid most of this.
Retention (or "retainage") is the practice of holding back a percentage — typically 5–10% — from each draw, releasing the retained funds at completion. Retention protects the lender (and borrower) against contractors disappearing before final punch-list work is done. The retained amount is released with the final draw, conditional on lien waivers from all contractors confirming they've been paid.
| Total construction budget | $385,000 |
| Draw 1 (closing): Permits + mobilization | $28,000 (7%) |
| Draw 2: Site work + foundation | $54,000 (14%) |
| Draw 3: Framing + roof | $96,000 (25%) |
| Draw 4: MEP rough-in + insulation | $58,000 (15%) |
| Draw 5: Drywall + interior trim | $77,000 (20%) |
| Draw 6: Finishes + flooring + exterior | $54,000 (14%) |
| Draw 7 (final / CO): Punch list + retention release | $18,000 (5%) |
The milestone-based disbursement plan for a construction or rehab loan. The lender releases funds in tranches (draws) as specific work milestones are completed and verified.
SFR ground-up: 4–7 draws. SFR rehab: 3–5 draws. Larger commercial / multifamily: 8–15 draws. Smaller projects have fewer, larger draws; bigger projects have more granular ones.
Typically 3–7 business days from draw request submission to funds disbursement, assuming clean documentation. Inspections are the biggest variable — scheduling can add 2–4 days.
A percentage (5–10%) held back from each draw and released at project completion. Protects against contractors leaving before punch-list completion. Released with the final draw, conditional on lien waivers.
The lender returns the request with specific issues — usually missing documentation, work not completed as represented, or budget overruns. The borrower addresses the issues and resubmits. Most rejections can be cured in 1–3 days.
Matrix manages draws fast — typical turnaround 3–5 days. Real inspectors, real responsiveness, real understanding of what builders actually need.
