What Is a Draw Schedule on a Construction Loan?

A draw schedule is the agreed plan for releasing construction or rehab funds in stages as the work gets done, rather than all at once. Each stage is a "draw," and you only pay interest on the money that has actually been released.

How does a draw work?

The budget is divided into milestones, foundation, framing, roof, mechanicals, finish. As each milestone is completed and inspected, the lender reimburses that portion of the budget. You fund the work first, then get reimbursed, which is why you keep some working capital on hand.

Why lenders use draws

Releasing money in stages protects everyone: funds track real progress, so the loan stays aligned with the value being built and there is no large unspent balance sitting idle.

How to keep draws on time

• Match your budget to the draw schedule before you start.
• Document completed work and request inspections promptly.
• Keep enough working capital to fund each stage ahead of reimbursement.