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Construction Loan Draw Schedule And Formula                                                                   

The common formula used to calculate a construction loan draw schedule:

1.. First Draw (Slab/Foundation) 15%. This draw will purchase land if not owned. If you are doing a rehab loan then your existing mortgage is paid off at this time. The draw is released at closing. Any builder "soft costs" such as permits are added to this advance. Septic and any site work is also included. The loan fees, ttorneys fees, title insurance, etc. are paid at closing.

2.. Second  Draw  (Framing/Rough Carpentry) 10% This draw is released when foundation is poured. First floor walls and sub flooring in place with exterior walls sheathed.

3.. Third Draw (Roof/Mechanicals) 20% The draw will include second floor sub flooring and walls, roof framing, rough plumbing electrical and HVAC inspected, and any miscellaneous items like garages and pools. 

4.. Fourth Draw (Exterior/Interior Finishes) 20%. The draw includes doors and windows installed, drywall installed, exterior siding or painting complete

5.. Fifth Draw (Trim-out)  20%. Draw includes all interior trim, cabinets, paint and final plumbing HVAC and electrical

6.. Final Draw (Project Closeout) 15% Draw includes all decks and patios, house cleaned. appliances , and any landscaping. The final inspection and occupancy permits are issued.

This schedule may be modified as determined by local requirements.

 Your contractor may complete construction on a different schedule. Funds can be disbursed for each item upon completion. Please note that if you are doing a Rehab loan we will compress the above schedule into three draws.

Learn more about construction loans

NEW! I have a newsletter giving a complete description of the Home Improvement/Renovation Financing programs which is available by email.

If you are not ready to build but have found the perfect lot. The new Purchase Plus Lot Loan can save you a great deal of money.

New! One of my favorite lenders has finally reopened their lending department. They offer you the ability to modify into the incredibly flexible Cash Flow Loan when your work is complete.

As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your debt is structured today can have a life changing effect in the years to come.  Read more about this free, no obligation service.