Construction money is not wired to you at closing. It sits in a holdback and comes out in draws as the work gets done. How fast those draws move is the difference between a build that stays on schedule and one that stalls waiting on a lender.
We fund in 24 to 48 hours once a draw clears. This page covers how that works: requesting a draw, inspections, soft costs, the interest reserve, and what happens when a budget runs over.
At closing, the construction portion of your loan goes into a holdback. You build, and the holdback pays out in stages as work is completed.
The order matters, and it is where most first-time borrowers get tripped up: the work comes first, the money second. A draw reimburses you for work already finished or soft costs already paid. Nothing is advanced against work that has not happened yet.
One upside of the holdback structure is that you are only paying interest on money that has actually been drawn, not on the full loan amount sitting in escrow. This is part of our ground-up construction loan program.
Draws are funded against work that is finished, or against soft costs you have already paid. Nothing is advanced ahead of the work.
Send the draw request by email, or through the portal if your project qualifies for virtual inspections. Include what was completed, and paid invoices for any soft costs in the request.
We order the inspection from a third-party company. You pay for it: $150 to $295 depending on whether it is virtual or in person.
We review the inspection against the request and the budget. If the completed work matches what was requested, the draw clears.
The wire goes out within 24 to 48 hours of the draw clearing.
There is no fixed draw schedule. Some lenders hand you a rigid five-draw template and make your build fit it. We do not, because a spec house in Charlotte and a teardown rebuild in Miami do not spend money on the same timeline.
How draws are measured depends on what you are drawing for:
There is no minimum draw size and no cap on the number of draws. Take them as the work gets done.
Every draw is inspected. We order it from a third-party inspection company, and the cost is yours: $150 to $295, depending on whether it is a virtual or an in person inspection. Not every project qualifies for virtual inspections; when yours does, draws move through the portal and the inspection is faster and cheaper.
The inspector is confirming one thing: that the work described in your draw request is actually finished. That is also the single most common reason a draw gets held up, and it is covered further down this page.
24 to 48 hours from the point the draw clears.
The clock that matters to your subs is the whole cycle: request, inspection, review, wire. The part you control is the request. A draw request that matches what is actually built, with invoices attached for any soft costs, clears the first time.
Hard costs are the physical build: labor, materials, construction fees. They are drawn to percentage of completion.
Soft costs are everything the build needs that is not the structure itself. The ones we finance are permits, general contractor fees, and plans and architectural work. They are drawn against paid invoices, so pay the invoice, send it in, and take it in your next draw.
Soft costs count toward total project cost, which is what sizes your loan. How construction loan LTC is calculated covers which costs are included and which are not.
The interest reserve is money set aside at closing to cover your monthly interest payments during the build. It sits in escrow and is drawn each month, so you are not writing a check while the house is producing no income.
When the reserve is depleted, you pay interest out of pocket for the rest of the term.
That is worth planning around. A build that runs months past schedule burns through the reserve and then starts costing you cash every month, on top of whatever the delay is already costing.
Every budget we finance has to include a 5% contingency. It is not a formality. It is there because line items come in over, and a budget with no room in it fails the first time something does.
You can draw against the contingency when a line item goes over budget. That is exactly what it is for.
The construction loan budget requirements page covers what the pre-closing budget review looks for.
First the contingency absorbs it. When the overrun is larger than the contingency, the answer in most cases is that you bring additional cash to the project.
It is reviewed case by case, because it depends on how far along the build is, how much of the holdback is left, and what the finished house is worth against what it now costs to get there.
The earlier you raise it, the more options there are. A borrower who calls when the framing bid comes back high has more room than one who calls with two draws left and a third of the house to build.
The most common reason a draw does not clear is that the work was not completed as stated on the request. The inspector goes out, the phase is not finished, and the draw comes back.
Behind that is usually the same misunderstanding: some borrowers expect the draw to come in advance, so the work can be paid for. It does not work that way on any construction loan. You fund the work, the inspection confirms it, and the draw reimburses you.
Plan your cash accordingly, especially on the first phase of the build.
You complete a phase of work, submit a draw request by email or through the portal, and we order a third-party inspection. Once the inspection confirms the work and the draw clears, the wire goes out within 24 to 48 hours.
24 to 48 hours from the point the draw clears. The inspection is what sets the overall timing, so a request submitted with complete information moves faster.
No. There is no fixed schedule and no set number of draws. Hard cost draws are funded to percentage of completion, and soft cost draws are funded against paid invoices.
No. There is no minimum draw size and no limit on how many draws you take.
No. This is the most common misunderstanding about construction draws. Every draw is funded against completed work or soft costs you have already paid. You fund the work, then the draw reimburses you.
No. Draws are funded against completed work, not stored materials.
You do. We order it from a third-party inspection company, and the cost runs $150 to $295 depending on whether the inspection is virtual or in person.
The interest reserve sits in escrow and is drawn each month to cover your interest payment. Once it is depleted, you pay interest out of pocket for the remainder of the term.
Your budget must include a 5% contingency. It is there for line items that come in over budget, and you can draw against it when they do.
In most cases you bring additional cash to the project. It is reviewed case by case, because the answer depends on how far along the build is and how much of the budget is left.
Permits, general contractor fees, and plans and architectural work. They are drawn against paid invoices.
Yes. A builder’s risk policy has to be in place before the first draw funds.
Lot, budget and plans. We will tell you today where it prices.