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.
Our standard is to wire funds within 24 to 48 hours after a draw is approved. 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.
| Funding speed | Our standard is to wire funds within 24 to 48 hours after a draw is approved. |
|---|---|
| Inspection fee | Flat $295 per draw, virtual or in person. Third-party inspection, paid by the borrower. |
| Inspection method | Construction holdback under $1.5M: request through the portal, virtual inspection. Holdback of $1.5M or more: request by email, in person inspection. Domus decides the method. |
| Draw request | Invoices, lien waivers from the general contractor only, and a form stating the work done and the amount requested. Photos are required for virtual inspections. |
| Typical number of draws | About 5 on a typical single-family build. |
| Draw schedule | No fixed schedule. The borrower chooses when to request each draw. |
| Minimum draw and cap | No minimum draw size and no cap on the number of draws. |
| Land | Funded at closing, not as a draw. |
| Reimbursement or advance | Draws reimburse completed work or soft costs already paid. Nothing is advanced, including supplier or subcontractor deposits. No stored materials. |
| Hard costs | Drawn to percentage of completion. |
| Soft costs | Permits, general contractor fees, and plans and architectural work are financed. Drawn against paid invoices. |
| Retainage | None. |
| Budget | Every financed budget includes a 5% contingency, which can be drawn when a line item goes over budget. Line items are not reallocated. |
| Insurance | Builder’s risk insurance must be in place before the first draw funds. |
| Interest | Charged only on drawn funds. |
| Interest reserve | Set aside at closing, held in escrow and drawn monthly to pay interest. Once it is depleted, the borrower pays interest out of pocket. |
| Draw servicing | In-house. |
Updated . Business-purpose loans only. These terms apply to draws on Domus ground-up construction loans.
Draws are funded against work that is finished, or against soft costs you have already paid. Nothing is advanced ahead of the work.
If your construction holdback is under $1.5M, request the draw through the portal. At $1.5M or more, send the request by email. Include invoices, lien waivers from the general contractor only, and the form stating the work done and the amount requested.
We order the inspection from a third-party company. You pay for it: a flat $295 per draw, 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 is approved.
Our standard is to wire funds within 24 to 48 hours after a draw is approved.
There is no fixed draw schedule. A typical single-family ground-up build takes about 5 draws, and more or fewer is fine, since you choose when to request each draw. 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.
The land is not one of those draws. Land is funded at closing, not as a draw. There is also no retainage.
Every draw request includes the same three things, plus photos when the inspection is virtual:
A draw reimburses completed work or soft costs you have already paid. Nothing is advanced, and that includes deposits to suppliers or subcontractors. Stored materials are not funded.
Every draw is inspected. We order it from a third-party inspection company, and the cost is yours: a flat $295 per draw, whether it is a virtual or an in person inspection.
The method depends on the size of your construction holdback. Under $1.5M, you request draws through the portal and the inspection is virtual, so photos are required. At $1.5M or more, you send the request by email and the inspection is in person. We decide the method.
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.
Our standard is to wire funds within 24 to 48 hours after a draw is approved. The clock starts at approval, not when the request is sent. Draw servicing is in-house.
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, is approved 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. Budget line items are not reallocated.
The construction loan budget requirements page covers what the pre-closing budget review looks for.
An overrun on a line item is covered by the contingency. Every budget we finance includes a 5% contingency, and you can draw against it when a line item goes over budget.
The most common reason a draw is not approved 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, the draw is approved. Our standard is to wire funds within 24 to 48 hours after a draw is approved.
Our standard is to wire funds within 24 to 48 hours after a draw is approved. 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 is a flat $295 per draw, 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.
An overrun on a line item is covered by the contingency. Every budget we finance includes a 5% contingency, and you can draw against it when a line item goes over budget.
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.
By Maximiliano Extrakt, Co-Founder, Domus Lending Group. Updated .
Business-purpose loans only.
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