Construction Draw Schedule: The Builder's Side of the Math

Updated October 2026

On an example $700,000 custom home, an even-percentage construction draw schedule leaves the builder carrying $193,800 of cost that no draw has paid for yet, more than three times what the job will net. Resize the draws and split one milestone, and the worst point falls to $108,600.

The builder often isn't the one who writes that schedule. The homeowner signs the loan, the lender attaches stage percentages, and the builder inherits them for a job that runs 10.5 months from start to finish, the average for a contractor-built home in the Census Bureau's Survey of Construction for 2025.

A good draw schedule pays each stage close to what the stage actually costs. A bad one pays in round, even chunks while the costs arrive in lumps. The difference is cost already spent that no draw has covered yet, and somebody carries it until the next draw clears: the builder's cash, a line of credit, or the subs and suppliers waiting on their checks. That number can be worked out before the loan closes, from NAHB's national cost-by-stage data or, better, from the builder's own past jobs. The rest of this piece works it out, with a calculator for your own numbers, then covers where draws stall and what to change in the schedule.

What is a construction draw schedule, from the builder's side?

A construction draw schedule lists the milestones at which the lender releases loan money and the share of the loan released at each one. For the borrower it is a payment plan. For the builder it decides when the job's costs get reimbursed, which makes it the single biggest input to the builder's cash position on that job.

The lender runs it. In Fannie Mae's Selling Guide, the lender "will be responsible for managing the disbursement of the loan proceeds to the builder, contractor, or other authorized suppliers," and the construction period can have "no single period of more than 12 months" and a total that "may not exceed 18 months."

This matters most for custom builders. NAHB counted 186,000 custom single-family starts in 2025, almost 20% of all single-family starts. NAHB defines custom as work "undertaken on a contract basis for which the builder does not hold tax basis in the structure during construction." The house belongs to the client the whole time, and the client's loan pays the builder through draws.

How much cash does a draw schedule leave the builder carrying?

In a worked example on a $700,000 custom home, an even-percentage schedule leaves the builder carrying close to $200,000 of unreimbursed cost just before the third draw funds. Shape the draws to the job's real costs and split the biggest stage in two, and the worst point drops to about $109,000.

The math starts with what each stage costs. NAHB's Cost of Constructing a Home study for 2024 breaks construction cost into stages. Applied to an example job with a $700,000 contract and $600,000 in construction cost:

Now compare three draw schedules, all paid on the $700,000 loan after each milestone is inspected. Schedule A is the even-chunk kind: 10% at foundation, 20% at framing, 25% when the rough-ins are done, 25% at interior finishes, 20% at completion. Schedule B keeps the same five milestones but sizes each draw to the stage's share of cost: 18, 17, 32, 24 and 9. Schedule C splits the big middle stage in two, adding a draw at dried-in, for six draws: 18, 17, 15, 17, 24 and 9.

The number that matters is unreimbursed cost at the moment a milestone is finished and its draw has not arrived yet.

Put the worst point next to the profit. At the 8.7% average net margin single-family builders reported for fiscal 2023 in NAHB's latest Cost of Doing Business study, the whole job nets about $60,900. Schedule A has the builder fronting more than three times that. If it sits on a credit line at the 11.67% average effective rate that NAHB's AD&C survey found on pre-sold construction loans in the second quarter of 2026, every month of it costs roughly $1,900 in interest. Schedule C cuts that to about $1,060.

The example assumes every cost is paid as it is incurred, and real jobs don't work that way. Subs bill after the work and suppliers extend terms. That doesn't shrink the gap. It moves it onto the subs, and the builder pays for it later in bid prices and in which subs answer the phone.

Why does the biggest stage set the worst point?

On an even-percentage schedule, the worst point lands just before the draw that follows the most expensive stretch of work. It tracks the share of the job's cost that piles up between two paydays.

On NAHB's numbers, exterior finishes plus major system rough-ins come to 32.6% of construction cost. Schedule A treats that stretch as one milestone. It is the most expensive gap between draws on the job, and it shows up in the table as Schedule A's $193,800. Shaping the percentages to the costs (Schedule B) helps, but the gap is still one giant stage. Splitting it at dried-in (Schedule C) takes the worst point from $193,800 to $108,600.

After the split, the worst point moves to the very first draw, because the builder pays for site work and foundations before any money has come in at all. The fix for that one is a deposit in the construction contract, where state law allows it, or a first draw at loan closing for mobilization and site work. Both are worth asking for up front, since the first stage is where the builder's exposure starts with zero cushion.

More draws are not free. Each one adds an inspection and a package to assemble. Six draws is a reasonable trade for a $700,000 job. Ten probably isn't.

How long does a construction draw take to fund?

There is no reliable public answer. No government agency or NAHB survey measures days from draw request to money in the account. The closest thing is an older survey by Rabbet, a draw software company, in which lenders put their own processing at about 5.5 business days and borrowers put the wait at 9.4. That gap is the point. Builders should get the number from their own lender, in writing, before the loan closes.

The steps are consistent even when the timing isn't. The builder assembles the request: invoices, lien waivers, photos, and the line-by-line progress. The lender orders an inspection, and an inspector walks the house to confirm the percentage complete. Some lenders also run a title check for new liens. Then the lender approves the request and wires the money.

Only the first step belongs entirely to the builder, and a complete package on day one is the part a builder can actually speed up. Two questions belong in the loan meeting. How many business days from a complete package to funded? And what counts as complete? The second answer is the checklist every draw gets built against.

What makes a construction draw stall?

Draws stall when the paperwork doesn't match the work. Four mismatches come up again and again.

Missing lien waivers come first. Lenders want proof that last period's subs and suppliers were paid before they release this period's money, and the reason sits in the loan rules. Fannie Mae requires that "all mechanic's liens, materialmen's liens, and any other liens and claims that could become liens relating to the construction must be satisfied" before it will buy the loan from the lender. One sub who hasn't signed holds up the whole request.

Second, change orders that aren't in the loan. The lender funds the budget it approved. A signed change order the lender never saw is new cost with no money behind it, and it needs the lender's approval or the owner's cash before it can show up on a draw.

Third, invoices that don't tie to budget lines. A plumbing bill coded to the wrong line, or one that pushes a line over budget, gets questioned, and the questions stop the clock.

Fourth, percent complete. When the builder bills framing at 100% and the inspector sees 85%, the draw gets cut or sent back.

Subs feel every one of these stalls. Billd's 2026 subcontractor survey of more than 600 subs, suppliers and GCs found subs waiting an average of 51 days after submitting a pay application, while GCs estimate they pay in about 35. Every day a draw sits waiting is a day the builder has less money to pay them with.

How should a builder set the schedule before the loan closes?

A builder sets the draw schedule by bringing a proposed one to the loan meeting, built from their own cost history, instead of waiting for the lender's default.

A working version, in roughly the order it gets done:

1. Pull cost by stage from the last three jobs of a similar size. NAHB's national shares are a starting point, and a builder's own numbers beat them.
2. Size each draw to the stage's share of cost, then spread the margin across the draws in the same proportions. Expect a lender to want a bigger final draw than the cost curve suggests, since that draw is what keeps a job moving to completion. Leave room to give a little there.
3. Split any stage that carries more than about a quarter of the cost. On NAHB's stage numbers, that means dried-in as its own milestone.
4. Ask for a deposit (some states cap deposits, mostly on home improvement contracts, so check first) or a closing-day draw to cover site work and foundations.
5. Get the funding turnaround and the complete-package checklist in writing.
6. Match sub payment terms to when money actually lands, so the subs don't hear about every stall secondhand.

Then keep the package current between draws instead of building it on draw day. Code bills as they arrive and request waivers when each payment goes out. Change orders go to the lender the week they're signed, so draw day is just assembly.

Where Trade Agent fits

Most of what makes a draw fast happens weeks before anyone opens the draw. Trade Agent works that part of the job. Subs and suppliers email bills to one address, and Arti, the AI built into Trade Agent, reads each one and matches it to the vendor, the job and the cost code. The review screen warns when a bill would push its budget line over.

When it's time to draw, approved bills bundle into the request, or the draw bills the schedule of values line by line from the signed prime contract, with AIA G702/G703-style output for lenders that want it. When you create a draw from bills, you can issue a lien waiver for every bill on it in one step, and subs sign them on a web page with no account to create. The draw goes to the bank by email from inside the job, and recorded payments move it to Funded when the balance is covered. Two of the four stall causes, a bill on the wrong line and a missing waiver, can be caught before draw day: each bill gets its job and cost code as it arrives, and a waiver can go out from any approved vendor bill, with automatic reminders if it sits unsigned.

The bills and draws page walks through it step by step.

The schedule is part of the bid

A builder who prices a job carefully and then accepts whatever draw schedule the lender attaches has only priced half of it. The schedule decides what the job costs to carry, and carrying cost comes out of the same margin the estimate was built to protect. Map the schedule against the costs before signing, the same way the estimate got checked. Then make every draw package boring. For the paperwork itself, the guide to what goes in a draw package covers it, and retainage is the other place cash hides until closeout.

To see a draw built from bills like yours, book a demo.