Construction Draw Schedule Explained — What It Is and Why It Exists

A construction draw schedule is a written agreement between a borrower and a lender that defines exactly how construction loan funds will be released throughout the build. It specifies the number of draws, the milestone or phase of construction that triggers each draw, the approximate dollar amount or percentage of the total holdback released at each stage, and the documentation required to submit a draw request. It is established before or at closing and it governs every dollar that flows from the construction holdback from the first draw to the final punch list.

The draw schedule exists for a simple and mutually beneficial reason. The lender cannot advance the full construction budget at closing because the collateral — the partially built home — does not yet exist and its value cannot be verified. Releasing funds in proportion to verifiable construction progress protects the lender’s capital and ensures that construction money is used for its intended purpose. For the borrower, the draw schedule provides a clear, predictable financial framework for the entire project — you know exactly what milestone you need to reach to trigger the next infusion of capital, which lets you plan your contractor payments, your material orders, and your cash flow across the full construction timeline.

At Mayflower Venture Partners, we establish the draw schedule with you and your general contractor before or at closing so there are no ambiguities once the build begins. Every party in the transaction — lender, borrower, and GC — knows exactly how money flows and what it takes to keep it flowing. That clarity is one of the most underrated advantages of working with a lender who invests time in the draw schedule setup.

A Typical Six-Draw Schedule for a Ground-Up New Construction Project

While every project is different and draw schedules are customized to each build, most ground-up single-family new construction projects in New England follow a similar milestone structure. Here is what a standard six-draw schedule looks like across the full construction timeline, with the typical percentage of the total construction holdback released at each stage.

The percentages above are illustrative — the actual amounts on any specific project are negotiated based on the project’s cost distribution across phases. A project with particularly expensive foundation work — deep excavation, rock removal, or a complex foundation system — may have a larger first draw. A project with a high-end finish specification may have a larger fifth draw. The schedule should reflect where the money is actually being spent, not a generic template.

The final 5% held until certificate of occupancy is standard across most private construction loan programs. It gives the lender confidence that the project will be completed rather than abandoned in the final stretch, and it gives the borrower a clear financial incentive to push through the punch list and inspections that are so often where projects stall in the final weeks.

How Interest Accrues Across the Draw Schedule

One of the most important financial concepts in a construction loan is that interest accrues only on the amount that has been disbursed — not on the total loan amount from day one. This means your monthly carrying cost is lowest at the beginning of the project, when only the acquisition funding and perhaps the first one or two draws have been advanced, and highest at the end of the project, when most of the construction holdback has been drawn.

Understanding this interest accrual pattern helps you model your project economics accurately. In the early months when your carrying cost is lower, that is also when your project is at its most vulnerable from a collateral value standpoint — you have a partially built structure worth less than the sum of its parts. In the later months when your carrying cost is higher, you are also closest to the exit that pays it all off. The structure of the draw schedule and the interest accrual pattern are aligned in a way that rewards efficient construction execution.

How to Submit a Draw Request — Step by Step

Knowing how to submit a draw request correctly — with the right documentation, submitted at the right time, in the right format — is what determines whether your draw funds in 48 hours or gets stuck in a back-and-forth with the lender. Most draw delays are caused by incomplete submissions, not by slow lenders.

What Documentation a Draw Request Requires

The specific documentation required to support a draw request varies by lender and by the phase of construction, but the core requirements are consistent across most private construction loan programs. Here is exactly what Mayflower Venture Partners typically requires to process and fund a construction draw.

Slow Draws vs Fast Draws — Why the Difference Costs Real Money

The difference between a lender who processes draws in 48 hours and one who takes 10 to 20 business days is not a matter of administrative convenience. It is a matter of real dollars. When a draw is delayed by two weeks, your contractor either stops work and redirects their crew to another project, or they continue working and absorb a cash flow gap that creates tension in the relationship. Either outcome is bad for your project timeline and your budget.

Common Draw Schedule Questions From Builders

At Mayflower Venture Partners, we walk every borrower through their draw schedule in detail at closing. We want our builders to understand every milestone, every documentation requirement, and every step of the draw request process before they break ground. That investment in clarity at the beginning of the project is what produces the 48-hour draw processing throughout the project. Find out more about how our full new construction loan process works step by step, or reach out directly if you have a project ready to finance in Massachusetts, Connecticut, Rhode Island, New Hampshire, or Maine.