Q: How do draw schedules work?
A: Lenders don’t want to pay for work that isn’t done yet. If it’s a big job and the contractor can’t complete it for some reason, the lending company will want to protect itself. Most lenders require that construction loans include a draw schedule that ensures they pay only for work that has been completed. For instance, if the foundation and framing are budgeted at $75,000, the check issued at the completion of framing cannot bring the total amount paid to that point to more than $75,000. A good draw schedule not only protects the lender and homeowner, but will be welcomed by a professional builder who does work on time and on budget.