A construction draw schedule is the payment timeline built into a construction loan. It breaks the total contract value into installments, each tied to milestones or time periods, so the lender releases funds only as work is completed. A draw schedule is the single most important document for managing cash flow on a residential build, and getting it right prevents draws from bouncing back for revision.
The formula
A draw schedule has three components. First, the total contract value is divided into draws (typically 5 to 8 on a residential project). Second, each draw is weighted as a percentage of the total. Third, the scheduled draws and weights are converted to dollars, and retainage is held back from each.
Draw Amount (Gross) = Contract Value × Draw Weight % Draw Amount (Net) = Gross − Retainage Retainage Held = Gross × Retainage %For example, on a $430,250 contract with 7 draws, an 18% draw weight yields $77,445 gross. At 10% retainage, the builder receives $69,700 and the lender holds $7,745 until final.
Three common draw structures
Equal payments
Each draw is the same size: total contract divided by number of draws. A $430,250 contract split 7 ways is $61,464 per draw. Equal payments are simple to administer but rarely match the actual work sequence on a residential build. They are most common on small remodels with one trusted lender.
Front-loaded
Earlier draws (foundation, framing) are weighted heavier than later ones (trim, final). This protects the builder’s cash flow when material and labor costs are high and revenue is still months away. A typical front-loaded schedule on 7 draws might be: 20%, 18%, 18%, 14%, 12%, 10%, 8% (adds to 100%). Lenders scrutinize front-loading heavily; if the schedule does not match the actual work in place, it bounces.
Milestone-based
Draws release when named phases complete: foundation, framing, dry-in, MEP rough, drywall, finishes, final. Each milestone gets a weight reflecting the cost of that phase. This is the most common structure for hard-money and portfolio lenders because it is easiest to verify with a site walk. BuilderGrid uses milestone-based scheduling because it forces discipline on the schedule of values.
Worked example: 926 Stratford with 7 draws
Contract value: $430,250. Lender requires 10% retainage held through completion.
| Draw | Phase | Weight % | Gross Amount | Retainage 10% | Net to Builder | Cumulative Net |
|---|---|---|---|---|---|---|
| 1 | Foundation | 12% | $51,630 | $5,163 | $46,467 | $46,467 |
| 2 | Framing | 18% | $77,445 | $7,745 | $69,700 | $116,167 |
| 3 | Dry-in | 18% | $77,445 | $7,745 | $69,700 | $185,867 |
| 4 | MEP rough | 12% | $51,630 | $5,163 | $46,467 | $232,334 |
| 5 | Drywall and finish | 25% | $107,563 | $10,756 | $96,806 | $329,140 |
| 6 | Flooring and trim | 10% | $43,025 | $4,303 | $38,723 | $367,863 |
| 7 | Final and punch | 5% | $21,513 | $2,151 | $19,363 | $387,226 |
Retainage total: $43,024 (cumulative across all draws). Released at final when punch list is complete, lien waivers are signed, and the certificate of occupancy is issued. The builder has received $387,226 through draw 7; the final $43,024 comes after substantial completion.
Inputs and what they mean
Total contract value
The sum of the original contract plus all approved change orders to date. On 926 Stratford, the contract is $430,250. If a change order adds $15,000, the new total is $445,250, and the lender typically requires a draw schedule amendment.
Number of draws
Typical residential is 5 to 7 draws. Smaller projects (under $200,000) might use 5; larger or complex projects (over $600,000) might use 8 or 9. Each draw represents a billing cycle, usually 4 to 6 weeks apart. More draws mean more lender review and more paperwork; fewer draws mean larger individual payments and longer gaps between funding.
Draw weights (percentages)
Each draw is assigned a weight that reflects the cost of work in that phase. Foundation is typically 10% to 15%, framing 15% to 20%, dry-in 15% to 20%, MEP rough 10% to 15%, drywall and finishes 20% to 30%, trim and flooring 8% to 12%, final and punch 3% to 8%. The weights must sum to 100% (plus any change orders). If you are not certain of the weights, ask the lender or the project’s construction manager.
Retainage rate
Standard residential is 10%. Some lenders step retainage (10% until 50% complete, then 5% thereafter). Some commercial contracts hold 15% or 20%. Retainage is held in an account until final, so it represents cash the builder has earned but not received. A 10% retainage on $430,250 is $43,025 in float.
Stored materials
Materials delivered but not yet installed (drywall, lumber, flooring) can sometimes be billed before installation. This is called stored-materials billing or pay-when-paid. Lenders require photo evidence and paid invoices. Stored-materials billing shortens the cash flow gap between ordering and installation. Typical cap: up to 5% of the phase value, or up to 30 days of lead time on the material.
Edge cases and gotchas
The weights do not match work in place
The most common draw rejection. Framing is billed at 18% but the photos show only 40% of framing is complete. The lender’s inspector flags this, and the draw bounces. The fix: build the draw schedule from a detailed schedule of values that ties each line item to a phase, then verify the phase percentage before submitting the draw.
Front-loading too aggressive
A schedule that front-loads heavily (20%, 20%, 20%, 20%, 20%) is easy to admin but hard to justify if the work does not match. Lenders prefer milestone-driven schedules because each draw is tied to a verifiable event. If your schedule is front-loaded, be prepared to defend it with a detailed timeline and site photos.
Retainage rate inconsistent with contract
Contract says 10%, the draw application says 5%, or vice versa. Common when a template from a prior project is reused without updating. Always copy the retainage rate from the executed construction contract, not from memory or a spreadsheet. Mismatch bounces the draw every time.
Change orders and draw schedule amendments
A $50,000 change order approved mid-project changes the total contract value. The draw schedule must be amended. Some lenders add the change amount to the final draw; others spread it across remaining draws. Discuss with the lender before the change order is signed. Do not add change-order value to an ongoing draw without lender approval.
Draws requested out of sequence
A builder tries to skip draw 2 (framing) and request draw 3 (dry-in) first. Lenders reject this. Draws must be taken in order unless the schedule explicitly allows it. If work is ahead of schedule, request an early draw of the next phase, do not skip phases.
How BuilderGrid uses this calculator
BuilderGrid’s draw module allows you to build a milestone-based draw schedule from the schedule of values. You define each phase (foundation, framing, etc.), assign a weight based on the cost of that phase, and the tool calculates gross, retainage, and net draw amounts. When you submit a draw application, the system validates that the work claimed on each line item matches the cumulative % complete for that phase. If framing is supposed to be 100% this draw but you claim 80%, the draw flags for review before submission. This prevents the most common rejection reasons and keeps cash flowing.