A construction draw schedule is the agreement between a builder and a lender about when the builder gets paid and how the lender knows the work behind each payment is real. The schedule breaks the loan into installments, each tied to a measurable amount of work in place, and dictates the documentation the lender expects before releasing funds.
On a residential build of $400,000 to $800,000, draws happen every four to six weeks. The lender wires money for the work the builder has completed since the last draw, holds back a percentage as retainage, and waits for the next package. The cadence sounds simple. The reason draws bog down is that the schedule, the line-item breakdown, the photo evidence, and the lien waivers all have to agree before the wire goes out.
What a draw schedule contains
Three documents move together on every draw, regardless of lender:
- The schedule of values, the line-item breakdown of the contract amount. Twenty to fifty rows on a residential build, each tied to a trade or division (foundation, framing, MEP rough, drywall, finishes).
- The application for payment, the cover sheet that declares the total amount being requested this period and certifies the work is in place.
- The supporting package, including site photos, paid invoices, conditional lien waivers from each vendor billed against, and (on later draws) a copy of the prior draw’s unconditional waivers.
The American Institute of Architects publishes the most widely used form pair: AIA Document G702 (Application and Certificate for Payment) and G703 (Continuation Sheet). G702 is the cover. G703 is the line-item math behind it. Banks accept these forms by default. Private and hard-money lenders often publish their own variants.
Three common draw structures
Equal payments
The contract amount is divided into equal installments tied to time, not work in place. A 9-month build with $450,000 contract value becomes nine $50,000 draws. Equal payments are common on small custom builds with one trusted lender and rarely show up on portfolios financed by banks.
Front-loaded
Earlier line items (mobilization, foundation, rough framing) are billed at a higher percentage of work completed than later ones. This protects the builder against cash flow shortfalls early in the project. Lenders push back on front-loading that exceeds the actual work in place; aggressive front-loading is a common reason a draw is bounced back for revision.
Milestone-based
Draws release on completion of named milestones (foundation poured, framing topped out, dried in, MEP rough complete, drywall hung, certificate of occupancy). This is the structure most hard-money lenders use and the easiest to verify with a single site visit per draw.
Retainage and stored materials
Retainage is a percentage of each draw withheld until substantial completion. Five to ten percent is standard. On a $50,000 draw with ten percent retainage, the builder receives $45,000 and the remaining $5,000 is held until final draw. State law caps retainage in some jurisdictions and prohibits retainage from being held against materials in others.
Stored materials are billable in most contracts but require evidence. Lenders typically ask for: paid invoice from the supplier, photo of the material on site, and confirmation that the material is insured. Some lenders cap stored-material billing at a percentage of the line item until the material is installed.
The five most common draw rejections
- Math does not reconcile. The G702 cover total does not match the sum of column G on the G703. Almost always a copy-paste error from a prior draw.
- Line item billed beyond actual work. Framing is billed at 80% but the photo shows roof trusses are not yet up. The lender’s inspector flags this on the site walk.
- Missing lien waivers. A vendor billed on the prior draw has no unconditional waiver in the current package. Most lenders refuse to release new funds until prior-period waivers are squared away.
- Stored materials without support. Materials billed but no photo, no invoice, or no insurance evidence in the package.
- Wrong retainage held. The contract specifies ten percent, the draw shows five percent. Common when the schedule template was reused from a prior project with different terms.
What good draw discipline looks like
On a well-run residential build at the scale of the seed project we use in our product (1,784 SF, $430,250 contract value), a draw should take an afternoon to assemble and an afternoon for the lender to approve. Anything longer is a sign the schedule of values, the photos, or the waivers are out of sync with each other. The fix is process discipline: the same line-item structure across every draw on a project, photos taken weekly so they exist when the draw is assembled, and waivers issued at the same moment as the invoice rather than chased afterward.
Software helps when it enforces the cross-references automatically. A draw package whose line totals are derived from the underlying transactions, whose waivers are generated from those line items, and whose photo links are stamped with a project location and date is much harder to assemble incorrectly than the same package built from a workbook.