Construction loan: draws by stage

How the money is released

The lender advances funds in stages. Each advance follows a completed, verified step.

Usual stages

• Foundations poured
• Structure and roof closed in
• Plumbing, wiring and insulation installed
• Interior finishing complete
• Final acceptance and occupancy

The holdback

Part of each advance is held back. It protects against supplier claims.

Why lenders advance in stages

Money follows the value created. Each completed stage increases the lender’s security.

A single advance at the start would leave the lender under-secured.

What you must advance yourself

Your equity is spent first. The loan begins only after that.

So plan for cash during the first weeks on site.

Time between request and payment

Allow one to two weeks after the professional’s visit. Plan for it with your contractors.

Paying the contractors

Contractors often want payment before the lender advances funds.

Negotiate a payment schedule aligned with the advances.

Without that alignment, you will front large amounts yourself.