A construction draw is how your builder gets paid during the build. This guide explains who gets paid, when, how the request moves from your builder to the lender, and why it takes five business days from the photos to the money.
On a VA One-Time Close construction loan, the full loan amount is set at closing, but the construction money is not handed to the builder up front. It is held by the lender and released in pieces, called draws, as work is completed and verified. The builder requests a draw, documents the finished work with photos, the lender's inspection partner confirms it, and the lender wires the funds. Every draw is measured against the budget your loan closed on. That is the entire system. The rest of this page is the detail.
A construction draw is a release of loan funds to your builder for a specific set of completed work. Instead of receiving the construction budget as one lump sum, the builder is paid in stages as the home goes up: foundation, framing, roof, mechanicals, drywall, finishes, and so on. Each stage is a draw.
Draws exist to protect you. On a 100% financed loan, the lender is the one carrying the risk that a builder takes money and does not deliver. Paying only for verified, completed work means the money can never get ahead of the house. If a builder walked off a job tomorrow, the loan would have paid only for what is actually standing on the lot.
Only the builder is paid from draws, and only for work that is finished. The builder's profit is already built into the total construction cost, and they take it as each draw is funded, with one exception: the first draw goes entirely to labor and materials, with no profit pulled from it.
You do not receive any of the construction funds, and you should never pay the builder directly for work that is covered by the budget. If a builder asks you for money outside the loan for budgeted work, call us before you write a check.
We use a standard draw schedule calculated from your total construction cost and the build timeline your builder provides during pre-qualification. Your builder can follow our schedule or use their own, but theirs cannot exceed ours. They can request fewer draws than the schedule allows, never more. The rule underneath all of it is the same: the money cannot get ahead of the work.
The first draw is capped at 10% of the project cost, and it is released at closing so the builder can mobilize and start work right away. The builder typically has it about a week after the loan funds.
This is what actually happens between your builder saying "I am ready for a draw" and the money landing. Our construction coordinator runs this process with the builder so you do not have to.
About five business days from the time your builder uploads the photos. That is the number to plan around, and it is measured from the upload, not from the day the builder first asked for the draw.
Most delays happen before the upload, not after. The common ones: a draw form with blank deposit, materials, or labor selections; line items or amounts that do not match the closing budget; a builder who does not upload promptly once the link arrives; or photos that do not clearly show the work being claimed. Our coordinator's job is to catch the first two before the form is ever submitted and to chase the second two until the draw is funded. If the builder has not received funds five business days after the upload, we escalate with the lender directly.
Every draw on your loan is measured against one document: the construction budget your loan closed on. It lists each line item, the dollar amount, and who gets paid. When the builder requests a draw, the request has to line up with that budget. When the inspection partner reviews photos, it is checking that the work on the budget line is actually done.
This is why the budget has to be right before closing, and why we spend so much time on it with your builder up front. A budget that is loose or incomplete at closing produces draw problems for twelve months. A tight one makes every draw routine.
Read every draw request before you sign it. Not skim, read. Each request lists the line items, the amounts, and who is being paid, and your signature is your approval of all of it. Compare it to your copy of the closing budget. If a request asks for work you can see has not been done, or pulls from a line you did not expect, say so before you sign.
Here is why this matters. We see it far too often: a borrower signs every draw without looking, and at the end of the build finds out the entire contingency has been spent. They had no idea. They approved it, one signature at a time. The contingency is your money. Watch it leave.
Beyond reading and signing, you do not need to coordinate with the lender or the inspection partner. Our coordinator does that and copies you where it matters.
Every change order has to be approved by the lender's construction team before the work happens. That requirement is written into the VA addendum you and your builder sign before closing. It is not a formality. The lender approved a specific set of plans and specifications, and the appraiser valued the home based on them. At the end of construction, an appraisal reinspection confirms the home matches those plans. A change made without approval, even one that seems minor, can cause that reinspection to fail, and a failed reinspection stops the loan from modifying into its permanent phase. Call before you change anything.
The lender builds a contingency of 5% of the construction cost into the loan. It exists for cost overruns: if cabinets were budgeted at $30,000 and the real invoice is $40,000, the $10,000 difference comes from the contingency instead of your pocket. It can also be used, with the construction team's approval, to add back amenities that were trimmed to make the appraisal work, as long as the project is not running over elsewhere.
The contingency is not a slush fund for a builder who budgeted loosely. If none of it is used, it is removed from your loan amount when construction is complete and the loan is modified, which lowers what you owe.
When the certificate of occupancy is issued, the builder requests the final draw. The lender releases it with a flat $20,000 held back. If the builder is owed $100,000 at CO, $80,000 is released and $20,000 waits. The holdback is released when you sign the modification agreement, which happens after the appraisal reinspection confirms the home matches the approved plans.
The holdback protects you. If the builder changed the bedroom count, altered a bathroom layout, or deviated from what was approved, the reinspection catches it, and the builder has $20,000 of their own money riding on fixing it before you sign and the final funds are released.
Nothing catastrophic. There is no requalification at any point on a VA One-Time Close. The schedule is 11 months to build and one month to modify, and your builder signs a memorandum of understanding at project approval requiring them to tell us if they are falling behind. The real consequence of a long build is the interest reserve. It is sized to the months your builder stated, and if the build outlasts it, you make the interest payments until the home is complete. Read more in how the interest reserve works.
No. Construction interest is built into your loan as an interest reserve, placed in a subsidy account at closing, and drawn from automatically each month. You do not write a check during construction unless the reserve runs out. Not every lender handles it this way, and it is one of the first things to confirm with anyone offering you a construction loan.
Draws are one piece. The Land Owner roadmap and Non-Land Owner roadmap walk the whole loan from first builder conversation to first mortgage payment. The FAQ has the short answers. The Builder List shows builders already registered in the lender's construction program in your state.
If you own land or have it under contract and your builder has given you a realistic number, the next step is the application. We review your financials and VA eligibility, then schedule a consultation to go through your project.
Start My Pre-Qualification