How Construction Draw Schedules Work

Paying for Your Build the Right Way

A draw schedule is the payment plan for a construction project. Instead of paying a lump sum upfront or at the end, payments are broken into installments that are released as specific construction milestones are completed. It protects both the homeowner and the contractor by tying money to actual progress.

How a Typical Draw Schedule Works

Every draw schedule is a little different, but for a new custom home build in Central Florida, here is a common structure:

1. Deposit (5 to 10% of contract) - Due at contract signing
2. Foundation complete (10 to 15%) - Slab poured and inspected
3. Framing complete (15 to 20%) - Walls up, roof trusses set, dried in
4. Rough-ins complete (10 to 15%) - Plumbing, electrical, and HVAC installed and inspected
5. Drywall complete (10%) - Drywall hung, taped, and finished
6. Interior finishes (15 to 20%) - Cabinets, countertops, flooring, and paint
7. Final completion (10 to 15%) - All work done, inspections passed, Certificate of Occupancy issued

The exact percentages and milestones vary by contract. Some draw schedules have five draws, others have eight or more. The important thing is that each payment is tied to verified, completed work.

How Draws Get Released

If You Are Paying Cash

You and your contractor agree on the milestones. When a milestone is complete, the contractor notifies you. You inspect the work (or have an independent inspector check it), and then you release the payment.

If You Have a Construction Loan

The process involves your lender. When a draw is due, the contractor submits a draw request to the bank. The bank sends an inspector to the property to verify the work is complete. Once the bank confirms the milestone is met, they release the funds to the contractor.

This extra layer of verification from the bank protects your investment. The bank has a financial interest in making sure work is actually done before they release money.

Why Draw Schedules Protect You

Without a draw schedule, you are exposed. If you pay a large percentage upfront and the contractor walks away or goes bankrupt, you have already lost that money. Recovering it is a legal battle that takes months or years.

A draw schedule means:

• You never pay for work that has not been done
• The contractor has financial motivation to keep hitting milestones
• There is a natural checkpoint at each phase to review quality
• Your exposure is limited to the current draw amount, not the full contract value

Red Flags in Draw Schedules

Watch out for these:

• Front-loaded schedules where more than 50% of the total is due before the house is framed. That gives the contractor too much of your money too early.
• No milestone verification. If the contractor just invoices you without any requirement for you to confirm the work is complete, that is a problem.
• A huge final payment that is too small. If only 5% is held back for the final draw, the contractor has little incentive to come back and finish the punch list.
• No connection to inspections. Draws should align with inspection milestones whenever possible, because inspections independently verify that work meets code.

What to Look For in a Good Draw Schedule

• Payments should be roughly proportional to the value of work completed at each phase
• Each milestone should be clearly defined so there is no argument about whether it has been met
• The schedule should hold back at least 10% for the final draw after all work is complete, inspections are passed, and the Certificate of Occupancy is issued
• The contract should state what happens if work stalls (your right to withhold payment, default provisions, etc.)

Protecting Yourself Further

In addition to your draw schedule, consider these steps:

• Request lien waivers from subcontractors and suppliers with each draw. This protects you from liens on your property if the GC does not pay their subs.
• Document each milestone with photos and notes before releasing payment
• Have your attorney review the draw schedule as part of the overall contract review

The Bottom Line

A draw schedule is one of the most important parts of your construction contract. It keeps the money flowing in step with the work and gives both sides clear expectations. If a contractor pushes back on using a draw schedule or wants payment terms that feel off, that is a red flag.

At J&N StructureWorks, every project uses a clear, milestone-based draw schedule. You always know when payments are due and exactly what you are paying for. Reach out to us to learn more about how we structure our projects.