Ground-Up Construction Financing: How Draw Schedules Actually Work (2026 Guide)

You found the lot. You have the plans. You know what the finished property is worth. But before a single nail goes in, you need to understand the one mechanism that controls every dollar of your construction loan: the draw schedule.

Most real estate investors and spec builders know they need construction financing, but far fewer understand how funds actually flow from lender to project. If you are planning a ground-up build in Florida, Texas, Georgia, or South Carolina in 2026, this guide breaks down exactly what to expect — and how to position yourself to get funded fast.

Ready to start the process? Apply in 2 minutes at slatefinancial.io/apply.

What Is a Construction Loan Draw Schedule?

A draw schedule is a predetermined release plan that dictates when and how much of your construction loan gets disbursed to you throughout the build. Instead of handing you the full loan amount on day one, the lender releases funds in stages — called draws — tied to verifiable milestones in construction.

This protects both parties. The lender limits its exposure at any given moment. You, the borrower, have a clear roadmap that keeps your GC and subcontractors paid on time.

Think of it like this: you borrowed $800,000 to build a $1.2M spec home in Tampa. You do not get $800k deposited into your account at closing. Instead, you might receive $120,000 at the start, another $180,000 after foundation and framing are complete, and so on until the last draw fires when the certificate of occupancy is issued.

The 5 Most Common Construction Draw Milestones

While every lender structures draws slightly differently, the following milestones appear in the vast majority of ground-up construction loan agreements in 2026:

1. Initial Draw (At Closing or Mobilization)

Typically 10-15% of the total loan. This covers site prep, permits, mobilization costs, and initial material deposits. Some lenders disburse this at loan closing; others release it only after the first site inspection confirms work has begun.

2. Foundation Complete

Once the foundation is poured and cured, you request draw number two — usually 15-20% of the loan. An inspector (hired by the lender) visits the site, confirms the milestone, and the lender releases funds. Most lenders allow draws to be requested within 5-10 business days of milestone completion.

3. Framing and Rough-In Complete

This is often the largest single draw — 25-30% of the loan amount. The structure is standing, the roof is on, and rough mechanical, electrical, and plumbing work is done. The lender sends an inspector before releasing funds. Do not skip your own pre-inspection walkthrough before requesting this draw — surprises delay funding.

4. Drywall and Interior Rough Work

At this stage — roughly 60-70% of the way through construction — you are eligible for another 20% release. Windows are in, HVAC is rough-set, and drywall is hung. This is where most builders hit cash flow crunches if the earlier draws ran thin, so accurate budgeting matters.

5. Certificate of Occupancy (Final Draw)

The last 10-15% releases when the municipality issues the certificate of occupancy. This is your exit milestone. At this point, most builders either sell the property or refinance into a permanent hold loan. Funding is subject to lender approval at each milestone.

How Inspections Work (and Why They Slow You Down)

Every draw trigger requires a lender inspection. Here is the reality most first-time builders do not anticipate: inspections take time.

After you submit a draw request, the lender schedules a third-party inspector. In hot markets like Jacksonville, Austin, or Atlanta, that inspector may be booked 5-10 business days out. Then the lender has its own review period before wiring funds. Total lag: 10-21 days per draw in many cases.

The practical implication is that your GC cannot wait for the draw to start the next phase. You need to either:

• Build a cash buffer that covers 3-4 weeks of labor between draws
• Structure your GC contract with payment terms that align with draw timing
• Choose a lender with faster inspection turnaround — typically private hard money or bridge construction lenders

At Slate Financial, we connect builders with lenders who understand the urgency of draw timing. Start your application at slatefinancial.io/apply and we will match you with lenders who move fast.

Interest Reserves: The Hidden Carry Cost

Most construction loans are interest-only during the build phase, and you only pay interest on the drawn balance — not the full committed amount. That sounds great, but many borrowers forget to budget for interest reserves.

An interest reserve is a portion of the loan set aside (sometimes upfront, sometimes funded as draws proceed) to cover your monthly interest payments automatically. If your lender structures an interest reserve, those payments come out of the loan itself. No monthly out-of-pocket during the build. This can be a major cash flow advantage, especially on longer projects running 10-14 months.

Not every lender offers interest reserves. When evaluating construction loan offers, ask directly: do you fund an interest reserve, and if so, how is it capitalized?

Ground-Up Construction Loan Requirements in 2026

Lender requirements vary, but here is what most ground-up construction lenders in Florida, Texas, Georgia, and South Carolina are looking at this year:

• Experience: At least 1-2 prior completed builds (some lenders accept first-timers with a strong GC and experienced borrower partnership)
• Loan-to-Cost (LTC): Most lenders fund 75-85% of total project costs (land + construction)
• Loan-to-ARV: Lenders cap exposure at 65-70% of after-repair value
• Credit Score: 640+ for most private lenders, 680+ for institutional programs (some bridge/hard money lenders go lower for experienced builders)
• Liquidity: 10-15% of the loan amount in post-close reserves
• Appraisal: Most lenders require a subject-to appraisal confirming the ARV before funding

All funding is subject to lender approval and individual underwriting criteria. We cannot guarantee approval or specific loan terms — but we can put your file in front of lenders who specialize in your project type and geography.

Construction-to-Perm vs. Stand-Alone Construction Loan

Two structures dominate ground-up financing in 2026:

Stand-alone construction loan: A short-term instrument (12-24 months) that covers the build only. At completion, you either sell or refinance into permanent financing. This is what most spec builders use because it gives flexibility on the exit.

Construction-to-perm (C2P): One loan that automatically converts to a 30-year mortgage at project completion. This is more common for owner-occupied builds where the borrower plans to live in the home. It reduces closing costs by eliminating the refinance, but ties you to one lender’s permanent terms upfront.

For spec builders and investors, the stand-alone construction loan is typically the better tool. It preserves your optionality — sell at top of market, 1031 exchange, or refi into a DSCR rental loan depending on what the market does by the time you get your CO.

How to Get Funded Faster

The builders who get funded fastest share three habits:

1. Submit complete packages. Permits, plans, survey, contractor bids, and your own experience resume ready before you apply. Incomplete files get deprioritized.
2. Use a broker who knows construction lenders. Not every commercial lender does ground-up. A broker who specializes in construction finance has lender relationships that cut weeks off your timeline.
3. Understand draw mechanics before you sign. Ask your lender for the full draw schedule, inspection vendor, and average funding lag at close — not after.

Ready to Fund Your Next Ground-Up Build?

Whether you are building a single-family spec home in Orlando, a small multifamily in Houston, or a custom build in Savannah, the right construction lender makes the difference between a project that runs smoothly and one that stalls at every draw.

Slate Financial works with ground-up construction lenders across Florida, Texas, Georgia, and South Carolina. We match your project to the right lender based on your experience, project type, and timeline — not a generic algorithm.

All funding is subject to lender approval. No guaranteed terms or outcomes.

Ready to fund your next deal? Apply in 2 minutes at slatefinancial.io/apply — get matched with construction lenders who know your market.

Need Business Funding?

Slate Financial matches you with the best funding options. Apply in minutes.

Tags