Construction Loan Draw Schedule: How It Works

What is a draw schedule?

When you need financing to fix and flip a residential or commercial property, a construction draw schedule is a necessity. A draw schedule is an agreement between the lender and lendee about when money will be released to the contractor or construction company to complete the needed repairs.

Can I be my own contractor?

If you have previous experience with flipping and fixing properties and you’re planning to sell the property once the project is complete, you can be your own contractor. Otherwise, we recommend working with a knowledgeable and well-reviewed contractor to help you with your project.

How does a draw schedule work?

As stages of the project are finished, your contractor is allowed to take draws on completed work after an inspection by the lender. Typically, a schedule of values is created that will list the major stages of the project, the approximate cost to complete that stage, and the approximate percentage of that cost in relation to the total project cost.

How many draws can I take, and how much do they cost?

The number of draws taken varies from project to project and is influenced by the scope of work needing to be completed. Smaller projects may have fewer draws while larger projects may have more, but either way, the number of draws taken is agreed on by both the lender and lendee. Individual draws may cost between $75 and $125 depending on the location of the property.

How long does it take to receive a draw?

It takes between 2 and 3 days to receive a draw.

How soon can I sell the property, and is there a prepayment penalty?

Once your fix and flip project is complete, you can sell the residential or commercial property as soon as you’d like. Some loans inflict a prepayment penalty when a loan is paid back in full before the end of its term; however, there is no such penalty with a loan from Noble Mortgage.

What if it takes me longer than 12 months to sell the property?

Usually a property will sell before the 12-month mark after project completion, but in the event that it does not, you will need to pursue one of three options:

  1. Apply for a loan extension with Noble Mortgage.
  2. Refinance with another lender.
  3. Pay off Noble Mortgage’s loan.

Who can I ask if I have more questions about construction draw schedules?

Contact the lenders at Noble Mortgage for answers to all your questions about draw schedules. Interested in applying for a loan? We provide conventional and hard money loans for both residential and commercial properties in Texas. Get in touch today with our team to kick start your fix and flip project.



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