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Straight answers on construction draw inspections.
Short, sourced answers for construction lenders, loan administrators and inspectors, with the answer in the first sixty words of every page.
12 answers, grouped by topic
Draw inspection basics.
What a draw inspection is, how it differs from other property evaluations, and the vocabulary of draw schedules and requests.
How many draws are in a construction loan?
There is no fixed number. Residential construction loans commonly use somewhere between four and seven milestone draws, renovation programs often cap draws at five, and commercial projects typically draw monthly against a pay application. The loan agreement and the lender's policy set the schedule, not the borrower or the builder.
Read the answerIs a draw inspection the same as an appraisal?
No. An appraisal is a licensed opinion of value. A draw inspection is a verification of construction progress at a point in time. A construction loan usually needs both: the appraisal sets the as-completed value the loan is sized against, and draw inspections confirm that each funded stage of work is actually in place.
Read the answerWhat is a construction draw inspection?
A construction draw inspection is a site visit, ordered by the lender, that verifies how much of the work claimed in a draw request has actually been completed. The inspector photographs the property, records percent complete by budget line item, and submits a report the lender uses to decide how much funding to release.
Read the answerWhat is a draw request?
A draw request is the borrower's or builder's formal application for a portion of construction loan funds, itemized against the approved budget and supported by evidence of progress. The lender reviews it, usually orders a draw inspection to verify the claimed work, and then funds all, part or none of the amount.
Read the answerWhat is a draw schedule?
A draw schedule is the pre-agreed plan that divides a construction loan into stages and says when funds are released as each stage is completed. It is set in the loan agreement, tied to the approved budget, and it tells the builder when to request money and the lender when to inspect.
Read the answerWhat is a progress inspection on a construction loan?
A progress inspection is a site visit that documents how far construction has advanced against the approved budget and schedule. When it is tied to a specific funding request it is called a draw inspection. Lenders also order progress inspections on a calendar, between draws, to catch stalled projects and keep the record current.
Read the answerWhat is the difference between a draw inspection and a final inspection?
A draw inspection happens during construction and supports one funding request. A final inspection happens at completion and confirms the project is finished before the last draw is released. Neither is a municipal code inspection or a certificate of occupancy, and neither should be treated as one.
Read the answerWhat is the difference between a draw inspection and a home inspection?
A draw inspection verifies construction progress so a lender can fund a draw request. A home inspection evaluates the condition and function of a finished home for a buyer or owner. The draw inspector reports percent complete against the budget; the home inspector reports defects in systems and components. Different client, different question, different report.
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Cost and pricing.
What draw inspections cost, who pays, how fees flow through closing, and why prices differ between vendors.
Can draw inspection fees be included in closing costs?
Often, yes. Draw inspection fees may be incorporated into closing costs, subject to lender policy and applicable requirements. For consumer-purpose construction loans the fee is a loan cost that has to be disclosed under Regulation Z, and how it is shown depends on whether it is collected at closing or later. Business-purpose loans follow the loan documents.
Read the answerHow much does a residential draw inspection cost?
A standard residential draw inspection typically costs $100 to $300 per site visit in the U.S., and rural or rush inspections often cost more. RAZE charges one flat $125 per single-family inspection at any U.S. address when RAZE sends the inspector, or $25 per request when your own inspector does the work.
Read the answerWho pays for a draw inspection?
The lender orders the draw inspection, and the borrower usually bears the cost as an expense of the construction loan. How it is collected varies: it may be incorporated into closing costs, netted from draw proceeds, or billed per inspection, subject to lender policy and applicable requirements. The loan agreement and fee schedule control.
Read the answerWhy do draw inspection prices vary by vendor?
Draw inspection prices vary because vendors are selling different amounts of work under the same name. Travel distance, the number of required photos and line items, quality review before delivery, turnaround expectations, inspector qualifications and the coordination overhead all move the price. Two quotes are only comparable once the scope is the same.
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