Do all construction loans require draw inspections?

Where the requirement comes from.

For banks, the rule is the lender's own. The FDIC's construction and land development examination procedures do not say that every loan must be inspected. They ask whether funds are advanced on a prearranged disbursement plan and released only after management reviews written inspection reports, lien searches and title updates, and whether inspections happen on an irregular schedule and before draw requests. A written inspection report is the record examiners look for. See how examiners review construction loan monitoring.

For federally insured credit unions the rule is written down. 12 CFR 723.6 requires a credit union that makes commercial construction and development loans to have a policy under which funds are released only after on-site inspections, documented in a written report by qualified personnel representing the credit union's interest, certifying that the requisitioned work is complete and the remaining funds can finish the project. The NCUA's examiner's guide adds that a qualified inspector should visit the project before each disbursement, and that the credit union should not rely on the inspector alone.

Program loans set their own terms.

• FHA 203(k). On a Standard 203(k), HUD's Handbook 4000.1 requires a 203(k) Consultant, who inspects before each draw. On a Limited 203(k), Mortgagee Letter 2026-06 (June 23, 2026) allows up to four draw requests per contractor and says the lender is not required to inspect the completed work but may, and may charge the borrower for a limited number of third-party inspections. See who performs draw inspections on a 203(k) loan.
• Fannie Mae HomeStyle Renovation. The lender must obtain periodic inspections confirming the work matches the plans before it releases later escrow draws. See how HomeStyle draws work.
• Small renovation loans. Where no program rule applies, a lender's policy may accept invoices, photographs or the borrower's own capture for small draws. That is a self-inspection draw, a fulfillment choice inside a controlled workflow rather than an exemption from the policy, and most programs keep an independent visit in reserve for the first draw, the final draw and any draw the photos do not support. A remote draw inspection works the same way.

Why it matters for lenders.

"Required" is a question the policy should answer in writing: which loans get an independent inspection before each draw, which may use self-capture or invoices, and what triggers a visit off cycle. How often is its own question, covered in how often draw inspections are required. The FDIC working paper by Heitz, Martin and Ufier found that loans with more on-site inspections were less likely to default; see whether draw inspections reduce construction loan defaults.

How RAZE handles it.

RAZE documents the work; the lender's policy decides which loans get inspected and what funds. Every order goes through the Ordering Engine: to a RAZE Marketplace inspector at any U.S. address, to the lender's own inspector through Direct Request, or as a self-inspection the borrower or builder completes in the RAZE Mobile App. Each path returns the same report, with percent complete by draw sheet line and GPS coordinates and date and time stamps on every photo, so the file reads the same whichever path the policy chose. RAZE does not approve or fund draws.