What is a draw schedule?

Milestone schedules and line-item schedules.

Draw schedules come in two basic shapes.

A milestone schedule releases a set percentage of the loan when a defined stage is complete: foundation, framing, dry-in, rough mechanicals, finishes, final. It is simple to administer and easy for a builder to plan around. Its weakness is coarseness: a stage is either done or it is not, and partial progress is hard to fund fairly.

A line-item schedule funds against percent complete of each budget line. The inspector reports, for example, framing at 80 percent and roofing at 40 percent, and the lender advances the corresponding share of those lines, less retainage. It gives finer control and matches the way commercial pay applications already work, at the cost of more detailed inspection and review.

Many residential lenders blend the two: milestone draws for the big structural stages, line-item funding for the long tail of finishes.

What the schedule has to respect.

The schedule lives inside constraints the lender does not fully control. The construction period in the note sets the outer boundary; Fannie Mae's single-closing construction-to-permanent rules, for example, cap it at 18 months. The approved budget sets the total. Retainage and contingency rules decide how much of any stage can be released. The inspection policy decides what evidence is required before a stage counts as done.

Why it matters for lenders.

The draw schedule is where underwriting assumptions meet construction reality. A schedule that front-loads funds, or that lets a builder draw on materials not yet delivered, moves risk onto the lender early. Federal rules require each insured institution to keep a written real estate lending policy with prudent underwriting and administration standards (12 CFR § 365.2), and the interagency guidelines in Appendix A to Part 365 expect construction disbursements to be tied to actual progress. The OCC's handbook names site inspections and budget monitoring as the controls. A schedule written to that standard, and inspected to it, is what makes the file defensible.

How RAZE handles it.

RAZE works from the lender's schedule, whichever shape it takes. The required photos, observations and completion fields for each stage are configured in the Ordering Engine, captured in the Mobile App, and reported by line item so reviewers can read progress against the schedule rather than against the builder's description of it. The draw inspections page shows the full order-to-report workflow.