How draws actually work
A construction loan doesn’t fund at once. Money is released in stages against work completed. You request a draw, an inspector verifies percent complete, the lender releases funds, and you pay subs. Repeat until the house is finished.
The mechanic is sound. The problem is turnaround. A draw process that takes weeks instead of days means subs waiting on money, and subs who wait go work for someone else. That shows up as schedule slippage, which shows up as carrying cost.
Why the inspection step matters more than builders expect
Percent complete is determined by someone else’s assessment, not your invoice. Disagreements about whether a stage is finished are a common source of delay, and they’re worth anticipating: documenting completed work clearly, and knowing what a given lender’s inspector expects to see, removes a lot of friction.
The date that actually governs everything
Every construction loan has a maturity or a conversion date. That date, not the day the house is finished, is the real deadline. Everything else (whether a spec sells in time, whether a takeout is arranged, whether you have leverage), is measured against it.
The builders who get squeezed are almost never surprised by the maturity date. They just started thinking about it too close to it.
When a spec sits
A finished spec home that hasn’t sold as maturity approaches presents two options. Cut the price to force a sale, or bridge the property and let it sell on its own timeline. Which is better is arithmetic, carrying cost against bridge cost against the discount a forced sale requires, and it’s arithmetic worth running before the deadline, while both options are still open.
Waiting removes the second option and makes the first one more expensive.
The small multifamily gap
Duplex-to-fourplex infill and small build-to-rent projects fall in a genuine gap: too small for a bank’s commercial desk to bother with, and too unusual (ground-up, multiple doors), for a typical rental lender’s box. Developers in this range often assume no one will look at the deal. It’s a real gap, not a reflection of the project.
What this does not cover
A home you intend to live in. Builder financing is business-purpose lending on a build that will be sold or rented, so acting as your own general contractor on your own house is not eligible for this program. That is an owner-occupied construction loan and a different conversation. Worth establishing before you pull the permit rather than after.