Construction Draws in 2026: Lender Draw Fees, FHA's $350 Cap and Lien Waiver Statutes in 7 States

What a draw is and why the lender controls it

A construction or heavy-rehab loan does not put the whole budget in your account. The lender funds the first piece at closing (the lot or the purchase) and keeps the rest as a holdback. Redwood Trust's 10-K defines the term for its bridge loans: holdbacks “represent amounts withheld from the initial loan proceeds and are subsequently disbursed to the borrower to be used in the construction, rehabilitation or purchase of the mortgaged property or to fund interest on the bridge loan.” Each release is a draw. You pay interest only on what has been drawn, which is why the draw schedule changes your carrying cost, and an inspector or a photo review gates each release. For the loan terms themselves (leverage, rates, term) see our page on ground-up construction loans; for the owner-occupant version see construction-to-permanent loans. This page covers what those pages leave out: what each draw costs, how long it takes and what paperwork the contractors must sign.

What lenders publish about draws

Draw terms sit in lenders' FAQ and blog pages rather than in rate sheets, and they are claims, not records of funded loans. We read eight on November 12, 2026 and saved each page that day.

Draw terms as published by eight lenders, read November 12, 2026

Three readings follow. First, the only published per-draw dollar figure we found from a lender is Ledger's $350 draw fee; the typical $150 to $350 inspection is Ledger's own range, not a fee schedule. Second, the free-draw offers are limited: Pimlico Capital says about four and then a flat fee it does not print, so the count of draws in your plan matters as much as the price. Third, speed is claimed in hours by lenders that review in-house and in business days by lenders that send an inspector; a draw cannot be faster than your contractor's paperwork. Ask each lender for its fee schedule in writing, because a number that is not on the page is a number you will meet at the closing table.

What public lenders' SEC filings say about holdbacks and draws

Two public companies that lend to investors describe the mechanics in their filings, which is a harder source than a marketing page.

• Redwood Trust (CIK 930236), Form 10-K for 2025, accession 0000930236-26-000007. It reports “commitments to fund up to $258 million of additional advances on existing residential investor bridge loans,” $92 million of it on loans in securitizations co-sponsored by one of its joint ventures. Its 2025 fundings of investor bridge loans include, in the filing's words, “$126 million of construction draws,” $88 million of them on loans sold to joint ventures, and its balance sheet carries $2,253 thousand of bridge loan holdbacks ($2,148 thousand a year earlier). The 10-K also says its platform “may utilize third-party inspectors in connection with funding advances,” who “may be required to certify a borrower's eligibility for advances based on the achievement of construction milestones.” The filing adds that the commitments are generally subject to loan covenants and “other terms regarding advances that must be met before we fund the commitment”: a draw is a conditional promise, not a deposit.
• Velocity Financial (CIK 1692376), Form 10-K for 2025, accession 0001193125-26-102677, and Form 10-Q for the quarter ended September 30, 2026, accession 0001193125-26-450404. The 10-K says that in June 2018 it added “a second short-term, interest-only loan product which allows borrower draws for rehabbing residential rental property.” Its majority-owned Century unit originated a $25.9 million government-backed construction loan in September 2025 whose unfunded portion was $22.0 million at December 31, 2025 and $8.6 million at September 30, 2026, so about $17.3 million had been funded or sold by then (our arithmetic). The filings do not give Velocity's per-draw fees or inspection rules for investor loans.

The filings of Rithm Capital (Genesis Capital), Ready Capital and Broadmark were not read for this page and are not scored.

The federal benchmark: FHA 203(k)

FHA's rehabilitation loan is the only program whose draw rules are published as rules. It is for owner-occupants, so it is a benchmark rather than a tool for an investor, but its numbers show what a conservative draw process looks like. Mortgagee Letter 2026-06 (June 23, 2026) and HUD Handbook 4000.1 say:

FHA 203(k) draw rules, read November 12, 2026

On an $80,000 draw, the 10 percent holdback is $8,000 held until the end (our arithmetic). The letter says its changes will be written into a forthcoming update of the Handbook, so the Handbook text we read may lag the letter; check both before relying on a figure.

Lien waiver statutes in seven states

A lien waiver is the contractor's or supplier's signed statement that it has been paid and gives up its mechanic's lien for that amount. Lenders ask for them with every draw: Ledger's draw checklist lists “Conditional lien waivers for this draw” from the contractor and every sub and supplier paid out of it, and “Unconditional lien waivers for the prior draw.” A conditional waiver takes effect when payment clears; an unconditional one takes effect when signed, so signing one before the money arrives gives the right up for nothing. Some states fix the wording by statute. We read the statute text in the states below on November 12, 2026.

State statutes that prescribe lien waiver forms (seven states read)

What this means for a draw. In California, Texas, Arizona and Nevada, a lender or owner who accepts a home-made waiver may be holding a document the statute treats as unenforceable, which is why lenders in those states use the statutory forms. In Georgia, Florida and Wyoming the form is more flexible or more limited, and in states not in this table the waiver is whatever the draw agreement says. This is not a 50-state census: we saved the seven states above and Missouri, and we could not retrieve the legislature pages for Michigan, Mississippi, Utah or Massachusetts on November 12, 2026, so they are not scored. The Texas and Nevada texts come from public.law mirrors of the legislature's text (access dates in May 2025) because the legislature pages are script-rendered; Georgia's is a FindLaw copy. Check the current section before relying on a clause, and talk to a lawyer licensed in your state: this is analysis of public documents, not legal advice.

A $400,000 build in five draws (our arithmetic)

We use Ledger because it is the lender in our sample that prints both a draw fee and a sample rate. Assumptions: a $400,000 construction budget (land bought separately), released in five draws on a 10-month build, interest only on the drawn balance at 11%, which is the rate in Ledger's own sample schedule, not a quote. Each draw is funded at the start of its month and sits for two months.

Five draws on a $400,000 budget, interest at 11% on the drawn balance (our arithmetic)

Add Ledger's published draw fee of $350 per draw ($1,750 for five) and a typical $150 to $350 status inspection per draw ($750 to $1,750), and the draw cost is $2,500 to $3,500. Interest plus fees come to $25,233 to $26,233. If the lender had funded the whole $400,000 on day one, interest for 10 months at 11% would be $36,667, so staging the money saves $13,933 of interest (our arithmetic). A two-month overrun at the full $400,000 balance adds $7,333 of interest, so the lender's extension terms matter more than the exact draw fee. Ledger's page also says its holdback is usually 5-10% of each draw; on the $80,000 draws above that is $4,000 to $8,000 each, released at the end, which you must be able to finance until then.

What a reader can do with this

1. Ask for the draw fee schedule in writing before you pick a lender. Seven of the eight lenders we read print no dollar draw fee. Ask for the draw fee, the inspection fee, the wire fee, the number of draws included and the holdback percentage.
2. Plan fewer, larger draws. Each Ledger draw costs $350 plus inspection; ten draws instead of five would add $2,500 to $3,500 on our example (our arithmetic).
3. Check your state's form before the first draw. If you build in California, Texas, Arizona or Nevada, ask your contractor and every subcontractor to use the statutory conditional form for each draw and the unconditional form for the prior draw once the payment has cleared.
4. Sign only the conditional form until the money is in your contractor's account. An unconditional waiver in Texas may not be required unless the payment was received (Property Code 53.283).
5. Keep a reserve for the holdback. If a lender keeps 5 to 10 percent of every draw until the end, your contractor carries that cash for months.

If you are comparing lenders for a ground-up build or a heavy rehab, the box below lists three that publish their terms. Compare their draw rules against the table above, and see our fix-and-flip lender comparison and the ADU construction loan page for the other loan types.

FAQ

Sources, all read November 12, 2026: lender pages of Ledger, Pimlico Capital, Cetan Funds, Lima One Capital, Sound Capital, Backflip, AHL and RCN Capital; Redwood Trust Form 10-K for 2025 (accession 0000930236-26-000007); Velocity Financial Form 10-K for 2025 (accession 0001193125-26-102677) and Form 10-Q for September 30, 2026 (accession 0001193125-26-450404); HUD Mortgagee Letter 2026-06 (June 23, 2026) and HUD Handbook 4000.1; California Civil Code 8132, 8134, 8136 and 8138; Texas Property Code 53.281 to 53.284 (public.law copy); Arizona A.R.S. 33-1008; Nevada NRS 108.2457 (public.law copy); Georgia O.C.G.A. 44-14-366 (FindLaw copy); Florida Statutes 713.20; Wyoming W.S. 29-10-101; Missouri RSMo 429.005. This is analysis of public documents, not investment, legal or tax advice.