Almost every client who builds with us has the same blind spot. They spend months on the floor plan, the lot, the finishes — and about ten minutes thinking about how the money actually moves from the bank to the framer. Then the first draw request goes in, the bank asks for a lien waiver nobody prepared, and the schedule slips two weeks over paperwork.

We’ve built more than 400 homes across Salt Lake, Summit, Wasatch, Utah, and Davis counties, on projects from $1.5M to $20M. Financing mechanics cause more avoidable delays than weather, permits, or material lead times. So here’s the honest, unglamorous explanation of the custom home construction loan draw process — what it is, who does what, where it breaks, and how to keep your build moving.

What a construction loan actually is

A construction loan is not a mortgage. A mortgage hands over a lump sum at closing. A construction loan is a line of credit the bank releases in pieces — draws — as the house physically gets built. You only pay interest on what has been drawn, which is why your payments start small and climb through the build.

Most Utah luxury builds use one of two structures:

• Construction-to-permanent (one-time close): one closing, one set of fees. The loan converts to a standard mortgage at completion. Cleaner, cheaper, and what we recommend for most clients.
• Standalone construction loan: a short-term loan (typically 12–18 months) that you refinance into a mortgage at the end. Two closings, two sets of costs, and re-qualification risk if rates or your income change mid-build. It occasionally makes sense — usually when a buyer plans to sell another property to pay it off outright.

Either way, the bank is not funding a house. It is funding verified progress toward a house. Everything about the draw process follows from that one sentence.

The draw schedule: the document that runs your build

Before a single shovel moves, the lender, the builder, and you agree on a draw schedule — a line-item breakdown of the total cost tied to construction milestones. On a high-end custom build, expect somewhere between six and twelve draws. A typical structure looks like this:

• Draw 1 — Site work and foundation: excavation, footings, foundation walls, waterproofing, backfill
• Draw 2 — Framing: floor systems, walls, roof structure, sheathing
• Draw 3 — Dry-in: roofing, windows, exterior doors, house wrap
• Draw 4 — Rough mechanicals: plumbing, electrical, HVAC rough-ins, inspections passed
• Draw 5 — Insulation and drywall
• Draw 6 — Exterior: stone, stucco, siding, soffit and fascia
• Draw 7 — Interior finishes: cabinetry, trim, tile, countertops, flooring
• Draw 8 — Mechanical trim, paint, fixtures
• Final draw — Punch list, final inspections, certificate of occupancy

Two details in that schedule matter more than the milestones themselves.

First: retainage. Most lenders hold back 5–10% of each draw until the project is complete and lien waivers are in hand. If your schedule doesn’t account for retainage, your subs are effectively financing your build — and good subs in this market won’t do that for long.

Second: front-loading. Site work is the single most unpredictable line item in Utah. On a steep Summit County lot with rock, a foundation package can run several times what the same house costs on flat ground in Davis County. If the draw schedule assumes a friendly site and your site isn’t friendly, you are short on cash in month two of an eighteen-month project. That’s why we push clients to nail down site costs and soils reports before the schedule gets locked. If you’re still at the estimating stage, our custom home cost calculator will get you a realistic per-square-foot range to build the schedule around.

How a single draw actually happens

Here is the sequence, step by step, the way it plays out on a real Ensign project:

1. Work gets completed. Not started — completed, to the milestone described in the schedule.
2. We assemble the draw request. Sworn statement of costs, invoices from every sub and supplier in that phase, updated lien waivers, and photo documentation.
3. We submit to the lender. Usually through a portal, sometimes by email to a construction loan administrator.
4. The bank orders an inspection. A third-party inspector visits the site and reports percent complete against the schedule.
5. The title company updates the title search. They confirm no mechanic’s liens have been filed since the last draw.
6. Funds release. The bank wires to the builder, or in some cases directly to subs and suppliers.
7. We pay the trades and collect the next round of lien waivers, which become part of the next draw package.

Realistic timing: 7 to 14 business days from submission to funding on most Utah lenders. Some regional banks turn it around in five. A few national lenders with centralized construction departments take three weeks. Ask about turnaround time before you choose a lender — it affects your schedule more than a quarter point on the rate does.

Lien waivers, and why we’re annoying about them

In Utah, a contractor, subcontractor, or supplier who doesn’t get paid can file a mechanic’s lien against your property. Under Utah’s construction lien statute, that right is real and the deadlines are short. Once a lien is on title, your lender stops funding — full stop — until it’s resolved.

A lien waiver is a signed document from each trade confirming they’ve been paid for work through a specific date and are releasing their lien rights for it. Collecting them from 30+ trades on a large build is administrative grind work, and it is exactly the sort of thing that quietly falls apart on an under-managed job site. We treat waiver collection as a hard gate: no waiver, no place in the next draw package. It makes us unpopular for about a week with new subs and it has never once cost a client a funding delay.

Where draws go wrong — and the fix

The gap between work and money. Subs expect payment on their terms, not the bank’s. If framing wraps on the 3rd and funding lands on the 17th, someone covers the gap. On our projects, that’s us — we carry it. Ask any builder you interview point-blank: do you float the draw gap, or do my subs wait? The answer tells you a lot about their balance sheet.

Inspection disagreements. The bank inspector says framing is 85% complete; your schedule needs 100% to release the draw. Usually it’s a documentation problem, not a construction problem. Detailed progress photos submitted with the request head most of this off.

Change orders that outrun the loan. This is the big one. Your loan was underwritten against a specific budget. Add $180,000 of change orders in month six and the bank does not automatically add $180,000 of capacity. You either fund the overage in cash or go through a loan modification, which means re-appraisal and delay. Decide changes early, in design, where they cost a fraction as much.

The appraisal gap. Construction loans are underwritten on the appraised value of the finished home. If the appraisal comes in below cost, the bank lends against the lower number and you cover the difference. This shows up most on highly customized homes — a $600,000 great-room glass package doesn’t appraise for $600,000 anywhere in the valley.

Interest reserve running dry. Many loans include an interest reserve that pays your construction-period interest out of loan proceeds. It’s sized on an assumed timeline. Run six months long and the reserve empties, and interest payments come out of pocket while you’re also paying for finishes.

What we handle vs. what you handle

Clients are consistently surprised by how much of this lands on the builder. On an Ensign build:

• We handle: the draw schedule build-out with your lender, all draw request packages, sworn statements, invoice and waiver collection, inspection coordination, sub payment, and the float between milestone and funding.
• You handle: loan qualification and closing, signing off on draw requests, funding change orders outside loan capacity, and your monthly interest payments.

What you should never be doing is chasing a plumber for a lien waiver on a Friday afternoon.

Questions to ask your lender before you sign

• How many draws does the schedule allow, and is there a fee per draw?
• What’s your average turnaround from complete request to wired funds?
• How much retainage do you hold, and when is it released?
• Is there an interest reserve, and what timeline is it sized for?
• What’s the process if a change order pushes us past the approved budget?
• Do you fund the builder or pay subs directly?
• What happens if we exceed the loan term?

A lender who answers those crisply is a lender who has done custom construction before. A lender who has to go ask someone is a lender who will cost you three weeks in month four.

The short version

Construction financing isn’t complicated, but it is unforgiving of vagueness. A well-built draw schedule, honest site-cost numbers, disciplined lien waiver collection, and a builder who floats the gap between work and funding — that’s the whole game. Get those four right and the money side of your build becomes invisible, which is exactly what it should be.

If you’re mapping out a build in Salt Lake, Summit, Wasatch, Utah, or Davis county and want a straight conversation about budget and financing structure before you talk to a bank, get in touch with our team. We’ll tell you what your project actually costs, and what your draw schedule needs to look like to support it.