Construction Loan Draw Calculator

Loan limit:

Available principal falls as construction advances, financed fees, and reserve-funded interest post.

Annual interest rate:

A single fixed rate applies to the funded opening balance between entered dates.

Interest day-count basis:

Each row accrues interest before that row's reserve, work, and fee advances post.

Opening date:

Draw dates must be on or after this date and remain in nondecreasing order.

Draw schedule:

Retainage is held back rather than counted as borrower cash. Financed fees consume loan availability.

Date	Milestone	Gross work	Retainage	Financed fee	Remove
{{ `Draw ${index + 1} date` }}	{{ `Draw ${index + 1} milestone` }}	{{ `Draw ${index + 1} gross work` }} $	{{ `Draw ${index + 1} retainage` }} %	{{ `Draw ${index + 1} financed fee` }} $

Interest reserve inside loan limit:

The neutral default is $0. Reserve-funded interest increases principal; uncovered interest becomes borrower cash.

Funding overview

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Funding order:

Planning estimate only; lender eligibility, posting, and rounding rules remain outside this model.

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Excludes variable rates, inspections, lien/title controls, payments or principal reductions, escrow, APR disclosures, taxes, insurance, permanent financing, and lender-specific posting or cent-rounding.

The chart renderer is unavailable. The same balance and availability values remain in the draw ledger.

Date / milestone	Days	Opening balance	Interest due	Reserve used	Gross work	Retainage held	Net work + fee	Loan funded	Ending balance	Borrower cash	Availability	Copy
{{ formatDate(row.date) }}{{ row.label }}	{{ row.elapsed_days }}	{{ formatCurrency(row.opening_balance) }}	{{ formatCurrency(row.interest_due) }}	{{ formatCurrency(row.reserve_used) }}	{{ formatCurrency(row.gross_work) }}	{{ formatCurrency(row.retainage_held) }}	{{ formatCurrency(row.net_work_and_fee) }}	{{ formatCurrency(row.loan_funded) }}	{{ formatCurrency(row.ending_balance) }}	{{ formatCurrency(row.borrower_cash_required) }}	{{ formatCurrency(row.loan_availability) }}

Construction lending releases money in stages because the completed property does not exist at closing. Each draw usually follows completed work, inspection, and lender approval. The balance therefore grows over time, and interest is charged on funded principal rather than automatically on the full loan limit from day one.

A useful draw plan connects four quantities that are often reviewed separately: the contractor's gross work request, retainage held back, fees financed into the loan, and interest accrued since the previous draw. Together they determine how much the lender can fund, how much of an interest reserve is consumed, and whether the borrower must bring cash.

Loan limit is the maximum funded balance in this estimate, not a promise that every cost is eligible.
Retainage is withheld from a work request and is not treated as borrower cash in the same row.
Interest reserve is a planned portion of the loan used to finance interest. Using it increases principal and reduces loan availability.
Borrower cash required covers accrued interest not paid from the reserve plus eligible work and fees that exceed remaining availability.

Date order changes the answer. Interest is accrued on the opening balance for the actual days before each row posts. A later draw or a 360-day basis increases interest relative to the same balance and rate on fewer days or a 365-day basis.

Real lenders may approve a different amount from the submitted work request, release retainage under separate rules, round interest daily or monthly, or place fees and reserves outside the stated loan limit. The result is a funding plan to reconcile against lender documents, not an approval schedule.

Construction financing can create material cash and legal obligations. Confirm draw eligibility, lien and inspection requirements, interest posting, and reserve treatment with the lender and project advisers.

How to Use This Tool:

Build the ledger in posting order so each interval starts from the previous funded balance.

Enter the Loan limit, fixed annual rate, 360- or 365-day basis, and opening date from the loan documents.
Enter the Interest reserve inside loan limit. Use zero when interest will be paid outside the loan.
Add draw rows in nondecreasing date order. For each milestone, enter gross work, retainage percentage, and any fee that is financed in that draw.
Review Funding overview for ending balance, remaining availability, reserve use, and borrower cash. A row before the opening date or a prior draw must be corrected before results are available.
Check the Construction draw ledger row by row against the lender's approved advance and actual interest statement.

Interpreting Results:

Ending balance includes work and fees funded by the loan plus interest paid from the reserve. Remaining loan availability is the unused portion of the loan limit after those advances.

Remaining interest reserve is an accounting balance, not guaranteed usable cash. If the funded balance has reached the loan limit, unused reserve cannot be advanced under this model because no loan availability remains.

A positive Borrower cash required means the reserve did not cover all interest, the loan could not fund all net work and fees, or both.
Total retainage is held back from gross work. It is not included in loan-funded work or borrower cash for that row.
Total interest is accrued interest across the entered intervals. Compare it with the lender's dates, day-count basis, rate, and rounding practice.

Technical Details:

The schedule is recursive. Row j begins with the prior row's ending balance. Interest accrues for the calendar-day interval, reserve-funded interest posts first, and the remaining availability then funds net work plus the financed fee. That ordering prevents one row from spending the same availability twice.

Formula Core:

Actual elapsed days are divided by the selected 360- or 365-day basis. Retainage reduces the work request before the financed fee is added.

\begin{array}{lll} I_{j} & = & B_{j - 1} \times r \times \frac{d_{j}}{D} \\ R_{j} & = & G_{j} \times q_{j} \\ W_{j} & = & G_{j} - R_{j} + F_{j} \\ B_{j} & = & B_{j - 1} + U_{j} + L_{j} \\ C_{j} & = & (I_{j} - U_{j}) + (W_{j} - L_{j}) \end{array}

Construction draw formula variables
Symbol	Meaning	Unit
B_j-1, B_j	Opening and ending funded balance for row j	USD
r	Annual interest rate as a decimal	per year
d_j, D	Elapsed calendar days and selected 360- or 365-day basis	days
G_j, q_j, R_j	Gross work, retainage percentage, and retainage held	USD or ratio
F_j, W_j	Financed fee and net work plus fee requested	USD
U_j, L_j	Reserve-funded interest and loan-funded work plus fee	USD
C_j	Borrower cash required for the row	USD

Funding Rule Core:

Calculate interest on the opening balance for the elapsed days.
Use the lesser of interest due, remaining reserve, and current loan availability. Add that reserve use to principal.
Calculate retainage and add the financed fee to net work.
Fund the lesser of that request and the availability left after reserve use.
Assign uncovered interest and unfunded work or fees to borrower cash.

A $100,000 opening balance at 10% for 31 days on a 360-day basis accrues $861.11. With no interest reserve, the balance remains $100,000 and the entire $861.11 is borrower cash for that row. With reserve and availability, the amount used from reserve would instead increase the funded balance.

The model carries full numeric precision through the schedule. Currency formatting rounds the displayed amounts; it does not feed displayed rounding back into later rows.

Limitations:

A single fixed rate applies to the full opening balance between entered dates.
Lender approval percentages, inspection timing, title or lien conditions, stored-material rules, retainage release, change orders, and lender-specific rounding are outside the model.
The schedule does not model payments that reduce principal, interest after the last draw, or costs held outside the loan limit.
The estimate uses entered work values, not independent proof that work was completed or eligible.

References:

Appendix D to Regulation Z—Multiple Advance Construction Loans, Consumer Financial Protection Bureau.
Mortgage key terms, Consumer Financial Protection Bureau.