Understanding the Construction Loan Lifecycle from Foundation to Final Draw

Quick answer:

The construction loan lifecycle moves in stages—starting with land acquisition and closing, followed by draw-based funding that aligns with construction milestones. From pouring the foundation to passing final inspections, each stage must be documented before the next draw is released.

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At Silverton Capital, we fund ground-up projects across Dallas, Tarrant, and Collin counties, and we work closely with builders and developers to structure draws that match real-world timelines.

Here’s a builder-friendly breakdown of how construction loans work from start to finish.

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Phase 1: Pre-Closing Prep and Loan Approval

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Before anything is built, the foundation of your loan is laid behind the scenes. This phase includes:

• Site review: We evaluate the land, zoning, and build potential.
  
• Plans and permits: You’ll need architectural plans, a build timeline, and city permits (or proof they’re in progress).
  
• Budget and scope: You’ll submit a detailed cost breakdown from your builder or GC.
  
• Appraisal: We commission a valuation based on as-completed value—this is your ARV (After Repaired Value).
  
• Exit strategy: Sell? Refi? Hold as a rental? We want to know the plan.
  

Once all docs are approved, we close the loan. This often includes:

• Paying off land (if not already owned)
  
• Initial funding for pre-construction work (if permitted)
  
• Recording lien documents
  

Now the real work begins.

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Phase 2: Foundation Work and First Draw

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Your first draw typically covers:

• Site prep and grading
  
• Soil testing and compaction
  
• Foundation footings and slab pour
  
• Underground plumbing or electrical
  
• Framing materials (sometimes)
  

Once your builder completes this stage, you’ll request a draw.

What we need:

• Draw request form
  
• Photos of completed work
  
• Any required city inspections (e.g., foundation inspection sign-off)
  
• Contractor invoice or scope confirmation
  

Once reviewed, we release funds directly to you or your builder—depending on the agreement.

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Phase 3: Vertical Progress and Midpoint Draws

This phase is where momentum builds (literally). It includes:

• Framing of the structure
  
• Roofing and exterior wrap
  
• Windows and doors
  
• Rough-in mechanicals (HVAC, electrical, plumbing)
  
• Inspections by the city for mechanicals and framing
  

These stages may trigger multiple draws, depending on how your project is paced.

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💡 Tip: Lenders like Silverton Capital can help you map a draw schedule that mirrors your subcontractor payments—keeping your project cash-flow positive.

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Phase 4: Interior Finishes and Pre-Final Draw

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Once the house is dried in, you enter the most detail-rich phase:

• Insulation and drywall
  
• Cabinetry and built-ins
  
• Flooring
  
• Paint, trim, and hardware
  
• Final electrical and plumbing fixtures
  
• Landscaping and driveway
  

At this point, you’ll be submitting draw requests nearly every 2–3 weeks as various subs complete their trades.

To get your draws funded fast:

• Keep before/after photos organized by room or trade
  
• Save invoices or proof of materials delivered
  
• Ensure you’ve passed necessary inspections (e.g., drywall or final electric)

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Phase 5: Final Draw and Closeout

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This is the finish line. The final draw typically includes:

• Final punch list work
  
• Cleaning and staging (if applicable)
  
• Last-minute adjustments or corrections
  
• Final inspection by city (certificate of occupancy)
  
• Final inspection by lender
  

Once the project is confirmed complete and all lien releases are provided, we fund the last portion of the loan.

This is also where you transition into your exit strategy, whether that’s:

• Listing the home for sale
  
• Refinancing into a long-term loan
  
• Holding as a rental
  
• Selling to an investor or builder partner
  

At Silverton Capital, we can help connect you with DSCR lenders or refi partners if you’re moving to long-term hold.

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Final Thoughts: Know the Lifecycle, Control the Build

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Construction loans don’t work like traditional mortgages. They’re dynamic, draw-based, and depend on:

• You staying on schedule
  
• Your builder communicating clearly
  
• Permits and inspections being properly managed
  
• Your documentation being clean and complete
  

When you understand the flow of funds, you can keep your project moving and your subcontractors paid—without unnecessary delays.

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Ready to fund your ground-up project in Texas?

Apply now with Silverton Capital. We specialize in construction loans across Dallas, Tarrant, and Collin counties, and we know how to keep your draws flowing.

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This article is for informational purposes only and is not intended to serve as legal, financial, or investment advice. Please consult with a licensed professional before making financial decisions.