The video below and corresponding downloadable templates will walk you through how to build a basic construction draw schedule.

Basic Construction Financing & Draw schedules: A Conceptual Overview

A standard draw schedule with a basic capital stack of debt and equity works as follows:

  • The development budget is created and projected out over the anticipated time of the project.
  • A Loan-to-Cost (“LTC”) ratio is applied to the development budget to size the amount of debt.
  • The remaining budget that is not covered by the debt will be covered by equity.
  • Equity first: at the beginning of the project, equity is spent first until the required equity balance is depleted.
  • Then debt: when the required amount of equity has been spent, the lender will begin to disburse funds as additional costs are incurred over time.
  • The interest reserve: Interest is then charged every period on the cumulative debt balance and is normally capitalized and added to the balance creating a budget line item referred to as an interest reserve.
    • This is the challenging part of draw schedules that creates an iterative problem. How does a lender loan money based on a LTC ratio from a budget if the interest reserve is not calculated until the debt begins to be disbursed, but the debt is being disbursed based on a LTC ratio based on the budget? To put it another way, how does a lender loan money against the construction costs including the interest reserve, when the interest reserve is not calculated until debt begins to be disbursed after the equity has been spent? If this is unfamiliar or confusing to you, I discuss this topic and how to resolve at length in this following post:

      Construction Draw Schedule: Accounting for True LTC

      And I will also cover how to resolve in the video. The post above goes into much more detail and will provide you with an intuitive understanding more so then this video and post.

a discussion of the A.CRE Accelerator real estate financial modeling courses

Watch Me Build Video: Construction Draw Schedule

This video will walk you step by step through the process and you can download both the blank and completed templates below to follow along.

Links to Posts Mentioned in The Video

My true LTC in construction draw schedule blog post shows you how to mitigate a common error seen in development underwriting.

Check out my Condo Development Model, a comprehensive cash flow pro forma for modeling for sale condo developments.

A Note on Circular References and Why I Try To Avoid Them

This draw schedule, like others I have included in models shared on this site, is built without using circular references. Circular references are often used in excel to solve for iterative problems such as an interest reserve calculation. I try to avoid using them as there is a chance that the calculations may be inaccurate and it is also harder for the user or a third party to understand the intuition behind what the model is doing. This is because circular references are inherently saying that the value in cell X, for example, is being resolved by the value in cell Y; and the value in cell Y is also being resolved by the value in cell X. Circular references can also have cell X ten formulas removed from cell Y in a chain of formulas referencing different cells, increasing the chance for error and confusion.

Download The Model

To make this model accessible to everyone, it is offered on a "Pay What You're Able" basis with no minimum (enter $0 if you'd like) or maximum (your support helps keep the content coming - typical real estate models sell for $100 - $300 each). Just enter a price together with an email address to send the download link to, and then click 'Continue'. If you have any questions about our "Pay What You're Able" program or why we offer our models on this basis, please reach out to either Mike or Spencer.

Note (especially for Gmail users): The model is sent via email and occasionally is blocked by spam filters. If you don't see the email arrive within five minutes, check your spam folder.


  • The file used in my 'Watch Me Build' video where I complete a real estate modeling exercise
  • Includes a zip file, containing two workbooks
    • A blank workbook with formatting to use as you follow along
    • The fully completed model to check your formulas against
  • In this video I model:
    • A development draw schedule
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About the Author: Michael Belasco has over nine years of real estate and construction experience. He currently works for a global real estate investment, development, and asset management firm in San Francisco managing large scale development projects in the city. Michael has both an MBA and Master in Real Estate with a concentration in Real Estate Finance from Cornell University.