Draw tranches
Each entered draw percentage is applied to the approved facility to estimate the tranche advanced at that stage.
Construction financing
Construction Draw Calculator Canada
Model construction mortgage tranches, days outstanding, draw interest, contingency, financing fees, interest reserve, borrower equity, and sources versus uses.
Four-stage draw modelInterest by trancheContingency budgetSources-and-uses test
Calculation inputs
Build a construction sources-and-uses model
Estimate draw interest, contingency, financing fees, interest reserve, required equity, and funding surplus or shortfall.
Fees and draw timing
%
%
$
Draw tranches
Foundation / first advance
Tranche 1
%
days
Framing and enclosure
Tranche 2
%
days
Mechanical and interior
Tranche 3
%
days
Completion / occupancy
Tranche 4
%
days
How the calculation works
Understand the formula before relying on the result
Interest by time outstanding
Each tranche accrues simple interest for the entered number of days, allowing earlier draws to carry more interest than later draws.
Sources and uses
Sources include the mortgage facility, borrower equity, and entered interest reserve. Uses include base cost, contingency, fees, and modeled interest.
Required equity
When modeled uses exceed the facility and reserve, the difference estimates borrower equity needed to complete the budget.
Interpret the result
Facility is not always fully available
Advances may depend on completed work, inspections, holdbacks, cost-to-complete, and lender-controlled conditions.
Timing drives interest
Delays after early draws increase carrying cost because more capital remains outstanding for longer.
Contingency protects completion
A project that works only with zero overruns is vulnerable to change orders, price increases, and permit or trade delays.
Interest reserve is not extra profit
The reserve is a source dedicated to carrying cost and may be controlled by the lender or lawyer.
Common mistakes
- Applying interest to the full facility from day one.
- Ignoring contingency and soft costs.
- Treating appraised completed value as cash available during construction.
- Forgetting statutory holdbacks, inspections, and cost-to-complete rules.
- Assuming the final draw automatically converts to long-term financing.
What lenders review
- Land value, as-is and as-complete appraisal.
- Plans, permits, budget, contracts, builder experience, and timeline.
- Borrower equity injected before or alongside advances.
- Construction lien, holdback, inspection, and title requirements.
- Exit to permanent financing and ability to carry delays.
Planning tips
- Use a line-item quantity-surveyor or contractor budget.
- Model downside timing, not only the ideal schedule.
- Separate hard costs, soft costs, financing costs, and taxes.
- Keep evidence of paid invoices and equity contributions.
- Arrange permanent financing before the construction term expires.
Connected HopeWell knowledge
Connect the construction draw calculator to the mortgage decision
Use the result alongside HopeWell's guide chapters, glossary definitions, real underwriting case studies, service pages, and related calculators.
Calculation pathway
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Frequently asked questions
Questions about this calculation
How is construction mortgage interest charged?
Interest is generally charged on funds actually advanced, but fees, reserves, minimum interest, and lender conventions vary.
Why do draw percentages need to total 100%?
The calculator allocates the full entered facility across tranches so the interest estimate can be tied to timing.
What is an interest reserve?
It is money set aside to pay or capitalize interest during construction rather than relying solely on monthly cash flow.
What is a construction holdback?
A holdback is an amount retained under legal or contractual requirements to address lien and completion risk. Rules and percentages require legal review.
Does the calculator determine lender approval?
No. Construction underwriting is highly document-, property-, borrower-, and project-specific.