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Thrifty Mortgage
The draw process depends on the lender and type of loan you are using. On a true construction loan, the lender will generally provide the builder with upfront money to start the construction and then will disburse the additional funds as the work is completed. Usually, the lender will require the builder/contractor to once the work is completed and the lender will send an appraiser out to ensure the work has been completed before another draw is issued. A draw schedule is normally presented prior to or at the closing of the construction loan so you are aware of how many draws will be issued. 

Renovation loans/home improvement loans generally work the same way, but the first draw includes enough money to pay off the existing mortgage or to purchase a new home.

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