Disbursements on a construction loan are designed to reimburse the borrower as the construction of the home progresses. Disbursement is usually handled in one of two ways: the first way is that specific invoices for work done can be submitted for payment. The invoice is compared to the budgeted amount to make sure costs are on track.
The second way, disbursement, is based on the amount of work that has been completed on the project. For example, if the construction budget is $150,000 and the project is 10% complete (based on the inspection), we will disburse the borrower up to $15,000 on the project. This disbursement would be in addition to any advances or deposits the borrower may be entitled to receive.