Construction financing involves two inspection tracks: lender draw inspections at build milestones and municipal building department sign-offs for code compliance. Expect foundation, framing, mechanical rough-in, and final inspections — plus an as-completed appraisal before permanent financing converts. Ryan and Steve map the full inspection path for Indiana new-build files.
Before the first shovel hits dirt, an appraisal based on plans and specs establishes the as-completed value your loan amount depends on. Some lenders order a second appraisal at final completion to confirm the finished home matches projections.
During construction, the lender sends independent inspectors — separate from your builder and separate from the city — to verify work at each draw milestone. Foundation poured, framing complete, mechanicals roughed in, and final walk-through are common checkpoints before funds release.
Your local building department runs its own permit inspections for code compliance. A passed city rough-in does not automatically trigger a lender draw. Ryan and Steve coordinate both schedules so Indiana builders are not waiting on paperwork while crews sit idle.
Each inspection protects a different interest — loan collateral, code compliance, or final occupancy.
The lender's inspector verifies completed work before each draw releases. Common stages include foundation, framing, rough plumbing and electrical, insulation, drywall, and final completion.
Local jurisdictions require permits and code inspections for structural, electrical, plumbing, HVAC, and fire safety. Failed city inspections must be corrected before the next phase proceeds.
The building department issues a CO when the home meets all code requirements and is safe to occupy. Lenders require this before converting to permanent financing or releasing the final draw.
Some programs require a final appraisal confirming the finished home value matches the original projections. One-time close products may use the initial plans-based appraisal; two-time close files often reappraise at completion.
Inspections are the checkpoint between completed work and released construction funds.
Step 1
Your contractor finishes an approved stage — foundation, framing, rough mechanicals, or finishes — and requests a draw from the construction account.
Step 2
An independent inspector confirms the work matches approved plans and the cost breakdown before the lender authorizes payment.
Step 3
Parallel municipal inspections confirm code compliance. Both lender and city sign-offs may be needed before the next phase starts.
Step 4
After all scope items pass, a final lender inspection and municipal CO release remaining funds and clear the path to permanent financing.
Related guides to understand draws, timelines, and construction paperwork.
When construction funds release and how draw schedules work.
Typical build timelines and loan completion windows.
Builder contracts, plans, permits, and lender paperwork.
Change orders, budget overruns, and lender options.
2MG Daily
Recent articles on new construction, draw schedules, and build financing.
May 12, 2026 • 2MG Daily
Read article →
Jul 21, 2026 • 2MG Daily
Read article →
Lenders typically require independent draw inspections at milestones — foundation, framing, mechanical rough-in, and final completion — before each portion of the construction budget is disbursed. The inspector verifies completed work matches the approved plans and cost breakdown.
No. Municipal or building department inspections enforce local codes and issue permits. Lender draw inspections protect the loan collateral and may run on a different schedule. Passing a city rough-in does not automatically clear a lender draw — both tracks need attention.
Most jurisdictions require a final municipal inspection and Certificate of Occupancy (CO) before anyone can legally occupy a new home. Lenders also require a final completion inspection — and sometimes a final as-completed appraisal — before converting to permanent financing or releasing the last draw.
No. Inspection schedules vary by lender, program, builder, and local jurisdiction. This page is educational only and is not a commitment to lend. Ryan and Steve outline the inspection path for your specific construction file before you break ground.
Share your builder, plans, and timeline with Ryan & Steve. We will outline the draw inspection milestones and municipal requirements for your construction loan before you break ground.