Schedule of Values for Construction Loans
Quick Answer
A schedule of values (SOV) breaks the total construction budget into line items with assigned dollar values. Each draw request references the SOV to show what percentage of each line item is complete and how much funding is being requested.
Table of Contents
What Is a Schedule of Values?
A schedule of values (SOV) is a detailed cost breakdown that assigns a dollar value to every component of a construction project. It serves as the blueprint for how construction loan funds are disbursed through draws.
The SOV is submitted to the lender before construction begins and becomes the basis for all future draw requests.
How It Works
Creating the SOV
The builder breaks the total construction budget into individual line items:
| Line Item | Budget | % of Total |
|---|---|---|
| Site work | $30,000 | 8% |
| Foundation | $35,000 | 9% |
| Framing | $65,000 | 17% |
| Roofing | $18,000 | 5% |
| Exterior finishes | $25,000 | 7% |
| Plumbing | $22,000 | 6% |
| Electrical | $20,000 | 5% |
| HVAC | $18,000 | 5% |
| Insulation/drywall | $20,000 | 5% |
| Interior finishes | $75,000 | 20% |
| Landscaping | $12,000 | 3% |
| Contingency | $40,000 | 10% |
| Total | $380,000 | 100% |
Draw Requests Against the SOV
When requesting a draw, the builder reports the completion percentage for each line item:
| Line Item | Budget | % Complete | Amount Requested |
|---|---|---|---|
| Site work | $30,000 | 100% | $30,000 |
| Foundation | $35,000 | 100% | $35,000 |
| Framing | $65,000 | 50% | $32,500 |
| All others | — | 0% | $0 |
| Draw Total | $97,500 |
Inspection and Approval
After submitting a draw request, the lender sends an inspector to verify that the reported completion percentages are accurate. Once verified, the draw is approved and funds are released.
Best Practices
- Be detailed: More line items provide better tracking and smoother draws
- Be accurate: Inflated values for early items create problems in later draws
- Front-load appropriately: Site work and foundation are naturally front-loaded
- Include contingency: Show it as a separate line item
- Match your contract: The SOV should align with your contractor agreement
- Plan for retainage: Some lenders hold 5-10% until project completion
Related Reading
Key Takeaways
- ✓The SOV is the foundation of the draw process
- ✓Each line item has a specific dollar value
- ✓Draw requests reference completion percentages against the SOV
- ✓Accurate SOV creation prevents draw delays