Bind builder's risk + finalize financing draws

Builder's Risk insurance

A Course of Construction / Builder's Risk policy covers the structure during construction (fire, theft, vandalism, weather damage, sometimes more). Lender-required if you're financing.

• Cost: $500 – $1,500 for a 6-month policy, or 1–4% of completed value annually.
• Notify your homeowner's carrier before construction starts — many policies require disclosure or attach a construction endorsement.
• After substantial completion, swap to a landlord/dwelling fire policy if the cottage is being rented.

Verify any insurance agent or producer at the Oregon Division of Financial Regulation — Oregon's insurance regulator under DCBS.

Financing draw schedule

If you're using construction financing (HELOC, cash-out refi, renovation loan, or one-time-close construction-perm), align the lender's draw schedule with the GC contract milestones. The standard sequence:

1. Initial draw at mobilization (or covered by your deposit).
2. Foundation completion.
3. Framing / dry-in.
4. MEP rough complete.
5. Drywall complete.
6. Substantial completion / Certificate of Occupancy.

Each draw needs a lender inspection. Build in a few business days of lag at each milestone — the GC mobilizes the next phase only after the draw is funded.

A note on financing

HomePlan doesn't provide financial advice. The patterns most Portland DADU owners describe:

• Appraisal often lags real construction cost. ARV (after-renovation value) on Portland DADU comps is still relatively thin in many neighborhoods.
• GSE cash-out is capped at 80% LTV — a hard limit for owners with sub-4% mortgages locked in 2020–2022 who don't want to refinance.
• The actual exit is a refinance after stabilization — short-term debt during the build, refinance into conventional once the unit is income-producing or has a year of seasoned equity.

Verify any lender or mortgage loan officer at NMLS Consumer Access.