I wouldn’t like it. Personally I prefer payment schedules based on completion. Completions of rough mechanicals X%, completion of tile X% etc. There is no incentive to finish anything with this payment schedule. He could say the kitchen starts the minute the subfloors goes in since that’s when he has to order the cabinets.

Even if you have cash, it is well worth getting a construction loan so that you have a middleman between your money and the builder. The banks will have their own payment schedule and will have the house inspected at several points during construction to make sure the items are completed before they write out a check to the builder.

Admittedly I know nothing about this stuff, but there seems to be a lot of “starting” and not much “finishing” in this payment schedule!

It's pretty simple really. The insulation and drywall aren't going to start until he gets paid. No chasing money and no excuses as to why he can't get paid because the widgets haven't arrived on time.

Were I a GC, my contract would look just like this, but I'd give you a little more retainage if you asked.

A payment schedule based on commencement of activities is more typical for remodeling projects where the timeframes are shorter than is typical for new home construction. Lenders prefer for payment schedules to align with costs incurred so they're not advancing more than the cost of completed work. Most lenders will hold back 5% of the loan amount until a certificate of occupancy is issued. It's not sufficient protection for an owner if they haven't selected the right builder, but it puts more of the builder's earnings at risk than a flat $5,000.