A modest deposit, then progress payments tied to completed milestones, then a final payment after the punch list is done. Never pay ahead of work performed, and get a lien waiver with each payment.
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The principle behind every safe payment schedule is the same: money follows work, never leads it. A reasonable structure for a mid-size project. A deposit at signing, typically 10 percent or the documented cost of special-order materials. Progress draws tied to defined, verifiable milestones such as rough-in complete and inspected, drywall complete, or cabinets set. A final payment released after the punch list is complete and the final inspection has passed. Some owners hold a retainage of 5 to 10 percent until the punch list closes, which is standard practice in commercial work and reasonable in residential. What makes a milestone real. It has to be something you can look at and verify, and inspection sign-off is the best version because a third party confirms it. A milestone defined as a date or a percentage of time elapsed is not a milestone. Lien waivers are the part homeowners most often skip. In Texas, subcontractors and suppliers who are not paid can file a mechanics lien against your property even when you have paid the general contractor in full. A conditional lien waiver exchanged with each progress payment, from the general and from the major subs and suppliers, is what prevents paying twice. Ask for them from the start rather than at the end. What to avoid. A schedule front-loaded so that most of the money is paid before most of the work. Any request to pay for the next phase before the current one is complete. Cash payments with no paper trail. And a final payment released on the promise that the remaining items will be handled next week, which is the moment your leverage disappears. If a contractor cannot work with a milestone-based schedule, that tells you something about their cash position rather than about your reasonableness.