Construction Loan Calculator
Calculate your construction loan interest-only payments during the build phase, permanent mortgage payments after completion, and the true total cost of building your home.
Project Cost
Construction Phase
Permanent Loan (After Construction)
How to Use the Construction Loan Calculator
- 1
Enter your land value and total construction cost. If you already own the land enter its current appraised value. Get a detailed cost estimate from your builder before entering this figure.
- 2
Set your down payment percentage and construction loan interest rate. Construction loans typically require 20% down and carry rates 0.5% to 1% higher than conventional mortgages. Enter the construction period in months — most single-family builds take 6 to 18 months.
- 3
Select the number of draws. Draws are scheduled fund releases to your builder as construction milestones are completed. More draws mean smaller interest charges per period since you are only paying interest on funds already released.
- 4
Enter your permanent loan rate and term — the mortgage you will carry after construction is complete. Click Calculate to see your construction phase interest payments, permanent mortgage payment, draw schedule, and true total project cost.
Example Construction Loan Calculation
Scenario: Land $100k | Construction $300k | Down 20% | Construction 8% | 12 mo | 6 draws | Perm 7% | 30 yrs
- Loan Amount: $320,000.00
- Total Construction Interest: $14,933.33
- Avg Monthly Interest: $1,244.44
- Permanent Monthly Payment: $2,128.97
- Permanent Total Interest: $446,428.47
- True Total Cost: $861,361.80
- First Month Perm Principal: $262.30
- Payoff Date: March 2057
Frequently Asked Questions
What is a construction loan?
A construction loan is a short-term loan that provides funds to build a home. Unlike a traditional mortgage where you receive the full amount upfront a construction loan releases funds in stages called draws as construction milestones are completed. During the construction phase you typically pay interest only on the funds already drawn.
What is a construction-to-permanent loan?
A construction-to-permanent loan also called a one-time close loan automatically converts from a construction loan to a permanent mortgage when building is complete. This saves you from going through a second loan application and second set of closing costs.
How much down payment is required?
Most lenders require 20% to 25% of the total project cost including land and construction as a down payment. FHA construction loans allow as little as 3.5% down for qualified borrowers.
How is interest calculated?
You only pay interest on the funds that have been drawn not the full loan amount. As construction progresses and more draws are released your interest charges increase monthly.
Disclaimer: This report is generated for informational purposes only. TheCalcTool is not a licensed financial legal or tax advisor. Construction loan calculations are estimates based on the inputs provided. Construction interest is calculated using a progressive draw schedule assuming equal draw amounts released at the start of each period. Actual construction loan interest will vary based on your lender's specific draw schedule and timing. Permanent loan payments assume a fixed interest rate. Please consult a qualified mortgage professional before making any construction financing decisions.