Construction Loan Payment Calculator

Construction loan: interest-only on disbursed balance during build, then converts to permanent mortgage.

Result

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How to use this calculator

Enter total loan needed for build.
Enter construction-phase APR (typically Prime + 1).
Estimate build months and average drawn (50% is typical).
Enter the permanent mortgage terms it converts to.

About this calculator

Construction-to-perm loans cover both build and the long-term mortgage in one closing. During construction, the lender disburses funds in draws as work completes; you only pay interest on what's been disbursed. Average balance over a 9-12 month build is roughly 50% of total — you start at $0 and finish at full. Construction APRs run 1-2% above prevailing 30-year fixed because of risk. At completion, the loan converts (no second closing) to a regular mortgage on the full principal.

Frequently asked

Why pay interest on average vs. full?+

Funds are released in draws as work completes. Month 1 you owe interest on the foundation draw only; month 9 on nearly the whole loan. Average ≈ 50%.

What if construction takes longer?+

Most construction loans have a 12-month limit; extensions cost ~0.25-0.5% of loan. Plan for 25% schedule overrun and confirm extension terms upfront.

One-close vs. two-close?+

One-close (this calc) saves a second closing fee (~$3-5k) and locks the perm rate at original closing. Two-close gives more flexibility on choosing perm terms.

Down payment requirement?+

Construction loans usually need 20-25% down based on appraised completed value, paid into a builder's escrow before draws.

Can I finance the lot?+

Yes — most construction-to-perm loans bundle the lot purchase + build + permanent loan. Lot value counts as part of your equity.