Construction Loan Payment Calculator
Construction loan: interest-only on disbursed balance during build, then converts to permanent mortgage.
Result
Avg interest-only payment
$1,417/mo
During 9-mo build. Converts to $2,661/mo permanent.
- Loan principal$400,000
- Build APR8.500%
- Avg drawn50% ($200,000)
- Avg IO payment$1,417/mo
- Build months9
- Total IO interest$12,750
- Permanent payment$2,661/mo
Step-by-step
- Avg outstanding balance during build = 400000 × 0.5 = $200,000.
- Avg IO payment = $200,000 × 0.007083 = $1,417/mo.
- Permanent payment after conversion = $2,661/mo.
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
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%.
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