Construction Loan Payment Calculator

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

Inputs

Typically 50% — you owe interest only on what's actually drawn so far.

Result

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General calculation reads

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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.

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