Construction Carry Cost Calculator

Carrying costs during construction include interest, property tax, and insurance.

Construction loan

Construction rate %

Annual property tax

Annual insurance

Construction months

Total carry cost

$2,195,833

Interest cost

$1,770,833

Tax + insurance

$425,000

How the math works

Interest cost = avg balance × rate × months/12. Other = (tax + insurance) × months/12.

$12.5M × 8.5% × 1.67 yr = $1.77M interest + $255k × 1.67 = $424k other = $2.2M total carry.

How to Use

Enter construction loan amount.
Enter construction rate %.
Enter annual property tax.
Enter annual insurance.
Enter construction months.
Read total carry cost.

Frequently Asked Questions

Typical carry?

Total carry: 15-30% of hard costs for a 2-year construction project. Interest dominates (70-85% of carry). Property tax: 5-10%. Insurance: 3-8%. Utilities: 2-5%. Administrative costs: 3-8%. Track monthly vs budget.

Interest reserve?

Built into construction loan; typically 6-18 months of interest pre-funded. Drawn as interest accrues. If underrun, released to borrower. If overrun, borrower contributes equity. Size based on project timeline +10-20% buffer.

Reducing carry?

Faster construction (compressed timeline). Lower-rate financing. Interim tenant leases (if staged occupancy). Pre-leasing to reduce lender risk premium. Phased development. Each strategy has its own cost/benefit.

Who owns this risk — sponsor or lender?

Construction risks are typically shared: hard-cost overrun owned by sponsor (via completion guaranty), soft-cost and delay risks shared per contract, force-majeure excused but bears owner carry cost. Document risk ownership in the loan agreement and GC contract before closing. Disputes get expensive when roles are unclear. Institutional deals spell out every allocation in writing.