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Construction Lender Advance Rate Calculator

Construction lenders advance funds per draw milestone.

$
%
%
$

Max advance available

$8,100,000

Retention held

$900,000

Loan utilization %

0.32%

How the math works

Target advance = loan × LTV × % complete. Max = target × 90% (retention 10%).

$25M × 80% × 45% × 90% = $8.1M max advance. Retention $900k held.

How to Use

  1. Enter total construction loan.
  2. Enter current % complete.
  3. Enter lender LTV %.
  4. Enter borrower equity already in.
  5. Read max available advance.

Frequently Asked Questions

Advance rate?

Typical: 75-85% of hard costs as incurred. Lender holds 10% retention. Borrower's equity funded first (then each draw). At 50% complete, typical 50% of loan funded. Lender inspection required for each draw.

LTC vs LTV?

LTC (Loan to Cost): 70-80% typical. Project-specific. LTV (Loan to Value): based on projected stabilized value; 60-70% typical. Takes the lower. Post-stabilization, roll to permanent at LTV.

Equity-first?

Borrower equity funded first (usually 25-30% of total project). Then loan advances. Lender inspects before each draw. Delayed draws common in first-time developers. Institutional developers get faster draws.

How does this interact with the rest of the capital stack?

Each tier of the stack affects the next. Senior debt constrains LTC and DSCR. Mezz and pref consume equity spread. Interest rate hedges protect DSCR but cost premium. Always model the full stack holistically — optimizing one tier alone often degrades another. Institutional underwriters run three or four scenarios across the stack before committing capital.

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