Finance category

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Construction Loan Calculator

Construction loans are interest-only, pay only on drawn funds, and convert to a permanent mortgage (or get refinanced out) at substantial completion. This calculator builds a month-by-month draw schedule and total interest for the build.

Loan amount

Interest rate

Build term (months)

Draw shape

Total interest during build

$18,594

Average outstanding balance

$236,111

Total funds drawn

$425,000

Final payoff at close-out

$443,594

principal + accrued interest

Month	Draw	Balance	Interest
1	$47,222	$47,222	$413
2	$47,222	$94,444	$826
3	$47,222	$141,667	$1,240
4	$47,222	$188,889	$1,653
5	$47,222	$236,111	$2,066
6	$47,222	$283,333	$2,479
7	$47,222	$330,556	$2,892
8	$47,222	$377,778	$3,306
9	$47,222	$425,000	$3,719

Editorial noteMaintained by EveryCalc - Reviewed June 2026

EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.

Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.

Learn more about our review process on the EveryCalc methodology page.

How this calculator works

What this page estimates

This Construction Loan Calculator is built to give a quick, browser-based estimate for construction loan. Construction loans are interest-only, pay only on drawn funds, and convert to a permanent mortgage (or get refinanced out) at substantial completion. This calculator builds a month-by-month draw schedule and total interest for the build. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.

Calculation approach

The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.

Example workflow

For example, start with a realistic value you already know, change one input at a time, and watch how the answer moves. That makes it easier to tell whether the result is being driven by the main amount, the rate, the time period, or a unit conversion.

Practical checks

Use current, real-world numbers when the result affects money, health, tax, or legal decisions.
Run a low, base, and high case when the inputs are estimates.
Check the related calculators below when the next decision depends on a different assumption.

How to interpret the construction loan result

Best use

Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.

Cross-check

Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.

Watch for

Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.

This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.

Before relying on this construction loan estimate

Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.

Confirm source numbers

Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.

Separate cash flow from total cost

A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.

Run conservative cases

Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.

Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.

How to Use

Enter the total loan amount approved for the build.
Enter the interest rate. Construction notes often price at prime + 1% to 4%.
Enter the build term in months — from first draw through the certificate of occupancy.
Pick a draw shape: linear (even), front-loaded (site/foundation heavy), or back-loaded (finish heavy).

Frequently Asked Questions

What's a typical construction loan rate?

As of late 2025, typical bank construction rates run 9–12% (prime + 1 to 4), with hard-money construction at 10–14%. Converted to a standard mortgage (perm) at a fixed rate at completion.

What's a construction-to-perm loan?

A single close structure where the construction phase automatically converts to a permanent mortgage at substantial completion — avoiding a second set of closing costs. Fannie Mae, FHA, and VA all offer these.

How are draws approved?

Each draw request is accompanied by a lien waiver, inspection, and contractor invoices. The lender's inspector verifies progress before approving disbursement. Typical 5–10 day funding cycle.

Does this include the interest reserve?

This shows the gross interest that would need to be paid. In most construction loans, an interest reserve is pre-funded from the loan itself. Use our Interest Reserve Calculator to size that reserve.