Draw Interest Carry Calculator

Construction loans draw over time; interest accrues on outstanding only. This calculator sizes weighted-average carry.

Total loan

Interest rate %

Construction months

Avg outstanding %

Total interest carry

$561,000

Average monthly

$31,167

Avg outstanding $

$4,400,000

How the math works

Carry = average outstanding × rate × years. Avg outstanding depends on draw pace.

Draws typically follow S-curve: 10-20% first quarter, 30-40% next two, balance in fourth. Use 50-55% as rule-of-thumb average outstanding for typical 18-month projects.

How to Use

Enter total loan amount.
Enter interest rate.
Enter construction months.
Enter average draw pace (% per month).
Read total interest carry.

Frequently Asked Questions

Why weighted?

At month 1, maybe 15% drawn. Month 6: 60%. Month 12: 95%. Interest only on outstanding at each moment, not total loan. Average ~50% saves 50% interest vs fully-drawn.

Draw schedule?

Front-loaded: more interest (foundation costs early). Back-loaded: less interest (FF&E at end). Typical S-curve: slow start, fast middle, tail end.

Interest reserve?

Lender typically caps interest reserve at 12-18 months of projected carry. Running out triggers additional equity contribution — plan reserves 20% over projection.

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.