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Interest Carry Budget Calculator
Interest carry — the cost of construction loan interest before the asset stabilizes — is one of the largest soft costs in real estate development. Draw pattern, construction duration, and lease-up timing all drive the total. This calculator estimates the carry budget so developers can size the interest reserve in their project pro forma.
Total interest carry
$154,375
Construction-period interest
$83,125
Lease-up period interest
$71,250
Average construction balance
$750,000
How the math works
Interest carry is one of the largest soft costs in development. Front-loaded draws (heavy first-quarter spending) push average balance higher and total interest up. Back-loaded delays carry but extends the loan duration.
Lease-up period interest is at full balance — once construction draws are complete, interest accrues on 100% loan until cash flow stabilizes. Build into project budget as separate line item.
How to Use
- Enter total loan amount and interest rate.
- Choose draw pattern (front / linear / back-loaded).
- Enter construction months and post-construction lease-up months.
- Read total interest carry and breakdown.
Frequently Asked Questions
Why does draw pattern matter?
Front-loaded means higher average outstanding balance earlier — total interest carry can be 30-40% higher than back-loaded with same total cost.
What about lease-up?
Once construction draws are complete, full loan balance accrues interest. Lease-up interest carry is often equal to 30-50% of construction interest — must be funded in interest reserve.
Construction loan rate spread?
Construction rates 1-3% above prevailing perm rates. SOFR + 250-450 bps typical for institutional construction loans.
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