Construction Loan Interest Payment Calculator
A construction loan interest payment calculator helps builders and homeowners determine the interest costs and payment schedules for construction financing. Calculate monthly interest payments, total interest costs, and conversion options for construction-to-permanent loans.
Construction Loan Interest Payment Calculator
Use this calculator for construction financing, home building loans, and construction-to-permanent financing.
Results:
| Monthly Interest Payment | $1,750.00 |
| Total Interest Cost | $21,000.00 |
| Total Loan Amount | $280,000.00 |
| Average Outstanding Balance | $140,000.00 |
| Origination Fee | $4,200.00 |
| Contingency Amount | $35,000.00 |
| Total Project Cost | $440,200.00 |
| Cost per Square Foot | $220.10 |
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| View Draw Schedule | |
Construction Budget Calculator
Calculate total construction budget including all costs, contingencies, and financing expenses for your building project.
Results:
| Construction Cost | $350,000.00 |
| Total Hard Costs | $475,000.00 |
| Contingency Amount | $71,250.00 |
| Total Project Budget | $546,250.00 |
| Cost Breakdown per Sq Ft | $273.13 |
| Land Cost Percentage | 14.6% |
| Construction Percentage | 64.1% |
| Soft Costs Percentage | 8.2% |
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| View Budget Breakdown | |
Construction-to-Permanent Loan Calculator
Compare construction-to-permanent loan options and calculate the transition from construction to permanent financing.
Results:
| Construction Interest | $24,000.00 |
| Permanent Loan Amount | $360,000.00 |
| Monthly Payment | $2,400.00 |
| Total Closing Costs | $11,250.00 |
| Loan-to-Value Ratio | 72.0% |
| Equity at Completion | $140,000.00 |
| Total Interest (30 years) | $504,000.00 |
| Total Cost of Project | $485,250.00 |
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| View Financing Timeline | |
Understanding Construction Loan Interest Payments
Construction loan interest payments differ from traditional mortgages as you only pay interest on the amount drawn during the construction phase. Understanding draw schedules, interest calculations, and conversion to permanent financing helps builders and homeowners manage construction costs effectively.
| Construction Loan Type | Interest Rate | Draw Schedule | Conversion | Best For |
|---|---|---|---|---|
| Construction-Only | Prime + 1-3% | Milestone-based | Separate permanent loan | Experienced builders |
| Construction-to-Permanent | Prime + 0.5-2% | Monthly/milestone | Automatic conversion | First-time builders |
| Renovation Loan | Prime + 1-2.5% | Progress-based | Existing mortgage | Home improvements |
| Owner-Builder | Prime + 2-4% | Strict milestones | Manual conversion | DIY builders |
Construction Draw Schedule
Construction loans release funds in stages based on completion milestones, minimizing risk for lenders and ensuring proper project progress.
Typical Draw Schedule
| Draw Stage | Percentage | Milestone | Inspection Required |
|---|---|---|---|
| Land Purchase | 15-20% | Closing on land | Title verification |
| Foundation | 15-20% | Foundation complete | Foundation inspection |
| Framing | 20-25% | Framing and roof | Framing inspection |
| Mechanicals | 15-20% | Plumbing, electrical, HVAC | Rough-in inspection |
| Drywall & Insulation | 10-15% | Drywall and insulation | Insulation inspection |
| Final | 10-15% | Certificate of occupancy | Final inspection |
Construction Cost Breakdown
Understanding typical construction cost allocations helps in budgeting and managing expenses throughout the building process.
Cost Categories by Percentage
| Cost Category | Percentage of Total | Typical Range | Notes |
|---|---|---|---|
| Land | 15-25% | $50,000-$150,000 | Varies by location |
| Site Preparation | 2-5% | $10,000-$30,000 | Includes excavation, utilities |
| Foundation | 8-12% | $25,000-$50,000 | Basement adds 50-100% |
| Framing & Structure | 20-25% | $60,000-$100,000 | Includes lumber, labor |
| Roofing | 3-6% | $10,000-$25,000 | Material dependent |
| Mechanicals (HVAC, Plumbing, Electrical) | 15-20% | $45,000-$80,000 | High-efficiency systems cost more |
| Interior Finishes | 15-25% | $45,000-$100,000 | Highly variable by quality |
| Exterior Finishes | 5-10% | $15,000-$40,000 | Siding, windows, doors |
| Contingency | 10-20% | $30,000-$80,000 | Essential for cost overruns |
Construction Loan Interest Calculation
Construction loan interest is calculated only on the outstanding balance, which increases with each draw.
Interest Calculation Methods
- Average Outstanding Balance: Interest calculated on 50% of total loan amount
- Actual Draw Schedule: Interest calculated on actual amounts drawn monthly
- Daily Interest: Interest accrues daily on outstanding balance
- Monthly Compounding: Interest compounds monthly on drawn amounts
- Interest Reserve: Some lenders require interest reserve account
- Payment Options: Interest-only payments or capitalize interest