Construction Loan Calculator

A construction loan is a short-term financing option used to fund the building of a new home or major renovation project. Unlike traditional mortgages, construction loans typically have variable interest rates and require interest-only payments during the construction phase.

  1. Construction Loan Calculator: Calculate payments for building projects
  2. Loan Phases: Understanding construction and permanent phases
  3. Construction Financing Tips: How to get approved and manage costs
Modify the values and click the calculate button to use

Construction Loan Calculator

Use this calculator to estimate the costs of a construction loan, including both the construction phase (interest-only payments) and the permanent financing phase (principal and interest payments).

Construction Cost
Land Cost
Down Payment
Interest Rate
Construction Term months
Permanent Loan Term years

Results:

Total Project Cost  $350,000.00
Loan Amount  $280,000.00
Construction Phase (12 months)
Monthly Interest Payment  $1,983.33
Total Construction Interest  $23,800.00
Permanent Phase (30 years)
Monthly P&I Payment  $2,147.29
Total Interest (All Phases)  $397,024.40
Total Cost of Project  $747,024.40

Understanding Construction Loan Phases

Phase 1: Construction Phase

During the construction phase (typically 6-18 months), you make interest-only payments on the amount drawn from the loan. Funds are released in stages as construction milestones are completed and inspected.

Phase 2: Permanent Financing

Once construction is complete, the loan converts to a traditional mortgage with principal and interest payments. This is often called a "construction-to-permanent" loan.

Construction Financing Tips

Prepare Detailed Plans

Lenders require detailed construction plans, specifications, and a realistic timeline. Work with experienced contractors and architects.

Budget for Contingencies

Add 10-20% to your construction budget for unexpected costs. Construction projects often exceed initial estimates.

Understand Draw Schedules

Funds are released based on completed work phases. Plan your cash flow carefully to cover expenses between draws.

Choose Qualified Contractors

Lenders often require contractors to be licensed, bonded, and insured. Some lenders have approved contractor lists.

Types of Construction Loans

Construction-to-Permanent Loans

Single closing loan that converts from construction financing to permanent mortgage upon completion.

Construction-Only Loans

Short-term loans requiring separate permanent financing upon completion. Often used by experienced builders.

Renovation Construction Loans

Financing for major home renovations and additions to existing properties.