Construction Loan Calculator
Building a home? Model your interest-only construction payments, see the draw schedule, and estimate your permanent mortgage payment after completion.
What you'll need
- Estimated construction cost
- Land cost (or 0 if already owned)
- Down payment amount
- Construction loan interest rate
- Expected build duration
- Permanent mortgage rate and term
What you'll get
Total construction interest
Estimated cost during build phase
Draw schedule breakdown
5-stage disbursement model
Permanent monthly payment
P&I after construction completes
Total project cost
Down + interest + mortgage payments
How it works
Enter project cost
Input total construction budget including land, permits, materials, and labor.
Set draw schedule
Construction loans disburse in draws — interest accrues only on amounts drawn.
See interest during construction
Get monthly interest costs during the build phase and conversion to permanent loan.
Construction Loan Interest by Draw Schedule
| Draw Stage | Drawn Amount | Monthly Interest (7.5%) |
|---|---|---|
| Foundation | $80,000 | $500 |
| Framing | $160,000 | $1,000 |
| Rough-in | $240,000 | $1,500 |
| Final (100%) | $400,000 | $2,500 |
Interest-only during construction. Convert to 30-year mortgage at completion.
Frequently asked questions
How does a construction loan work?
A construction loan is a short-term loan that funds building a home. Unlike a mortgage, funds are disbursed in stages called draws as construction milestones are completed (foundation, framing, rough-in, drywall, completion). You pay interest only on the money drawn, not the full loan amount. After construction is complete, you either convert to a permanent mortgage (construction-to-permanent loan) or pay off the construction loan with a new mortgage.
How is interest calculated on a construction loan?
Construction loan interest is calculated only on the disbursed balance, not the total approved amount. For example, if you've drawn $100,000 at 9%: $100,000 × (9% ÷ 12) = $750/month. After the next draw of $80,000 (total $180K): $180,000 × 0.75% = $1,350/month. Interest payments grow as construction progresses — lowest at the start, highest near completion.
What is a draw schedule for a construction loan?
A draw schedule is the plan for disbursing construction loan funds in stages tied to building milestones. Typical draws: 10% at closing/land, 15% at foundation, 25% at framing, 25% at mechanical rough-in, 25% at drywall and completion. Each draw is inspected and approved by the lender before funds are released.
What is the difference between a construction-to-permanent loan and a stand-alone construction loan?
A construction-to-permanent loan (also called a one-time-close) automatically converts to a regular mortgage once construction is complete — one closing, one set of fees. A stand-alone construction loan must be paid off (or refinanced) with a separate mortgage after completion, requiring two closings and two sets of fees. One-time-close loans are simpler but may have slightly higher rates.
Planning a new build?
Calculate Build Costs →State guides
How this varies by state
Property taxes, insurance costs, first-time buyer programs, and closing costs differ significantly across states. See local data for your state.
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Ohio
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Arizona
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