Construction Loan Calculator

How this calculator works

Construction loans fund the build in draws as work is completed. Lenders usually require your equity to go in first, and they charge interest only on what has been drawn, so interest grows as the project goes on.

Commitment = the smaller of (land + hard + soft costs + contingency) × loan-to-cost and completed value × loan-to-value.
Spending follows the pattern you choose; equity pays first, then the loan draws, assumed mid-month.
Interest is charged on the drawn balance; you can add it to the loan as an interest reserve.

Worked example

Example values are illustrative, not quotes or market data. These are the numbers the calculator above starts with.

Inputs

Land cost or value: $80,000
The loan pays for the land: No
Construction (hard) costs: $300,000
Soft costs (plans, permits, fees): $30,000
Contingency on hard costs: 5%
Appraised value when complete: $600,000
Maximum loan-to-cost: 80%
Maximum loan-to-completed-value: 75%
Rate: 9%
Points: 1%
Build time (months): 10
Spending pattern: Slow start, busy middle, slow finish
Permanent loan rate: 6.75%
Permanent loan length: 30 years

Results

Commitment: $340,000
Equity: $85,000
Interest: $12,581
Permanent payment: $2,205

Common questions

Can my land count as equity?

Often, if you own it. Lenders value it differently; ask how they treat land you already own.

What is a construction-to-permanent loan?

One loan that converts to a regular mortgage when the home is complete, instead of two separate closings.

How are draws released?

After an inspection confirms the work. You or your builder may need to pay first and be reimbursed.

Related calculators

Estimate only. Actual loan terms, eligibility, insurance, taxes, and settlement charges require verification. These are planning estimates, not a lender Loan Estimate, Closing Disclosure, appraisal, or approval. Michael O'Neal is a real estate broker, not a lender, appraiser, attorney or tax adviser.