Construction Loan Calculator

Construction Loan Calculator

Construction loans provide funding for building projects, typically with interest-only payments during construction.

What This Calculator Shows

• Monthly Payment: Your expected payment amount based on loan terms
• Total Interest: The cost of borrowing over the loan lifetime
• Amortization Schedule: How payments split between principal and interest
• Payment Breakdown: Visual representation of your loan costs

How to Calculate

1. Enter your loan amount 2. Input the interest rate (APR) 3. Select the loan term 4. Review your payment details and total costs

Key Considerations for Construction Loan

• Compare offers from multiple lenders before committing
• Understand all fees including origination, closing costs, and prepayment penalties
• Consider how rate changes might affect your payments (for variable rates)
• Factor in your overall financial goals and debt-to-income ratio

A construction loan is not a mortgage. Money is released in draws as building stages complete, and you pay interest only on what has been drawn — so the payment climbs through the build rather than staying flat.

Stage	Cumulative draw	Interest-only payment at 7.5%
Foundation	$60,000	$375/mo
Framing	$150,000	$938/mo
Mechanical	$225,000	$1,406/mo
Completion	$300,000	$1,875/mo

At completion the loan either converts to a permanent mortgage (construction-to-permanent, one set of closing costs) or is refinanced (two sets). Rates run 1–2 points above a standard mortgage, and lenders typically want 20–25% down plus contingency reserves, because a half-built house is poor collateral.

The Numbers This Page Opens With

The calculator above starts at $300,000 over 1 year at 7.5%, which is representative for this product:

Monthly payment	$26,027
Total repaid	$312,327
Total interest	$12,327
Interest as a share of principal	4%

Change any input above and every figure recalculates. The amortisation formula behind it:

`` M = P × [ r(1+r)^n ] / [ (1+r)^n − 1 ]

P = principal, r = monthly rate (annual ÷ 12), n = number of payments ``

Before You Sign

• Compare APR, not the rate. APR includes origination and points; the rate does not.
• Ask about prepayment penalties. They turn a plan to pay early into a fee.
• Rate-shop inside 14 days. Credit scoring models treat multiple mortgage or auto

enquiries in that window as one enquiry.

• Check whether the payment includes escrow. A mortgage quote without taxes and insurance

understates the real monthly cost by hundreds.

Where the Money Goes

On $300,000 at 7.5% over 1 year, paying $26,027 a month:

Point	Principal repaid	Interest paid	Balance
Month 3	$72,910	$5,171	$227,090
Month 6	$147,197	$8,967	$152,803
Month 9	$222,884	$11,361	$77,116
Month 12	$300,000	$12,327	$0

Early payments are mostly interest. That is not a fee structure — it is arithmetic: interest accrues on the outstanding balance, which starts at its largest. It is also why an extra payment made early saves far more than the same payment made late.

What a Rate Change Costs

Rate	Monthly	vs 7.5%	Total repaid
6.50%	$25,889	-$138	$310,667
7.00%	$25,958	-$69	$311,496
7.50%	$26,027	—	$312,327
8.00%	$26,097	+$69	$313,158
8.50%	$26,166	+$139	$313,991

Half a percentage point moves the monthly payment by $69 and the total by $832. Shopping three lenders usually beats any amount of negotiating on price.