Estimate construction financing
Draw and interest assumptions
Permanent loan conversion
This is a simplified estimate. Actual lender draw inspections, retainage, disbursement timing, builder contracts, local permit costs, insurance, taxes, and rate-lock terms can materially change the cash requirement.
| Line item | Amount | How it is treated |
|---|
Loan-to-cost uses the estimated construction loan divided by project cost. Loan-to-value uses the completed value you enter. Permanent payment is principal and interest only, before taxes, insurance, HOA dues, or mortgage insurance.
Methodology notes
Project cost
Total project cost adds build cost, contingency, land payoff, construction closing costs, and conversion costs. Land value above payoff is counted as equity, not a new cash cost.
Draw interest
Even draws use the average of monthly outstanding balances. Upfront-heavy draws assume the entered upfront percentage is advanced first and the rest is drawn evenly.
Takeout payment
The permanent mortgage payment uses the estimated construction loan balance after any financed interest reserve, then applies the permanent rate and term.
This calculator is educational and is not a loan approval, construction budget, appraisal, or builder bid. Construction costs are local and project-specific. Lenders may require larger contingencies, reserves, inspections, builder approvals, title updates, and documented borrower funds. See full disclosure.
Construction loan FAQ
Why does the average balance matter?
Interest-only construction payments are usually based on drawn funds, not the full approved loan on day one. A higher early draw raises the interest reserve.
What if costs run over budget?
Many lenders expect the borrower to cover overruns after the contingency is used. A thin contingency can turn into a cash problem even if the loan was approved.
Is one closing always cheaper?
Not always. One-time-close loans can reduce duplicate closing costs and rate risk, but pricing, lock terms, and program rules may differ from separate construction and permanent loans.