Construction Loan Calculator

Calculate construction loan interest and permanent mortgage payments. See draw schedule.

By Konstantin Iakovlev · Updated September 2026 · Source: CFPB — Owning a Home

$
$
$
%
%

Total Project Cost

$450,000.00

Construction Interest

$17,850.00

Permanent Monthly Payment

$2,334.95

Construction Phase

Loan Amount$360,000.00
Down Payment (20.0%)$90,000.00
Average Monthly Interest$1,487.50
Max Monthly Interest (full draw)$2,550.00
Total Construction Interest$17,850.00

Draw Schedule

Draw 1, month 1: $60,000.00 drawn$425.00/mo interest
Draw 2, month 3: $120,000.00 drawn$850.00/mo interest
Draw 3, month 5: $180,000.00 drawn$1,275.00/mo interest
Draw 4, month 7: $240,000.00 drawn$1,700.00/mo interest
Draw 5, month 9: $300,000.00 drawn$2,125.00/mo interest
Draw 6, month 11: $360,000.00 drawn$2,550.00/mo interest

Permanent Loan & Total Cost

Permanent Monthly Payment$2,334.95
Total Permanent Interest$480,583.13
Total All-In Cost$948,433.13
Extra Cost vs Buying Existing$17,850.00

Use the Construction Loan Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

Building a home involves two distinct costs, and this tool estimates both: the interest that accrues while the house goes up and the permanent mortgage payments that follow. The result shows the full financial arc of a project from groundbreaking to move-in, including the way your draw schedule shapes what you ultimately pay.

The loan amount is land plus construction cost minus your down payment. During construction, the math follows a simple-interest approach: the calculator releases the loan in six equal draws spread evenly over the build and charges interest only on the funds drawn so far, from each draw's month to the end of the construction period. The permanent mortgage then switches to standard amortization, P = L[i(1+i)^n]/[(1+i)^n-1], applied to the same loan amount at the permanent rate and term.

Construction-phase interest is easy to underestimate, particularly when the build drags on or the draws land early and large. Permanent mortgage rates can move as well, so leave room in your long-term budget for the rate to shift before you lock it.

Example: Building on a $100,000 Lot

  1. 1 Input a $100,000 lot, $350,000 of construction and a $90,000 down payment (20% of the $450,000 project), so the loan is $360,000. Construction takes 12 months at 8.5%; the permanent loan is 30 years at 6.75%.
  2. 2 The calculator splits the loan into six $60,000 draws in months 1, 3, 5, 7, 9 and 11. Monthly interest is $425 after the first draw ($60,000 × 8.5% ÷ 12) and rises by $425 with each draw, to $2,550 once all $360,000 is out.
  3. 3 Each draw is charged $425 a month for the months left in the build: 12, 10, 8, 6, 4 and 2, or 42 draw-months in all. Total construction interest is 42 × $425 = $17,850, an average of $1,487.50 a month.
  4. 4 The permanent payment on $360,000 at 6.75% for 30 years is $2,334.95 a month, with $480,583.13 of interest over the term. The all-in cost is $450,000 + $17,850 + $480,583.13 = $948,433.13, and the $17,850 of construction interest is the extra cost compared with buying an existing home with the same loan.

Source: CFPB — Owning a Home · Last updated: September 2026

Frequently Asked Questions

How does a construction loan work?
A construction loan is a short-term loan (typically 12-18 months) that funds building your home in stages called draws. You pay interest only on funds disbursed. Once construction is complete, the loan converts to a permanent mortgage (construction-to-perm) or is refinanced into a standard mortgage.
What interest rate should I use for a construction loan?
Use the rates your lender quotes. The calculator's defaults, 8.5% during construction and 6.75% for the permanent loan, are placeholders rather than market figures. You only pay interest on the amount drawn, so monthly payments start low and increase as construction progresses. The permanent mortgage rate is locked separately.
How much down payment is needed for a construction loan?
Most construction loans require 20-25% down based on the projected value of the completed home. Some lenders accept land equity as part of the down payment. You also need detailed plans, a licensed builder, and a construction timeline. Qualification is stricter than a standard mortgage.

You might also need

Mortgage Calculator 2026 — Payment, Amortization & PMI

Calculate your monthly mortgage payment with taxes, insurance, PMI, and HOA. Free, instant results at the interest rate you enter.

FHA Loan Calculator 2026 — MIP, Down Payment & Limits

Calculate FHA loan payments including upfront MIP (1.75%) and annual MIP premiums. See when MIP drops off. Free, instant results based on 2026 FHA limits.

Home Affordability Calculator — How Much House Can You Afford?

Find out how much house you can afford based on income, debts, down payment, and the mortgage rate you enter. Free, instant results with DTI ratio breakdown.