🏗️ Construction Loan Calculator Interest-Only
Estimate draw payments, interest reserves, and permanent loan conversion costs
📋 Loan Details
📊 Construction Draw Schedule
Phase 1 - Site Prep/Foundation:15%
Phase 2 - Framing/Roof:20%
Phase 3 - Rough-ins (MEP):25%
Phase 4 - Insulation/Drywall:20%
Phase 5 - Finishes/Trim:15%
Phase 6 - Final/Punch List:5%
Total: 100% (should equal 100%)
Construction Loan Summary
Total Loan Amount
$400,000
Avg Monthly Payment
$1,875
Total Interest Paid
$18,750
Final Loan Balance
$418,750
📋 Construction Phase Breakdown
Construction Cost:$400,000
Down Payment:$100,000
Loan Amount:$400,000
Origination Fees:$4,000
Average Draw Balance:$250,000
Monthly Interest Payment:$1,562
Total Construction Interest:$18,750
Total Project Cost (with interest):$518,750
📊 Draw Schedule & Monthly Payments
| Phase | Draw Amount | Cumulative Drawn | Monthly Interest |
|---|
Frequently Asked Questions
How do construction loans work?
Construction loans provide funds in draws as work progresses. During construction, you pay interest only on the amount drawn. After completion, the loan either converts to a permanent mortgage or must be paid off. Typical construction period is 6-12 months.
How are construction loan payments calculated?
Payments are interest-only on the amount drawn to date. Monthly payment = (Outstanding balance × Annual rate) ÷ 12. As draws increase, payments increase. Some lenders offer interest reserves that roll interest into the loan balance.
What is the typical interest rate for construction loans?
Construction loan rates are typically 0.5-1.5% higher than conventional mortgages. Current rates: 6-10% depending on credit score, down payment, and lender. Some loans have variable rates during construction with conversion to fixed at completion.
What down payment is required for a construction loan?
Down payment requirements: Conventional: 20-25%, FHA: 3.5%, VA: 0% for eligible veterans, USDA: 0% in rural areas. Down payment is based on total project cost (land + construction). Higher down payments may qualify for better rates.
What is an interest reserve on a construction loan?
An interest reserve is a portion of the loan set aside to pay interest during construction. This allows borrowers to avoid monthly payments while building. Interest is added to the loan balance rather than paid out of pocket, increasing the final loan amount.