Construction to Permanent Loan Calculator One-Time Close
Estimate interest-only construction payments and permanent mortgage payments for C2P loans
What is a Construction to Permanent Loan?
A Construction to Permanent (C2P) loan combines construction financing and permanent mortgage into a single loan with one closing. During construction, you pay interest only on the amount drawn. After completion, the loan converts to a standard mortgage with principal and interest payments.
Loan Details
Construction Draw Schedule
Interest is charged only on the amount drawn to date. Adjust the draw percentages to match your construction timeline.
Month 1-2 (Foundation):15%
Month 3-4 (Framing):20%
Month 5-6 (Rough-ins):25%
Month 7-8 (Finishes):20%
Month 9-10 (Final):15%
Month 11-12 (Close-out):5%
Total:100% — Draw percentages should total 100%
Construction to Permanent Loan Summary
Total Project Cost
$500,000
Loan Amount
$400,000
Down Payment Required
$100,000
CONSTRUCTION PHASE (Interest Only)
Average Outstanding Balance
$260,000
Monthly Interest Payment
$1,408
Total Construction Interest
$16,896
PERMANENT PHASE (Principal + Interest)
Monthly P&I Payment
$2,463
Monthly Taxes & Insurance
$542
Total Monthly Payment
$3,005
Full Cost Breakdown
Construction Loan Amount:$400,000
Origination Fees (1%):$4,000
Total Construction Interest:$16,896
Closing Costs (estimate):$6,000
Total Cash Needed at Closing:$126,896
Draw Schedule & Interest Calculation
Period
Draw %
Draw Amount
Cumulative Drawn
Monthly Interest
Important Notes: This calculator assumes equal draws each month within each phase. Actual draw schedules vary by lender. Interest during construction is calculated on the average outstanding balance. Some lenders may require interest reserves or additional fees. PMI may apply if down payment is less than 20%.
Why Understanding C2P Loans Saves You Thousands
Building a custom home is exciting, but financing it can be overwhelming. I've helped dozens of homeowners navigate construction loans, and the biggest mistake I see is not understanding how interest accrues during the build. That's why I created this calculator - to give you a clear picture of your true costs before you break ground.
With a Construction to Permanent loan, you only pay interest on money as it's drawn. This calculator breaks down exactly how much you'll pay during construction and what your permanent mortgage payment will be. No surprises, no hidden costs - just transparent numbers to help you plan your dream home budget.
How to Use This C2P Loan Calculator
Enter your total construction cost and land value, then your down payment percentage. Adjust the construction interest rate (typically higher than permanent rates) and permanent mortgage rate. Set your construction timeline in months. Use the draw schedule sliders to match your builder's payment timeline. Click calculate to see your average monthly interest during construction, total construction interest, and permanent monthly payment including taxes and insurance.
Pro Tips from Construction Lenders
Lock your rate early: Many C2P loans allow rate locks for 12-18 months - use this feature!
Add a contingency: Include 10-15% buffer for construction overruns and delays.
Front-load draws: Ask your builder to draw early to reduce interest costs.
Compare lenders: Construction loan fees vary widely - shop around!
IMPORTANT DISCLAIMER: This calculator provides estimates only. Actual loan terms, interest rates, and fees vary by lender, credit score, location, and market conditions. Construction delays can significantly increase interest costs. Always consult with a qualified lender and your builder before making financial decisions.
- Build smart from the MultiTooSite team
Frequently Asked Questions
What is a construction to permanent loan?
A construction to permanent loan (C2P) is a single loan that covers both the construction phase and the permanent mortgage. During construction, you pay interest only on funds drawn. After completion, the loan converts to a standard mortgage with principal and interest payments.
How are interest payments calculated during construction?
During construction, you pay interest only on the amount drawn so far. Interest is calculated daily on the outstanding balance. Payments are typically monthly and only cover interest, not principal. Rates are often variable during construction.
What's the difference between a C2P loan and a separate construction loan?
A C2P loan requires one closing, saving thousands in closing costs. Separate loans require two closings (construction loan then permanent mortgage) with two sets of fees. C2P loans also have lower risk if rates rise during construction.
What are typical down payment requirements for C2P loans?
Conventional C2P loans typically require 20-25% down. FHA C2P loans require 3.5% down. VA C2P loans offer 0% down for eligible veterans. USDA C2P loans offer 0% down in rural areas.
Can I lock my interest rate during construction?
Most C2P loans allow you to lock the permanent rate at closing for up to 12-18 months. Some offer floating rates during construction with conversion at completion. Rate lock options vary by lender and market conditions.
What happens if construction takes longer than expected?
Most C2P loans have a construction period of 12-18 months. If construction exceeds this timeline, you may need an extension, which can incur additional fees. Some lenders allow extensions with proof of progress and payment of additional interest reserves.