Construction Loan Calculator
Calculate construction loan payments, draw schedules, and conversion to permanent financing. Analyze interest-only payments during construction phase.
How it works
Construction loans fund building projects in stages. You pay interest only on drawn amounts during construction, then convert to traditional mortgage payments upon completion.
Example
$400K loan at 7% construction rate, 5 draws over 12 months, converting to 6.5% 30-year = $183/month average during construction, then $2,528/month permanent.
FAQ
How do construction loans work?
Construction loans provide funds in stages (draws) as construction progresses. You typically pay interest-only on the amount drawn during construction, then convert to permanent financing upon completion.
What is a construction loan draw schedule?
A draw schedule outlines when funds are released during construction phases: foundation, framing, roofing, mechanicals, and final completion. Each draw requires inspection approval.
What fees are associated with construction loans?
Common fees include origination fees, inspection fees, appraisal fees, and conversion fees. These typically range from 1-3% of the loan amount plus inspection costs.
How are construction loan interest rates determined?
Construction loan rates are typically higher than permanent mortgage rates, often prime rate plus 1-3%. The rate may be variable during construction and fixed upon conversion.
What happens after construction is complete?
The loan converts to permanent financing with a new rate and term. You'll start making principal and interest payments instead of interest-only payments.