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Construction Loan Calculator
Building a home? Model your interest-only construction payments, see the draw schedule, and estimate your permanent mortgage payment after completion.
Educational calculators — always consult a licensed professional before making financial decisions.
Total cost to build the home (not including land).
Enter 0 if you already own the land.
Construction loans typically require 20–25% down.
Construction loans are typically 1–2% above standard mortgage rates.
Typical home builds take 9–18 months.
The rate on your take-out mortgage after construction completes.
Lowest payment after construction completes. Most common choice for construction-to-permanent loans.
Permanent Monthly Payment
$2,047
30-year mortgage on $300,000
Where Your Money Goes
Estimated Draw Schedule
Pro tip
Construction loan interest is charged only on disbursed amounts — not the full loan. Faster draws mean higher early interest costs. The schedule above uses a typical 5-draw model.
For educational purposes only. Actual interest depends on your specific draw timing and schedule. Get detailed figures from your construction lender.
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What you'll need
- ·Estimated construction cost
- ·Land cost (or 0 if already owned)
- ·Down payment amount
- ·Construction loan interest rate
- ·Expected build duration
- ·Permanent mortgage rate and term
What you'll get
- ✓Total construction interest — Estimated cost during build phase
- ✓Draw schedule breakdown — 5-stage disbursement model
- ✓Permanent monthly payment — P&I after construction completes
- ✓Total project cost — Down + interest + mortgage payments
Construction Loan vs Construction-to-Permanent Loan
Which structure you use changes how interest accrues, whether you close once or twice, and how funds reach your builder. Run the numbers above for your own build cost — the table below compares the mechanics, not dollar figures.
Lenders and borrowers use two different vocabularies for the same structure. "Construction-to-permanent" describes what the loan does — it converts into your permanent mortgage automatically. "Single-close" (also written one-time-close) describes how many closings that takes: one, before construction starts, instead of a second one after. They're the same loan under two names, not two different products. The construction-only row below is the same thing lenders call a two-close or two-time-close loan — you sign twice, once for the construction loan and again for the permanent mortgage that pays it off.
| Structure | How interest accrues during the build | Second closing required? | Draw structure | What happens at completion |
|---|---|---|---|---|
| Construction-only (two-close) | Interest-only, charged solely on the balance drawn so far, not the full approved amount | Yes — the loan must be paid off with a separate mortgage after completion | Staged draws released as milestones are inspected and approved | Balance is repaid or refinanced into a new permanent mortgage — a second set of closing costs |
| Construction-to-permanent (single-close / one-time-close) | Interest-only on the drawn balance during the build, same as construction-only | No — it converts automatically into the permanent mortgage at one closing | Same staged, milestone-based draws | Loan converts in place to fully amortizing P&I payments — no new closing |
| HELOC / cash-out refinance on an existing home | Interest on whatever is drawn (HELOC) or on the full new loan amount immediately (cash-out refinance) — not tied to build milestones | No new mortgage closing at completion, since it isn't a construction loan to begin with | No lender-inspected draw schedule — funds are available as a lump sum or revolving line | No conversion event; you keep paying down the HELOC or refinanced loan as normal |
How Construction Loan Draws Work
You're only charged interest on money that has actually been disbursed, not on the full approved loan amount. The calculator above splits your build cost into five staged draws — Closing/Land (10%), Foundation (15%), Framing (25%), Rough-In Mechanicals (25%), and Drywall/Completion (25%) — and computes interest only on each draw's outstanding balance for the months it remains outstanding.
Each draw's interest is its dollar amount multiplied by the monthly rate and by the number of months it stays outstanding, so the cost of a draw depends on both size and timing — not on timing alone. The first draw is outstanding the longest but is also the smallest (10%), and the last draw is a quarter of the loan but outstanding for only the final stretch. In practice the middle of the build carries the heaviest single charge: on a 12-month schedule the Framing draw costs more in interest than any other, and the Drywall/Completion draw costs the least. Total construction-phase interest is the sum across all five draws — enter your own build cost, rate, and timeline above to see your figures.
How it works
Enter project cost
Input total construction budget including land, permits, materials, and labor.
Set draw schedule
Construction loans disburse in draws — interest accrues only on amounts drawn.
See interest during construction
Get monthly interest costs during the build phase and conversion to permanent loan.
Construction Loan Interest by Draw Schedule
| Draw Stage | Drawn Amount | Monthly Interest (7.5%) |
|---|---|---|
| Foundation | $80,000 | $500 |
| Framing | $160,000 | $1,000 |
| Rough-in | $240,000 | $1,500 |
| Final (100%) | $400,000 | $2,500 |
Interest-only during construction. Convert to 30-year mortgage at completion.
State guides
How this varies by state
Property taxes, insurance costs, first-time buyer programs, and closing costs differ significantly across states. See local data for your state.
California
Texas
Florida
New York
Illinois
Pennsylvania
Ohio
Georgia
North Carolina
Michigan
New Jersey
Virginia
Washington
Arizona
Colorado
Tennessee
Other financing paths to compare
- Mortgage Calculator — estimate the permanent mortgage payment once your build converts.
- HELOC vs Cash-Out Refinance Calculator — compare tapping existing home equity instead of a ground-up construction loan.
About this calculator
How does a construction loan work?+
A construction loan is a short-term loan that funds building a home. Unlike a mortgage, funds are disbursed in stages called draws as construction milestones are completed (foundation, framing, rough-in, drywall, completion). You pay interest only on the money drawn, not the full loan amount. After construction is complete, you either convert to a permanent mortgage (construction-to-permanent loan) or pay off the construction loan with a new mortgage.
How is interest calculated on a construction loan?+
Construction loan interest is calculated only on the disbursed balance, not the total approved amount. For example, if you've drawn $100,000 at 9%: $100,000 × (9% ÷ 12) = $750/month. After the next draw of $80,000 (total $180K): $180,000 × 0.75% = $1,350/month. Interest payments grow as construction progresses — lowest at the start, highest near completion.
What is a draw schedule for a construction loan?+
A draw schedule is the plan for disbursing construction loan funds in stages tied to building milestones. Typical draws: 10% at closing/land, 15% at foundation, 25% at framing, 25% at mechanical rough-in, 25% at drywall and completion. Each draw is inspected and approved by the lender before funds are released.
What is the difference between a construction-to-permanent loan and a stand-alone construction loan?+
A construction-to-permanent loan (also called a one-time-close) automatically converts to a regular mortgage once construction is complete — one closing, one set of fees. A stand-alone construction loan must be paid off (or refinanced) with a separate mortgage after completion, requiring two closings and two sets of fees. One-time-close loans are simpler but may have slightly higher rates.
Can I use a HELOC or cash-out refinance instead of a construction loan?+
Only if you already own the land or home you're building on and have enough equity in it. A HELOC or cash-out refinance draws against existing equity in one lump sum or revolving line, with no lender inspections tied to build milestones — but it does not fund a construction loan on raw land with no existing structure, and the amount available is capped by your current equity, not the finished value of the build.
Do I need a second closing after construction finishes?+
It depends on the loan structure. A construction-to-permanent (one-time-close) loan converts automatically at completion, so there is no second closing. A stand-alone construction-only loan must be paid off with a separate mortgage once the home is finished, which means a second closing and a second set of closing costs.
Want to try different numbers?
Back to the calculator ↑Construction Loan Calculator is built and maintained by the RealCostIQ editorial team. Cost ranges and rates are checked against published industry data and contractor quotes, and revised when the underlying figures move. Read our data methodology or more about who builds this. Every calculation runs in your browser — no account, and none of your inputs are stored.
Cost ranges and rates here are checked against contractor quotes and published industry data. If a number still looks off, email Support@RealCostIQ.com and we'll review and fix it.