Construction Loan Calculator
Building a home usually means a construction loan that pays interest only while you build, then converts to a permanent mortgage. This models both phases.
How it works: during construction you draw funds as work completes and pay interest only on the outstanding balance. At completion the loan converts to a permanent mortgage (construction-to-permanent) or you pay it off with a new loan. Model: interest on the average outstanding balance (half the build cost), then a fully amortizing permanent payment. Gotchas: construction rates are higher than permanent rates, inspections gate each draw, and cost overruns must be covered out of pocket or with contingency. This is an estimate — your lender's draw schedule and rate lock terms rule.
FAQ
How do construction loan payments work?
During the build you pay interest only on the amount drawn so far (no principal). Once the home is complete, it converts to a permanent mortgage you pay down like a normal loan.
What is a construction-to-permanent loan?
A single loan that finances the build and automatically converts to a permanent mortgage at completion — one closing, one set of fees. Separate construction and mortgage loans mean two closings.
Do I need a big down payment for a construction loan?
Construction lenders usually want 20-25% equity — commonly provided by the land value plus cash. Your land equity counts toward the down payment, as modeled here.
Figures are editable example defaults for modeling, not quotes or advice. Financial, tax, and medical outcomes vary with your situation — verify with a qualified professional (CFP, CPA, tax advisor, or veterinarian).