Construction Loan Calculator
construction loan calculator. Get instant, accurate results. Enter values for instant results with step-by-step formulas.
Reviewed by Sahil, Senior Finance & Tax Editor
Formula
Interest-Only (construction): Interest = Drawn Amount x Rate / 12 | Permanent: M = P[r(1+r)^n]/[(1+r)^n-1]
During construction, you pay interest-only on drawn funds. Draws typically follow a schedule (e.g., 10% at start, then periodic draws). After construction, the loan converts to a standard amortizing mortgage.
Worked Examples
Example 1: $400K construction
Problem:$400K budget, 7.5% construction rate, 12mo, then 6.5% permanent 30yr
Solution:Avg construction interest: ~$1,625/mo. Permanent: $2,528/mo
Result:~$1,625/mo during build, $2,528/mo permanent
Frequently Asked Questions
What building permits are typically required for construction projects?
Most jurisdictions require permits for structural changes, electrical work, plumbing, HVAC installation, roofing, additions, and new construction. Minor cosmetic work like painting and flooring usually does not require permits. Check your local building department as requirements vary by municipality.
What are common mistakes in construction material estimation?
Common errors include forgetting waste allowances (10-15% for lumber, 5-10% for concrete), not accounting for overlap in roofing and siding, miscalculating areas with complex shapes, ignoring header and footer materials, and using nominal vs actual lumber dimensions.
Reviewed by Sahil, Senior Finance & Tax Editor · Editorial policy