Construction Loan Calculator

Calculate construction loan interest and permanent mortgage payments. See draw schedule.
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Total Project Cost

$450,000.00

Construction Interest

$17,850.00

Permanent Monthly Payment

$2,334.95

Construction Phase

Loan Amount$360,000.00
Down Payment (20.0%)$90,000.00
Average Monthly Interest$1,487.50
Max Monthly Interest (full draw)$2,550.00
Total Construction Interest$17,850.00

Draw Schedule

Draw 1 (Month 1) — $60,000.00 drawn$425.00/mo interest
Draw 2 (Month 3) — $120,000.00 drawn$850.00/mo interest
Draw 3 (Month 5) — $180,000.00 drawn$1,275.00/mo interest
Draw 4 (Month 7) — $240,000.00 drawn$1,700.00/mo interest
Draw 5 (Month 9) — $300,000.00 drawn$2,125.00/mo interest
Draw 6 (Month 11) — $360,000.00 drawn$2,550.00/mo interest

Permanent Loan & Total Cost

Permanent Monthly Payment$2,334.95
Total Permanent Interest$480,583.13
Total All-In Cost$948,433.13
Extra Cost vs Buying Existing$17,850.00

Use the Construction Loan Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

Our 2026 Construction Loan Calculator helps you estimate both the interest accrued during your build and your subsequent permanent mortgage payments. Understand the financial implications of your construction project from start to finish, including how your draw schedule impacts costs.

This calculator uses a simple interest methodology for the construction phase, calculating interest only on the disbursed loan amount (draws) at each payment period. For the permanent mortgage, it employs standard amortization formulas (P = L[i(1+i)^n]/[(1+i)^n-1]) based on the final loan amount, interest rate, and term.

A common mistake is underestimating the total interest paid during construction, especially with longer build times or front-loaded draw schedules. Also, remember that permanent mortgage rates can fluctuate, so factor in potential changes when planning your long-term budget.

Example: Building a New Home in 2026

  1. 1 Input a total construction loan amount of $400,000 with a 3-month interest-only construction period at 8.25% APR. Set a draw schedule: $100,000 at month 1, $150,000 at month 2, and $150,000 at month 3. For the permanent mortgage, use a 30-year term at 6.75% APR.
  2. 2 The calculator will compute interest payments for each month of the construction phase based on the outstanding disbursed amount. It will then calculate the total permanent mortgage payment using the full $400,000 loan amount.
  3. 3 The calculated interest-only construction payments would be approximately $687.50 for month 1, $1,718.75 for month 2, and $2,750.00 for month 3. The permanent mortgage payment would be approximately $2,594.00 per month.
  4. 4 This example shows the escalating interest costs during construction as more funds are drawn, followed by a consistent permanent mortgage payment. This allows you to plan your cash flow effectively for both phases of your home ownership journey.

Source: CFPB — Owning a Home · Last updated: April 2026

Frequently Asked Questions

How does a construction loan work?
A construction loan is a short-term loan (typically 12-18 months) that funds building your home in stages called draws. You pay interest only on funds disbursed. Once construction is complete, the loan converts to a permanent mortgage (construction-to-perm) or is refinanced into a standard mortgage.
What are construction loan interest rates in 2026?
Construction loan rates are typically 1-2% higher than conventional mortgage rates, roughly 7.5-9% in 2026. You only pay interest on the amount drawn, so monthly payments start low and increase as construction progresses. The permanent mortgage rate is locked separately.
How much down payment is needed for a construction loan?
Most construction loans require 20-25% down based on the projected value of the completed home. Some lenders accept land equity as part of the down payment. You also need detailed plans, a licensed builder, and a construction timeline. Qualification is stricter than a standard mortgage.

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