Construction Loan Calculator

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

By Konstantin Iakovlev · Updated April 2026 · Source: CFPB — Owning a Home

$
$
$
%
%

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

Building a home in 2026 involves two distinct costs, and this tool estimates both: the interest that accrues while the house goes up and the permanent mortgage payments that follow. The result shows the full financial arc of a project from groundbreaking to move-in, including the way your draw schedule shapes what you ultimately pay.

During construction, the math follows a simple-interest approach, charging interest only on the funds actually disbursed as draws at each payment period. The permanent mortgage then switches to standard amortization, P = L[i(1+i)^n]/[(1+i)^n-1], applied to the final loan amount, interest rate, and term.

Construction-phase interest is easy to underestimate, particularly when the build drags on or the draws land early and large. Permanent mortgage rates can move as well, so leave room in your long-term budget for the rate to shift before you lock it.

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.

You might also need

Mortgage Calculator 2026 — Payment, Amortization & PMI

Calculate your monthly mortgage payment with taxes, insurance, PMI, and HOA. View full amortization schedule. Free, instant results based on current rates.

FHA Loan Calculator 2026 — MIP, Down Payment & Limits

Calculate FHA loan payments including upfront MIP (1.75%) and annual MIP premiums. See when MIP drops off. Free, instant results based on 2026 FHA limits.

Home Affordability Calculator — How Much House Can You Afford?

Find out how much house you can afford based on income, debts, down payment, and current mortgage rates. Free, instant results with DTI ratio breakdown.