Construction Loan Calculator

About this calculator

A construction loan doesn't disburse all its funds at once — it's drawn down gradually as building progresses, so interest only accrues on whatever portion has actually been advanced. This calculator assumes an even, linear draw schedule over the build term, meaning the outstanding balance grows roughly from $0 to the full loan amount, averaging about half the total loan — so estimated interest ≈ (Loan Amount ÷ 2) × Rate × Build Term, rather than charging interest on the full amount from day one.

Real-world draws follow an actual construction draw schedule (foundation, framing, roof, finishes, etc.) rather than a perfectly straight line, so this linear approximation is a planning estimate, not a substitute for the lender's draw-schedule amortization. Homebuilders, custom-home buyers, and construction lenders use it to budget interest reserve — the amount set aside specifically to cover interest payments during the build — before construction begins and the loan later converts to a permanent mortgage.