Construction Loan Calculator
This construction loan calculator models total project cost and the interest you actually pay on draws during the build.
By Onias Derilus, Mortgage Capital · NMLS# 1859012 · Last Updated: June 2026
You pay interest only on funds drawn, so the early months cost far less than the last. This models an average outstanding balance near 55% of the loan across the build. Estimate only.
A construction loan funds in draws as work is completed, and you pay interest only on what has been drawn. The payment therefore starts small and climbs toward the end of the build.
The total interest you pay during construction is a real project cost, and it belongs in the budget alongside materials and labor rather than being treated as an afterthought.
These figures are estimates. For neutral, official guidance on mortgage costs and what lenders can charge, see the CFPB's Owning a Home guide.
How to Use This Calculator
- 1
Enter land cost, hard construction cost and soft costs such as permits, plans and impact fees.
- 2
Add a contingency — 10% is a common floor and more is wise on an older lot or a complex build.
- 3
Enter your down payment or land equity, the construction rate and a realistic build time.
- 4
Read interest during construction alongside the payment at full draw.
The Formula & Assumptions
Project = land + (build ×
(1 + contingency%))
+ soft costs
Loan = project ×
(1 − down%)
Draw interest ≈ average
balance × rate ÷ 12
× months
Interest is charged on drawn funds only, so the true cost depends on the draw schedule. Modeling an average outstanding balance around half the loan is the standard approximation and is close enough for budgeting.
Florida soft costs are heavier than many builders expect. Impact fees, wind-load engineering and county permitting can add materially, and coastal parcels may require elevation certificates and additional review.
Build time slippage is the most common budget breach. Every extra month adds interest at close to the full-draw rate, because the balance is highest at the end.
Frequently Asked Questions
How much down payment does a construction loan need?
Commonly 20% to 25% of total project cost. Land you already own free and clear usually counts toward that equity, which is why buying the lot first can reduce the cash you bring at construction closing.
Do I pay the full payment from day one?
No. Interest accrues only on funds drawn, so early payments are small and grow as the build progresses. The payment at full draw shown here is the peak, reached near completion.
What happens when construction finishes?
Either the loan converts to a permanent mortgage, or you refinance into one. A construction-to-permanent loan handles this with a single closing and avoids a second set of costs.
Why does Florida require a contingency?
Lenders want a reserve for the overruns that permitting, weather delays and material pricing reliably produce. Ten percent is a typical minimum, and complex or coastal projects often carry more.
Ready to Turn Your Estimate Into a Real Pre-Approval?
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Rates are illustrative only. APR and payments vary by credit score, loan amount, and market conditions. Subject to credit approval. Not a commitment to lend. NMLS# 1859012. Equal Housing Lender.