Construction Loan Calculator — Know Your Numbers Before You Break Ground
Use Paperfree's free construction loan calculator to estimate your monthly interest payments, total project costs, draw schedule, and financing needs — then get matched with a direct lender in 24 hours.
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Construction Loan Calculator
Estimating the true cost of a construction loan requires more than a simple monthly payment figure — because unlike a traditional mortgage, construction loans are disbursed in stages and typically carry interest-only payments during the build. Here's how the key numbers come together.
What Goes Into the Calculation
- Total Construction Budget — The full cost of the build, including land (if not already owned), materials, labor, permits, and contingency reserves
- Loan-to-Cost (LTC) Ratio — Most construction loans finance 70-85% of total project cost, with the borrower covering the remainder
- Draw Schedule — Funds are released in stages as milestones are completed (foundation, framing, roofing, finishes), so interest is only charged on funds actually disbursed — not the full loan amount from day one
- Interest Rate — Construction loan rates are typically higher than conventional mortgage rates, reflecting the short-term, higher-risk nature of financing an unfinished property
- Loan Term — Most construction loans run 6 to 24 months, depending on the scope of the project
How Interest-Only Payments Work During Construction
Because funds are drawn incrementally, your monthly payment during construction grows as more of the loan is disbursed. Early in the project, when only site work and foundation draws have been paid out, your interest cost is low. By the final draws — as finishes and closeout costs are funded — your interest-only payment reflects a much larger disbursed balance.
Estimating Your Numbers
To get an accurate estimate for your specific project, we typically need:
- Your total estimated construction budget
- The estimated timeline for your build
- Your expected loan-to-cost ratio (based on down payment and land equity, if applicable)
- Your target interest rate range, based on credit profile and lender
Get a Personalized Quote
Every construction project has a different draw schedule and cost structure, which makes a one-size-fits-all calculator less accurate than a personalized estimate. Contact us to walk through your project's specific numbers and get a real quote based on your build.
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