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Construction loan calculator
For investors and builders financing a ground-up project. Enter the land, hard and soft costs and the completed value to see the loan, the equity you need, a month-by-month draw schedule with the interest on each draw, and the interest reserve to budget for the build and the sale.
Cash to close: (land not advanced, plus points and fees).
Cost and loan stack
Draw schedule and interest by month
Illustrative estimate from the numbers you entered. Not an offer or commitment to lend; actual terms are set by the lender after underwriting. Business-purpose loans on non-owner-occupied investment property only.
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Send the deal and a person reads it. Your calculator numbers are copied into the form, so there is nothing to retype. If it is a deal the lenders in our network can do, you get an indicative range and a list of what they need. If it is not, we tell you quickly.
- No application fee, no upfront fee, no obligation.
- Business-purpose loans only: investment property held in an LLC or other entity, never owner-occupied.
- Programs available in 40 states.
Easy Lending USA is not a lender or a mortgage broker. We introduce real estate investors to independent private lenders, who make every credit decision.
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How a construction loan is sized
Ground-up lenders cap the loan two ways and use the lower figure: a share of the total project cost (loan-to-cost) and a share of the completed value (loan-to-ARV). Part of the land cost can usually be advanced at closing; the construction budget is held back and released in draws as each stage is inspected.
Total cost = land + hard costs + soft costs + contingency Loan = lower of (LTC% × total cost) and (ARV% × completed value) Your equity = total cost − loan
How construction loan interest works
On most construction loans you pay interest only on the money drawn, so the payment starts small and grows as the build goes up. The draw table shows each month’s draw, the balance and the interest on it. Some lenders charge interest on the full commitment from day one (Dutch interest); switch Interest charged to see the difference.
Interest each month = loan balance outstanding × annual rate ÷ 12
What an interest reserve is
An interest reserve is money set aside, often inside the loan, to pay the interest while the project earns nothing. Its size is the total interest from closing until you sell or refinance: the build months plus the months it takes to sell or lease up. The calculator’s total interest figure is the reserve you would need. If the lender funds the reserve, it has to fit under the loan caps along with the land and construction money.
Draw patterns
Construction spending rarely runs evenly. Most projects draw slowly during site work, fastest during framing and mechanicals, and slowly again at finishes, which is the Typical pattern. Front-loaded and back-loaded patterns show how the interest changes if your budget is heavy at either end.
Construction loan calculator questions
How do you calculate interest on a construction loan?
Each month, multiply the balance drawn so far by the annual rate and divide by 12. Because the balance grows with each draw, the monthly interest grows through the build. Add the months together, including the months to sell or refinance, for the total interest.
How much down payment do I need for a construction loan?
Your equity is the total project cost minus the loan. With an 80% loan-to-cost cap you bring at least 20% of the cost, and more if the loan-to-ARV cap is the lower of the two. On a ground-up investment loan the land you already own can count toward that equity.
What is a construction draw schedule?
The plan for releasing the construction money in stages. You complete a stage, request a draw, the lender inspects, and the funds are released. Draws reimburse finished work, so you need working capital to carry each stage.
What is an interest reserve on a construction loan?
Money set aside to pay the interest during the build and sale, when the project has no income. It equals the total interest you expect to pay from closing to payoff.
Can a first-time builder get a ground-up construction loan?
Ground-up lenders usually want a track record of completed projects, including at least one new build. If you have flips but no new construction yet, a heavy-rehab fix and flip loan is the usual first step. See ground-up construction loans for the requirements.
Is this for building my own home?
No. The loans we arrange are business-purpose only: a project built by a business entity to sell or rent, never a home you or your family will live in.
More investor calculators
Holding the finished property as a rental? Size the long-term loan with the DSCR calculator. Renovating instead of building? Use the hard money loan calculator. All tools are on the calculators page.
Results are illustrative estimates based on the numbers you enter. They are not an offer or commitment to lend. Actual loan amounts, rates and terms are set by the lender after underwriting. Easy Lending USA is not a lender or a mortgage broker; we introduce real estate investors to independent private lenders. Business-purpose loans on non-owner-occupied investment property only.