Construction-to-permanent scenarios

Construction Loan Calculator

Plan monthly interest as construction funds are drawn, then estimate the permanent mortgage payment after conversion.

Project and financing details

Leave blank for equal monthly draws, with any cent remainder in the final month. Otherwise enter one amount per month separated by commas or new lines, including 0 for months without a draw. Do not use thousands separators. The total must equal the construction budget minus your construction cash contribution. Land financing and financed fees are added separately at closing.

For land already owned outright, enter 0 as the land amount financed. For a land purchase or existing land debt rolled into this loan, enter only the amount borrowed. This model limits that amount to the entered land value. Land equity is not automatically counted as cash for construction.

Other construction carrying costs can include estimated property taxes, insurance, rent and HOA. They are paid outside the loan each month. Permanent property charges should include any mortgage insurance. Enter all fees you want modeled, including conversion fees if applicable; this simplified fee model pays or finances them at closing.

Starting rates are examples, not current lender offers. Interest is paid from outside funds; financed interest reserves are not modeled.

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How the two phases work

During construction, this calculator applies the annual construction rate divided by 12 to the drawn balance. Beginning-of-month draws accrue a full month's interest immediately; end-of-month draws start accruing next month. Land financing and financed fees are outstanding from closing in either case. Monthly interest rounds to cents and is paid without reducing principal.

At conversion, the outstanding balance becomes the permanent mortgage. Its separate rate and term determine a fixed monthly principal-and-interest payment. Payments and monthly interest round to cents; the final payment clears any rounding balance. A zero interest rate divides principal by the number of payments. If no funds are borrowed, principal and interest are zero.

The average construction payment is total construction interest divided by construction months. Carrying cost adds your other monthly construction costs for every month; it excludes principal cash and fees. The cash-outlay subtotal adds construction cash and cash-paid fees. Financed fees are included in loan principal, not counted again as immediate cash.

Assumptions and limits

This is a monthly planning model, not an APR or a regulatory Loan Estimate. Actual lenders may use daily accrual, different day-count conventions, inspection-dependent draws, variable construction rates, retainage, interest reserves and extension fees. Delays, cost overruns, changes in property charges and lender conversion requirements can change both phases. The permanent term starts after the construction phase; no conversion balloon or principal paydown is assumed. The land value plus budget is not an appraisal or a borrowing limit.

Source review: October 5, 2026. CFPB guidance on multiple-advance construction loans discusses advances and interest reserves. PNC's construction-loan explanation describes the transition from interest-only payments to principal and interest. Your loan agreement controls your actual costs.

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