Construction Loan Calculator: Construction-to-Permanent Estimate
A construction-to-permanent loan works in two phases. While the house is being built, the lender pays your builder in draws, and you are usually billed interest on the money drawn so far. When the house is finished, the loan converts to a regular mortgage with principal and interest. This calculator estimates both phases from the numbers you enter.
Your estimate
Enter your numbers
This calculator needs JavaScript. Results are estimates, not an offer of credit.
How the calculator works
During the build, interest is figured on the money drawn so far, not on the full loan. Early in the build only a small amount has been drawn, so early bills are small. They grow as each stage of work is paid. The calculator assumes your loan is drawn in equal amounts each month. Your real schedule follows your builder's draw schedule, which you can model in the draw schedule calculator.
After the build, the loan converts to permanent financing. From then on you repay principal and interest on the full balance over the loan length your lender sets. Fannie Mae's Selling Guide section on single-closing construction-to-permanent loans describes how one closing covers both phases, with the terms converting when construction is complete.
Worked example
Say your build costs $428,215, the average construction cost for a new single-family home in the National Association of Home Builders' 2024 Cost of Constructing a Home survey. You close the loan and the builder starts work.
- After the first draw for site work and the foundation, say $77,467 has been drawn. That month's interest is figured on $77,467, not on $428,215.
- Once framing is paid, the amount drawn might reach $148,449. Interest that month is figured on $148,449.
- By the final draw the full $428,215 is out, and that's the balance that converts to the permanent loan.
Enter your loan amount, build length, and the rates and loan length your lender gives you, and the calculator does the math for your build. We don't fill in a rate because only your lender can quote one.
Frequently asked questions
How does interest work on a construction-to-permanent loan?
During the build, most lenders bill interest on the money drawn so far. After the home is finished, the loan converts to a regular mortgage with principal and interest on the full balance.
Is a construction-to-permanent loan one closing or two?
A construction-to-permanent loan is usually a single closing that covers the build and the permanent mortgage. A two-time close uses a separate construction loan and a new mortgage at the end.
Why doesn't the calculator show a rate?
Rates depend on your credit, the property, the lender, and the market on the day you lock. Enter the rate your lender gives you to get a useful estimate.
Does the calculator include taxes and insurance?
No. It estimates interest during the build and principal and interest after conversion. Property taxes, homeowners insurance, and any mortgage insurance are extra.
What if my build takes longer than planned?
Each extra month means another month of interest on the money drawn so far, usually near the full balance late in the build. Try a longer build in the calculator to see the difference.
More construction loan calculators
Related guides
- One-time close vs. two-time close
- Do you make payments during a construction loan?
- What happens when your construction loan converts
Sources
- NAHB, Cost of Constructing a Home, 2024
- Fannie Mae Selling Guide B5-3.1-02, single-closing construction-to-permanent financing
- Fannie Mae, FAQs: Construction-to-Permanent Financing
This calculator is for general education. Results are estimates based on the numbers you enter, not an offer of credit, a rate quote, or a commitment to lend. Requirements vary by lender, loan program, and location.