Construction payment calculator
Two payments live inside one construction loan: interest during the build, and principal and interest once it converts. This estimates both so a buyer sees the whole picture before they sign — then saves, shares, or prints it.
Scenario
Estimate
$540,000 total project · $54,000 equity · $486,000 financed · 8.5% during build · 6.75% on a 30-year fixed
During construction
- Average interest-only payment (9 months)
- $1,721
- Payment at full draw (final months)
- $3,443
- Total interest during construction
- $15,491
After conversion
- Estimated principal & interest
- $3,152
- Taxes & insurance (escrow)
- $583
- Estimated total monthly payment
- $3,736
Construction interest assumes draws fund evenly, so the average outstanding balance is roughly half the loan amount. Actual interest follows the real draw schedule. Estimates exclude mortgage insurance and HOA dues.
Before you decide
Common misconceptions
A few things buyers and sales counselors hear often about construction financing. None of them are simply true or false — each depends on the builder, the program, and the buyer's circumstances.
“The lowest interest rate automatically means the lowest overall cost.”
Rate is the number everyone shops, and it does a lot of work. But two loans at the same rate can cost very different amounts, and a lower rate is sometimes purchased with points or higher fees. Mortgage insurance, loan structure, term, and how long you keep the loan all feed into total cost. A rate that is a quarter point lower may be worth it if you stay ten years and may not be if you refinance or sell in three.
Worth asking
What are the fees behind this rate, and at what point do I break even on them?“Builder financing is always more expensive.”
Sometimes it is, sometimes it isn't. Builders often bring incentives to their preferred lender — closing cost credits, rate buydowns, or forward commitments — that can make the total cost competitive or better. Other times the incentive is offset elsewhere. The only way to know is to price the builder's offer and an outside offer on the same home, on the same day, with the same assumptions, and compare cash to close and payment together.
Worth asking
Can we put the builder's incentive and an outside quote side by side on the same terms?“The down payment is what I need to bring to closing.”
The down payment is usually the largest piece, but it isn't the whole number. Closing costs, prepaid taxes and insurance, and escrow setup are all part of cash to close, and they can add several thousand dollars. Seller or builder credits, lender credits, and gift funds can reduce what you bring — but those are negotiated, not automatic. It is worth knowing the full figure early rather than at the end.
Worth asking
What is my realistic total cash to close, including prepaids and escrows?“My rate is set as soon as I'm pre-approved.”
A pre-approval is a review of your credit, income, and assets — it establishes what you can borrow, not the rate you will pay. The rate is set when you lock, which typically happens once you have a property under contract. On new construction the timing question is bigger, because delivery dates move and lock periods have limits. Extended locks and float-down options exist, and each has a cost and a tradeoff.
Worth asking
When should I lock given my timeline, and what are my options if the date moves?
If any of these apply to your situation, they are good things to talk through before you choose a direction. There is rarely one right answer — there is the answer that fits what you are trying to do.
Explore
What happens if…
Construction financing has more moving parts than a resale purchase. Try a change below and the estimate updates in place — the numbers you see are what that change would do to the payment after the loan converts.
These are estimates, and nothing here is a commitment. Nothing is saved, submitted, or shared, and there is no wrong combination to try — explore as freely as you like. If a scenario starts to look like your actual plan, or you simply have a question about what you are seeing, personalized guidance is always available: Corie is happy to walk through it with you.
Why this changed
Because you increased the permanent-loan interest rate from 6.75% to 7.25%, the same amount financed costs more in interest once you convert, so the principal-and-interest payment after the home is finished rises — your build budget and equity are untouched. For the numbers you entered, that works out to about $163 more a month after conversion — nothing else in the estimate changed. In practice, worth knowing before you count on today's pricing.
Before and after: the permanent-loan interest rate changes from 6.75% to 7.25%.
Why this changed
Because you lowered the permanent-loan interest rate from 6.75% to 6.25%, less interest is owed on the same loan amount after conversion, so the long-term payment eases while nothing about the construction period changes. For the numbers you entered, that works out to about $160 less a month after conversion — nothing else in the estimate changed.
Before and after: the permanent-loan interest rate changes from 6.75% to 6.25%.
Why this changed
Because you increased the equity you put into the build from 10% to 15%, you are financing less of the same total project cost, so the loan amount drops — that lowers both the interest-only draws during construction and the payment after conversion, in exchange for more cash out of pocket. For the numbers you entered, that works out to about $175 less a month after conversion — nothing else in the estimate changed. In practice, less financed, less cash in hand.
Before and after: the equity you put into the build changes from 10% to 15%.
Why this changed
Because you lowered the equity you put into the build from 10% to 5%, you keep more cash but finance more of the same project, so the loan amount rises and every payment tied to it rises with it. For the numbers you entered, that works out to about $175 more a month after conversion — nothing else in the estimate changed.
Before and after: the equity you put into the build changes from 10% to 5%.
Why this changed
Because you increased the length of the construction period from 9 months to 12 months, you make interest-only payments on the drawn balance for more months, so total interest during construction goes up — the permanent payment after conversion is unaffected — but in your scenario it barely moves the a month after conversion. That tells you the length of the construction period is not what is driving your numbers right now; something else you entered matters more.
Before and after: the length of the construction period changes from 9 months to 12 months.
Why this changed
Because you lowered the permanent loan term from 30 years to 15 years, the same loan is repaid over half as many months, so far more principal is due each month — the payment climbs, but the total interest over the life of the loan falls sharply. For the numbers you entered, that works out to about $1,148 more a month after conversion — nothing else in the estimate changed.
Before and after: the permanent loan term changes from 30 years to 15 years.
Why this changed
Because you lowered the build budget from $450,000 to $410,000, a smaller project cost means a smaller amount financed at the same down payment percentage, so construction interest and the permanent payment both come down. For the numbers you entered, that works out to about $233 less a month after conversion — nothing else in the estimate changed.
Before and after: the build budget changes from $450,000 to $410,000.
Why this changed
Because you increased the annual property tax estimate from $5,400 to $6,600, taxes are escrowed monthly, so a higher assessment raises the escrow piece of your payment after conversion even though the loan amount never changed. For the numbers you entered, that works out to about $100 more a month after conversion — nothing else in the estimate changed. In practice, escrow moves even when the loan does not.
Before and after: the annual property tax estimate changes from $5,400 to $6,600.
In closing
Your mortgage decision summary
You've modeled a $540,000 project with $54,000 in equity or down payment and $486,000 financed. During the 9-month build, payments start small and grow with each draw, averaging about $1,721 a month; after conversion to a 30-year fixed, the estimate settles near $3,736.
Construction financing asks two different questions at once: what carrying the loan costs while the home is being built, and what the payment looks like once you live in it. The roughly $15,491 of interest during construction is a cost of the timeline itself — it moves when the schedule moves.
The gap between the 8.5% construction rate and the 6.75% permanent assumption is an assumption, not a quote. How that gap is managed — an extended lock, a float-down, or a builder forward commitment — is often the most consequential part of the conversation.
Key takeaways
Your build payment and your permanent payment are two different numbers, and both belong in your budget planning.
Construction interest follows the real draw schedule, so a longer build costs more even if nothing else changes.
Rate lock strategy matters more on a new build than on a resale, simply because the delivery date is further out.
The permanent rate here is an assumption. Understanding how it could move is more useful than treating it as fixed.
Reserves matter during construction — change orders and timeline shifts are common, and flexibility is what absorbs them.
What would you like to do next?
There's no next step you have to take. Keep exploring, save what you've built, or talk it through — whichever is genuinely useful to you right now.
A note from Corie
A mortgage is more than a monthly payment.
It's a financial decision that should support your goals, your family, and your future.
My hope is that these tools help you better understand your options. If you ever have questions, I'd be honored to help you think through them.
Ask Corie about this estimate
Have a question about these numbers?
Every homebuyer's situation is different.
Construction financing has unique considerations. I'd be happy to explain how these estimates fit into a new construction timeline.
Whether you're comparing loan options, buying your first home, building a new home, or simply planning ahead, we can review your scenario together.
No pressure. No obligation. Just clear answers to help you make an informed decision.
Estimates are for education only. They are not a loan approval, a rate quote, or a commitment to lend. Interest during construction depends on the actual draw schedule, and the permanent payment depends on the buyer's qualification and the program guidelines in effect at closing.
A conversation, not a pitch
Want these numbers pressure-tested on a real buyer?
Send the scenario over and we will walk through the program, the timeline, and what the buyer should expect.