Construction Loan Calculator: What They’ll Actually Lend
Enter the land, the build budget, and what the finished property is worth. The calculator sizes the loan the way a construction lender does, tells you which of the two caps bound it, prices the carry on the balance your draws leave outstanding, and shows what happens whether you sell the house or keep it.
The Project
The Loan
The Exit
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Loan Amount
$320,800
Cash to Close
$80,200
Actual LTC
80.0%
Actual LTV
59.4%
Loan-to-cost is binding · The 80% cost cap writes $320,800, below the $378,000 the value cap allows. More equity is what moves this loan, not a higher appraisal.
How the Loan Got Sized
Contingency runs on hard costs alone, because overruns happen in the build. Closing costs sit outside this base and get paid in cash, which is the conservative reading.
Your equity is what moves this loan.
This calculator estimates. The desk sizes the real facility against your budget, your plans, and the exit you are underwriting.
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How does a construction lender size the loan?
Two caps, and the tighter one wins. Loan-to-cost is a percentage of what the project costs to build: land, the vertical budget, contingency, and soft costs. Loan-to-value is a percentage of what the finished property appraises for. A lender quoting 80% of cost and 70% of value is quoting both, and your loan is whichever number comes out smaller. Most calculators size on cost alone, which is why the figure they hand you is often larger than anything this desk can place.
Knowing which cap bound your loan tells you what to change. When cost binds, the project is fine and you simply need more equity in it. When value binds, you are spending close to what the finished house is worth, and no amount of equity fixes that. You need a cheaper build or better comps. This calculator names the binding cap instead of leaving you to work it out.
Why the contingency sits on hard costs
Overruns happen in the build. The lot price is fixed at closing and the architect already sent the invoice, so applying a contingency percentage across the whole project inflates a number that is supposed to be a cushion. Ten percent of your hard costs is a real reserve for the framing surprise and the material price you did not lock. Ten percent of everything is a padded budget that makes the loan look bigger than the project needs.
What does the carry actually cost?
Less than most people assume, because construction money does not all show up at closing. The advance that covers the land funds on day one and sits there the whole build. Everything else releases in draws as work gets completed and inspected, so the balance climbs from the foundation to the final walkthrough. Interest gets charged on what you have drawn, which on an even draw schedule averages out to about half the construction portion.
The difference is not academic. On a $320,000 facility at 10.5% over ten months, charging the full balance from day one produces a carry figure roughly $10,000 above what the project will really cost. Change the draw profile in the calculator and watch it move. A build that is front-loaded, where the site work and the foundation eat the budget early, costs more to carry.
One thing this calculator does not do for you: it treats interest as money you pay rather than as a reserve funded out of the loan. Many facilities include a reserve, and yours may. Modelling it that way would shrink the cash number and lift every return on the page, so the tool shows the conservative version and leaves you to adjust if your term sheet is friendlier.
Sell it or keep it?
A finished house has two exits and they are scored differently. Selling gives you profit after commission and payoff, measured against the cash you put in. Keeping it means a permanent loan retires the construction facility, some of your capital comes back, and the rest stays in the property. The calculator runs both, because a project can win one way and lose the other.
The hold exit has a second test that nothing else on this page can substitute for. The permanent loan has to qualify, and a DSCR loan qualifies on the finished property’s rent against its payment. Pulling capital out of a house the rent cannot carry is not an exit, so the tool reports the ratio separately from the cash figure. When it lands short, a smaller takeout or a no-ratio program is the conversation worth having. For the full picture of what the property nets each month after vacancy and management, use the rental property calculator.
Financing the build
Investor construction lending funds the land and the vertical build in one facility, drawn as the project rises, underwritten on the project and the builder rather than on your tax returns. That is a different product from the construction-to-permanent loan a retail bank writes for someone building their own house. Our new construction loans page covers how the facility is structured and what the draw process looks like. If the plan turns out to be a heavy renovation rather than a rebuild, the fix and flip loan is the closer fit.
Put this calculator on your website
Builders, agents, and investor educators can embed the construction loan calculator free with one line of HTML. It sizes itself to any page and keeps working as we improve it.
Embed this calculator on your site
<script src="https://onemoredoor.com/omd-embed.js" data-calc="construction-loan"></script>Free to use. Paste it where the calculator should appear and it sizes itself. Attribution stays part of the tool. Want it in your brand colors with your name on it? Apply to the Partner Program.
How do I enter land I already own?
Put it in the land cost field at what the lot is worth today, not what you paid for it years ago, since the lender sizes the project against current value. Owned land is real equity in the deal either way, so it belongs in the project cost and it lowers the cash you bring to closing.
Do I pay interest on the whole construction loan from day one?
No. Construction money releases in draws as the work gets done, so interest is charged on the balance you have actually drawn. That is why this calculator prices the carry on an average balance instead of the full loan. Charging the full amount for the whole build would overstate your carry by a wide margin.
What is an interest reserve, and does this calculator use one?
An interest reserve is a line inside the loan that pays your construction interest for you, so the money never leaves your pocket during the build. Plenty of facilities include one. This calculator treats interest as cash you pay, which is the harder number. If your loan carries a reserve, your cash invested drops by roughly the interest figure shown.
What happens if the build runs over budget?
The contingency line is the first place to look, which is why it belongs in your budget from the start rather than in your head. Past that, an overrun generally comes out of your pocket, because the loan was sized against the budget you submitted. Increasing a construction loan mid-build is possible on some programs and slow on all of them.
Can I refinance a construction loan into a rental loan?
Yes, and it is the standard path on a build-to-rent project. The permanent loan pays off the construction facility once the house is finished and rented. A DSCR loan qualifies on the rent against the payment, so your tax returns never enter the file, which is why this calculator reports the ratio the desk will run.
The budget decides the loan.
Bring the lot, the plans, and the build budget. The desk sizes the real facility against the exit you're underwriting.
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