New Construction Loan Calculator
Estimate construction loan costs, draw-period interest, origination fees, cash needed, loan-to-cost, and loan-to-completed value for a ground-up or major renovation project. This estimate is informational only and is not an approval, rate quote, or commitment to lend.
- 1Project
- 2Financing
- 3Terms
- 4Your Results
Step 1 of 4: Project
Tell us about the project
Start with a few details about the construction project and the financing you are considering.
This calculator provides an illustrative estimate for educational and planning purposes only. It is not a loan offer, approval, commitment to lend, rate quote, or guarantee of available terms. Estimated draw-period interest assumes approximately 50% average loan utilization; actual draw-based interest may differ based on the draw schedule, holdbacks, and lender terms. This estimate excludes taxes, insurance, appraisal, legal, inspection, title, escrow, extension, draw, servicing, and prepayment fees unless entered above. Actual rates, payments, points, fees, eligibility, and loan terms vary by borrower, property, lender, valuation, and market conditions. Borrowers should review personalized options with a qualified lending professional.
What Is a Construction Loan?
A construction loan is short-term financing used to pay for the cost of building a new home or completing a major renovation. Instead of receiving the full loan amount up front, funds are typically released in draws as construction milestones are reached. Interest is charged on the amount actually drawn, not the full approved amount.
Because construction loans are short-term, they are usually replaced by longer-term financing once the project is complete. Program requirements, draw schedules, and availability vary by lender, borrower, and project, so Anchor Capital Lending helps borrowers review and compare available construction financing options for their scenario.
Construction-to-Permanent vs. Construction-Only
Construction-to-permanent
A single loan that converts into a standard mortgage automatically once construction is finished. You close once and avoid the need for a second loan, which can simplify the process and reduce duplicate closing costs.
Construction-only
A short-term loan that covers just the build. When construction is complete, the loan must be paid off or refinanced into longer-term financing. This keeps the build and permanent loan separate but requires a second closing.
Owner-Builder and Spec / Investment Projects
Owner-builder projects are homes built for the borrower to occupy. Lenders often review the borrower's plans, contractor arrangements, and timeline carefully, and may require additional documentation when the borrower is acting as their own general contractor.
Spec and investment projects are built to sell or hold for rental income. These projects are typically evaluated on the projected completed value and the borrower's overall project plan. Because requirements vary, Anchor Capital Lending helps investors review available construction financing paths for their specific project.
Draw-Based Funding and Interest
Construction loans are usually funded in draws tied to milestones such as foundation, framing, drywall, and finishing. The lender inspects progress before releasing each draw, so the outstanding balance grows over time rather than all at once.
Because interest is charged only on the drawn amount, your actual interest depends on the draw schedule and how quickly funds are used. This calculator uses a 50% average loan utilization planning assumption to estimate draw-period interest; actual draw-based interest may differ based on the draw schedule, holdbacks, and lender terms.
Loan-to-Cost and Loan-to-Completed Value
Loan-to-cost (LTC)
Compares the requested loan amount to the total project cost — land, construction, and other costs. It shows how much of the project the loan represents relative to what it costs to build.
Loan-to-completed value (LTGV)
Compares the requested loan amount to the estimated value of the finished property. Lenders use it to understand the loan relative to the project's expected completed worth.
Common Construction Costs
Land and construction
The land or lot value plus the construction budget form the core of total project cost and drive the loan-to-cost ratio.
Other project costs
Permits, plans, engineering, and soft costs that are not part of the construction budget but still contribute to total project cost.
Financing and holding
Draw-period interest, origination fees, and carrying costs during the build. This calculator estimates interest and fees; it does not include every holding cost.
Qualification Considerations
Construction lenders commonly review the borrower's project plans, budget, contractor or builder experience, timeline, and the estimated completed value of the property. They may also review the borrower's financial profile and reserves to confirm the project can be completed and the loan repaid or refinanced.
Because this calculator cannot evaluate every factor a lender considers, its results are informational only. Eligibility, rates, terms, draw schedules, and loan amounts vary by lender, borrower, property, and market conditions. A personalized review with the lending team is the best way to understand the options available for your project.
Frequently Asked Questions
What is a new construction loan?
A new construction loan is short-term financing used to fund the cost of building a new home or completing a major renovation. Funds are typically released in draws as construction milestones are reached, and interest is charged on the amount actually drawn. These loans are usually replaced by longer-term financing once the project is complete.
What is the difference between construction-to-permanent and construction-only?
A construction-to-permanent loan converts into a standard mortgage automatically once construction is finished, so you close once and avoid a second loan. A construction-only loan covers just the build and must be paid off or refinanced when the project is complete. The right structure depends on your project, timeline, and long-term financing plans.
How does draw-based funding work?
Construction loans are usually funded in draws tied to milestones such as foundation, framing, and finishing. The lender inspects progress before releasing each draw, so the outstanding balance grows over time. Because interest is charged only on the drawn amount, your actual interest depends on the draw schedule and how quickly funds are used.
Why does this calculator assume 50% average loan utilization?
Because draws are released gradually, the full loan amount is not outstanding for the entire term. This calculator uses a 50% average utilization planning assumption to estimate draw-period interest. Your actual interest may be higher or lower depending on the draw schedule, holdbacks, and lender terms.
What are loan-to-cost and loan-to-completed value?
Loan-to-cost compares the requested loan amount to the total project cost (land, construction, and other costs). Loan-to-completed value compares the loan amount to the estimated value of the finished property. Lenders use both ratios to understand how much of the project the loan represents.
Is this calculator result a loan offer or approval?
No. The result is an informational estimate for educational and planning purposes only. It is not a loan offer, approval, commitment to lend, rate quote, or guarantee of available terms. Actual rates, payments, points, fees, eligibility, and loan terms are determined following review by the appropriate licensed lending professional.
Ready to Review Your Construction Financing Options?
Schedule a consultation to discuss your project, budget, and available lending options. We'll review your scenario and help identify the appropriate next steps.
Submitting an inquiry does not guarantee approval or constitute a commitment to lend. Financing availability and terms are determined following review by the appropriate licensed lending professional.
This calculator provides an illustrative estimate for educational and planning purposes only. It is not a loan offer, approval, commitment to lend, rate quote, or guarantee of available terms. Estimated draw-period interest assumes approximately 50% average loan utilization; actual draw-based interest may differ based on the draw schedule, holdbacks, and lender terms. This estimate excludes taxes, insurance, appraisal, legal, inspection, title, escrow, extension, draw, servicing, and prepayment fees unless entered above. Actual rates, payments, points, fees, eligibility, and loan terms vary by borrower, property, lender, valuation, and market conditions. Borrowers should review personalized options with a qualified lending professional.