Construction to Permanent Loan Calculator
Estimate your payments during the interest-only construction phase and the permanent mortgage phase. Enter your loan details below:
What Is a Construction to Permanent Loan?
A construction to permanent loan is a specialized mortgage that combines two phases: financing the construction of a new home and converting to a long-term mortgage after completion. Instead of taking out two separate loans (one for construction and one for mortgage), this loan structure simplifies the process with a single closing.
This type of loan is ideal for borrowers planning to build their own home or hire a contractor. It helps save on closing costs, time, and stress compared to juggling multiple loans.
How Our Construction to Permanent Loan Calculator Helps
Our calculator is designed to give U.S. borrowers a clear picture of how much they’ll pay during both stages:
- Construction Phase: Interest-only payments based on the draw amount and annual construction interest rate.
- Permanent Loan Phase: Fully amortized monthly payments based on the permanent mortgage rate and loan term.
Simply enter the loan amount, construction period, interest rates, and permanent term to get accurate monthly payment estimates and total costs.
Key Components of a Construction to Permanent Loan
Understanding each component of this loan is crucial before applying:
- Loan Amount
This is the total sum borrowed to cover construction costs and land value (if applicable). - Construction Phase (Interest-Only)
During this phase, payments only cover the interest on the amount disbursed. These payments are usually lower, as you’re not paying principal yet. - Construction Interest Rate
Typically slightly higher than a standard mortgage rate, this applies only during the construction period (usually 6–12 months). - Permanent Phase
After construction, the loan converts into a traditional mortgage. You’ll start paying both principal and interest. - Permanent Mortgage Rate & Term
This rate and term (15, 20, or 30 years) determine your long-term monthly payment.
Benefits of Using a Construction to Permanent Loan
Here’s why thousands of Americans opt for this type of loan every year:
- One-time closing: Saves money and reduces paperwork.
- Lock in rates early: You can lock in your permanent rate before construction begins.
- Simplified approval: Lenders often assess once for both stages.
- Cash flow planning: Know exactly what you’ll owe, when, and for how long.
- Protect against market rate fluctuations after construction.
Who Should Use This Loan Type?
This financing option is ideal for:
- First-time homeowners building custom homes
- Real estate investors constructing new properties
- Contractors and builders wanting a streamlined funding process
- Buyers purchasing land and building soon after
How to Use the Calculator (Step-by-Step)
- Enter Loan Amount: Total amount you plan to borrow.
- Set Construction Months: Duration of the build.
- Input Construction Interest Rate: Annual percentage (e.g., 6.5%).
- Add Permanent Rate: The expected fixed mortgage rate.
- Choose Loan Term: Typically 15, 20, or 30 years.
- Click Calculate: Instantly get monthly construction and mortgage payments.
Bonus: Use the “Print” or “Download as PDF” features to keep a copy for lender discussions.
Real-World Example
Case Study:
Sarah is building a $450,000 home. She takes a 12-month construction to permanent loan.
- Loan amount: $450,000
- Construction rate: 6.5%
- Construction period: 12 months
- Permanent rate: 5.25%
- Term: 30 years
Using the calculator, she finds:
- Interest-only construction payment: $2,437.50/month
- Permanent mortgage payment: $2,484.46/month
This helps Sarah plan her budget with clarity and avoid unexpected costs.
Tips to Get the Best Construction to Permanent Loan
- Improve your credit score before applying
- Compare lenders who specialize in construction lending
- Negotiate both rates (construction + permanent) early
- Understand your draw schedule — how funds are released during the build
- Budget for delays or cost overruns (common in construction)
FAQs About Construction to Permanent Loans
Q1. Do I need a down payment?
Yes. Most lenders require 10–20% down, based on the home’s future value.
Q2. Can I refinance the permanent phase later?
Yes, you can refinance the mortgage portion after the construction phase ends.
Q3. Is this loan available for investment properties?
Some lenders allow it, but stricter requirements may apply.
Q4. Can I lock in the permanent rate before construction?
In most cases, yes — some lenders offer rate lock-in for up to 12 months.
Q5. What happens if construction takes longer than expected?
You may need a loan modification or extension. It’s important to budget for delays.
Conclusion
A construction to permanent loan can simplify your path to building and owning a home. With just one application and closing, you finance both the build and your mortgage. But to plan properly, you need accurate payment estimates.
That’s exactly what our Construction to Permanent Loan Calculator provides — a quick, easy, and accurate way to understand what you’ll pay and when. Whether you’re a first-time builder or a seasoned investor, this tool helps you stay informed and financially prepared.
Try the calculator now and take the first confident step toward building your dream home.
