Construction Loan Calculator
Construction Loan Calculator Results
Max Loan Amount
Down Payment
Monthly Repayment
Origination Fee
Total Cash Invested
(Sum Of All Costs + Down Payment)Total Cost Of Project
(Total Cash Invested + Max Loan Amount)Net Profit
(After Repair Value - Total Cost)Return on Investment (ROI)
(Net Profit / Total Cash Invested)Download a PDF with your results
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Apply For A Construction Loan
Quick Financing for residential builders
Interest Rate
9.75 - 11.5%
Origination fee
1.5 - 2%
Loan To Cost (LTC)
up to 90%
Construction Financing
up to 100%
Loan To ARV
up to 75%
Term
18 months
Minimum Loan Amount
$100,000
Maximum Loan Amount
$5,000,000
Minimum FICO
650
Type of Property
Residential 1-4 units, condos, townhomes
How to Use the Construction Loan Calculator
Using our Construction Loan Calculator is simple. Follow these steps:
- Enter the Cost of the Land – The purchase price or current value of the land.
- Input the Estimated Cost of Construction – The projected cost of building the property.
- Enter the Estimated Value After Construction – The expected market value of the completed building.
That’s all we need to provide an instant breakdown of key loan details, including the maximum loan amount, interest rate, required down payment, and estimated construction loan payments.
How to Calculate The Costs of Construction Project
Calculating a construction loan involves several key steps to ensure you understand the financial commitment. Here’s a step-by-step guide:
- Determine the Loan Amount: Calculate the total amount needed for your project, including land acquisition, construction costs, and any additional expenses.
- Determine the Interest Rate: The interest rate is the percentage charged on the loan amount over its term. Construction loan interest rates can vary based on the lender, loan terms, and your financial profile.
- Determine the Repayment Terms: Decide on the length of the loan, whether it will be interest-only during construction, and the monthly payment amount once it converts to a permanent loan.
- Calculate the Monthly Payment: Use the loan amount, interest rate, and repayment terms to determine your monthly payment.
- Calculate the Total Interest Paid: Estimate the total interest you will pay over the life of the loan based on the loan amount, interest rate, and repayment terms.
Using our detailed Construction Loan Calculator can give you a clear sense of the financial obligations and expected Return on Investment (ROI) from a potential project. It also makes it very easy to estimate all the expected financing costs involved.
How to Estimate the Value of the Building After Construction
Estimating the post-construction value of a building is crucial for understanding its investment potential and securing financing. Here are key factors to consider:
- Comparable Sales (Comps) – Research recent sales of similar properties in the same area. This is a very reliable way to estimate the post construction value of a building. Using an ARV Calculator can help you source suitable comps.
- Cost Approach – Calculate the total cost of land, materials, and labor, then add a profit margin.
- Income Approach – For rental properties, estimate the future rental income and apply a capitalization rate.
- Market Trends – Consider the local real estate market conditions and future growth projections. The market in which the property is located has a fundamental impact on the post construction value. For instance, a 1,000 square foot residential building in the center of Seattle will be worth several multiples more than an equivalent residential building in Montgomery Alabama.
- Professional Appraisal – Work with a licensed appraiser to get an expert valuation based on industry standards. The appraised value tends to be the most accurate method for working out the post construction value of a building, but it comes with a cost. More specifically, you will need to pay an appraisal fee.
By using these methods, you can make informed decisions about your construction project’s profitability and long-term value.
What You Need When Applying For A Construction Loan
When applying for a construction loan, providing detailed information about the property and land is crucial. Here’s what you need to include:
- Property Location: Specify the address and zip code of the property.
- Property Type: Indicate whether it’s a single-family home, condominium, or commercial building.
- Land Acquisition Cost: Include the purchase price of the land and any associated closing costs.
- Construction Cost: Provide a detailed breakdown of the total construction costs, including labor, materials, and other expenses.
- Property Value: Estimate the value of the property once construction is complete.
- Project Duration: State the expected time frame for completing the construction project.
Providing this comprehensive information helps lenders assess the risk and feasibility of your construction loan, ensuring a smoother approval process.
Frequently Asked Questions (FAQs)
A construction loan is a short-term financing option designed specifically to fund the costs of building or renovating a property. Unlike a traditional mortgage, which provides a lump sum to purchase a completed home and is repaid over a long-term period (typically 15-30 years), a construction loan is disbursed in stages, or “draws,” as the project progresses. Once construction is complete, the loan can either be paid off or refinanced into a long-term mortgage.
If your construction project exceeds the initial budget, you may need to cover the additional costs out of pocket or seek additional financing. It’s essential to budget carefully and include a contingency reserve—typically 10-15% of the total project cost—to cover unexpected expenses. Communicating regularly with your contractor and lender can help you stay on track and address cost overruns before they become a major issue.
Yes, most lenders require a down payment for a construction loan, typically ranging from 10% to 20% of the total project cost.
However, down payment requirements may vary depending on factors such as the borrower’s credit profile, experience, and the overall risk of the project. Some lenders may offer lower down payment options for experienced real estate investors or borrowers with strong financials.
Most traditional lenders require a credit score of 650 or higher for a construction loan, with better terms available to borrowers with higher credit scores. However, hard money lenders like New Silver place greater emphasis on the property’s value and the borrower’s experience rather than just the credit score. This makes it easier for investors to secure financing even if their credit history isn’t perfect.
Absolutely! Many lenders, including New Silver, specialize in construction loans for real estate investors. Whether you’re building a new rental property, fixing and flipping a home, or completing a ground-up development, you can use a construction loan to finance your project. Our streamlined approval process and flexible loan terms make it easy for investors to secure funding.
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Additional Resources
Find out the latest Construction Loan Rates here. This guide explores what rate you are likely to qualify for.
First and foremost, you need to know the location of the development and you also need to have building plans and permits.
The typical down payment on a construction loan is between 10% and 20% of the total project cost.
Some lenders are better than others. This guide reveals the Best Construction Lenders at this moment in time.
This guide explains out how you can get started in the Construction Industry.
On average construction workers make over $50,000 annualy.This resource explores how much construction pays, on average.
This is a step-by-step guide which explains how to start a Construction Business.
There are 3 main types of Construction Loan. This guide highlights the differences between them.
There are various US banks providing different Construction Loan options for real estate investors
There are a number of differences between a Construction Loan and Mortgage. Each difference is fully explored in this guide.