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)
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Apply For A Construction Loan
Quick Financing for residential builders
Interest Rate
10.25 - 11.25%
Origination fee
1 - 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 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.
Types of Construction Loans: Which One Is Right for You?
Not all construction loans are structured the same way, and the type you choose will affect your down payment, qualification criteria, interest rate, and which lenders can work with you. Below is a comparison of the five main construction loan categories.
| Loan Type | Min. Down Payment | Min. Credit Score | Max. DTI | Best For | Key Consideration |
|---|---|---|---|---|---|
| Conventional | 20% | 620 – 680 | 43 – 45% | Owner-occupants with strong financials | No government backing; stricter requirements but no upfront insurance fees |
| FHA | 3.5% – 10% | 500 | 43% | First-time buyers, lower-income borrowers | Primary residence only; mortgage insurance premiums required; FHA-approved builder required |
| VA | 0% | No set minimum | 41% | Veterans, active military, eligible spouses | Primary residence only; VA funding fee applies; limited lender availability; requires Certificate of Eligibility |
| USDA | 0% | 640 | 41% | Low-to-moderate income borrowers in rural areas | Primary residence only; strict geographic and income limits; guarantee fee applies |
| Investor / Hard Money | 10 – 20% | 650 (New Silver) | Deal-based underwriting | Real estate investors, residential builders, developers | Approval based primarily on deal quality and project strength; fast funding; no owner-occupancy requirement; loan terms up to 18 months |
FHA Construction Loans
FHA construction loans are backed by the Federal Housing Administration and are structured as construction-to-permanent loans, meaning a single closing and automatic conversion to a long-term mortgage on completion. They are designed to expand homeownership access for buyers with lower credit scores or limited savings. Borrowers must use an FHA-approved builder and the property must serve as their primary residence. Mortgage insurance premiums apply for the life of the loan in most cases.
VA Construction Loans
Eligible veterans and active-duty service members may qualify for a VA construction loan, which offers zero down payment and no private mortgage insurance. VA construction loans can be difficult to find as many lenders consider them higher-risk. Borrowers will need a Certificate of Eligibility and must work with a VA-approved builder. The completed property must be the borrower's primary residence.
USDA Construction Loans
The USDA Single Close Construction Loan allows eligible borrowers in qualifying rural areas to finance a new primary residence with no down payment. Availability is limited due to strict geographic and income requirements. Borrowers who cannot find a USDA construction lender often start with a conventional construction loan and refinance into a USDA mortgage once the build is complete.
Investor and Hard Money Construction Loans
For real estate investors and residential builders, conventional and government-backed products are often poorly suited to the pace and flexibility that investment projects demand. Investor-focused construction loans are underwritten primarily on project strength and the borrower's track record, rather than on personal income verification alone. They offer faster approvals, shorter loan terms, and no requirement to occupy the property. New Silver's ground-up construction loans cover Residential 1-4 units, condos, townhomes, with loan amounts from $100,000 to $5,000,000.
One-Time Close vs. Two-Time Close Construction Loans
One of the most important structural decisions when financing a new build is whether to use a one-time close or a two-time close loan. The difference comes down to how many separate closings — and how many sets of closing costs — you will pay over the life of the project.
- ✓ Single closing, one set of closing costs
- ✓ Interest rate locked in at origination
- ✓ Loan converts automatically to permanent mortgage at completion
- ✓ No need to re-qualify after construction ends
- ✗ Typically requires larger down payment and stronger credit
- ✗ Less flexibility if project costs change significantly during the build
- ✓ More flexibility to shop for the best permanent mortgage rate at completion
- ✓ Construction loan terms negotiated independently from the mortgage
- ✓ Well suited to investors who plan to sell on completion
- ✗ Two closings means two sets of closing costs
- ✗ Must qualify for permanent financing separately after construction
- – Rate on the permanent loan is set at the second closing
New Silver's ground-up construction loans are structured as two-time close products, making them well suited to investors with a defined exit strategy — whether that is a sale or a refinance into long-term financing once construction is complete. The 18-month loan term gives investors sufficient runway to complete the build and execute their exit. For a full breakdown of how different structures compare, see our guide to types of construction loans.
What Does a Construction Project Actually Cost?
Accurately estimating your construction costs before approaching a lender is essential. Lenders will want to see a detailed, itemized budget as part of your application, and an underestimated budget is one of the most common reasons construction projects run into financial difficulty mid-build. Below is a breakdown of the main cost categories to account for, with typical national ranges as a starting point.
Land values vary widely by location. Use comparable sales and an ARV Calculator to estimate value in your target market before making an offer.
Architectural drawings, engineering reports, land surveys, and building permits are required before any lender will release funds. Budget for these upfront — they are typically non-refundable.
Grading, excavation, clearing, and utility connections. Costs can rise significantly if the land has existing structures to demolish or drainage issues to resolve.
One of the most expensive line items. The foundation type — slab, crawl space, or full basement — directly affects both total cost and the property's resale value.
Typically the largest single line item. Framing cost is heavily influenced by the size and design complexity of the build, and by lumber prices at the time of construction.
Roofing, siding, windows, and exterior doors. Material selection is a significant cost driver — standard asphalt shingles cost considerably less than standing seam metal, for example.
HVAC, plumbing, and electrical systems are individually expensive and together can represent a large share of total build cost. All require licensed contractors and staged inspections.
Flooring, drywall, paint, cabinetry, countertops, fixtures, and appliances. Interior finishes are where budgets escalate quickly — investors building for resale should monitor the cost-to-value ratio of each selection carefully.
Most lenders — including New Silver — expect borrowers to hold a contingency reserve for unexpected costs or change orders. Budgeting for this upfront demonstrates experience and strengthens your loan application.
When you run these numbers through the Construction Loan Calculator above, the estimated value after construction is a critical input. For help establishing a realistic post-construction value, use our ARV Calculator to cross-reference comparable sales in your market, and see our guide on how construction loans work for more context on how lenders evaluate project budgets.
The Construction Loan Process: Step by Step
Construction loans involve more preparation and documentation than a standard mortgage. Understanding each stage before you apply helps you move faster, avoid common delays, and put your best foot forward with lenders.
Before approaching any lender, you need a clearly defined project scope, an itemized construction budget, and a realistic after-construction value estimate. Use the Construction Loan Calculator above to establish your loan size, required down payment, and estimated returns before you begin the application process. Lenders will expect this level of preparation from day one.
Most construction lenders — including New Silver — require borrowers to work with a licensed general contractor. You will need to submit building plans, permits, and a project timeline as part of your application. These documents form the basis of your draw schedule, which governs how funds are released as construction progresses. New Silver's ground-up construction loans require the project to be shovel-ready at closing.
Compare lenders on rate, Loan-to-Cost ratio, loan term, and speed of approval. For investment-focused builds, specialist construction lenders will generally offer better terms and faster turnaround than traditional banks. New Silver provides an instant term sheet and approval in as little as 48 hours for qualifying projects. Gather your financial documents, project plans, contractor information, and down payment estimate before submitting your application.
The lender will review your financial profile, assess the project plans and budget, conduct a property appraisal based on the expected completed value, and issue loan terms. For New Silver's construction loans, the appraisal must include interior access and the borrower must be a US citizen or legal resident. Review the full list of construction loan requirements to make sure your application is complete before submitting.
At closing you will sign the loan agreement, pay the origination fee and any closing costs, and provide your down payment. New Silver's origination fees start at 1 - 2% of the loan amount. Once closed, funds are held in reserve and released to your contractor in draws as the project hits agreed milestones. Funding can occur in as little as five days from approval.
During construction you make interest-only payments on the outstanding loan balance. As each draw is made, your monthly interest payment increases proportionally. Lenders typically inspect the project before releasing each draw to confirm progress is on schedule. Staying closely aligned with your contractor on the build timeline helps avoid delays that add to your overall interest costs. Use our construction loan rates guide to understand how interest accrues during this phase.
When construction is complete, the loan principal becomes due. Your exit strategy — selling the completed property or refinancing into a long-term mortgage — should be agreed before you close the construction loan. New Silver's 18-month loan term gives investors the runway to execute either approach. Most investment projects either sell the asset at a profit or refinance the outstanding balance based on the revised appraised value of the completed property.
Frequently Asked Questions (FAQs)
Yes, most construction lenders require a down payment. Conventional construction loans typically require 20% of the total project cost. Government-backed programs such as FHA, VA, and USDA can offer lower down payments — and in some cases zero down — but come with additional requirements around property type, occupancy, and borrower eligibility.
For real estate investors, New Silver’s construction loan down payment requirements range from 10% to 20% depending on the deal. The loan covers up to 90% Loan-to-Cost and up to 100% of construction financing, meaning experienced investors with strong projects can access a significant portion of the capital they need.
A draw schedule is an agreed plan between the borrower, contractor, and lender that outlines when and how funds will be released during construction. Rather than advancing the full loan amount at closing, lenders release funds in stages — called draws — that correspond to completed milestones such as foundation, framing, and mechanical rough-ins.
Before each draw is released, the lender will typically inspect the property to verify progress. Your interest-only payments during construction are calculated on the cumulative balance drawn to date, so earlier draws cost less in monthly interest than later ones when more of the loan has been accessed.
In some programs, yes. If you already own the land on which you plan to build, the appraised equity in that land may be credited toward your required borrower contribution, reducing the cash down payment needed at closing. Treatment of land equity varies by lender and loan type, and depends on when the land was purchased and its current appraised value.
It is worth discussing this with your lender during pre-qualification, as it can meaningfully affect the amount of cash you need available at closing.
These are two different ways lenders measure their exposure on a construction loan. Loan-to-Cost (LTC) expresses the loan amount as a percentage of the total project cost — land, construction, and soft costs combined. If your project costs $1,000,000 and the lender offers 90% LTC, the maximum loan would be $900,000.
Loan-to-ARV (After-Repair Value, or After-Construction Value) expresses the loan amount as a percentage of the property’s estimated value once construction is complete. Lenders use this to ensure the completed asset provides sufficient collateral. New Silver offers up to 75% Loan-to-ARV. Most lenders apply both tests and cap the loan amount at whichever produces the lower figure.
When construction is finished, the full loan principal becomes due. With a construction-to-permanent loan, the outstanding balance automatically converts to a long-term mortgage. With a construction-only loan — such as New Silver’s product — you will need to execute your pre-agreed exit strategy: typically selling the completed property or refinancing based on the new appraised value.
Planning your exit strategy before you close the construction loan is essential. Most investor-focused lenders will ask you to outline this as part of the initial application.
Yes — and for many investors, a construction loan is the most appropriate financing option for ground-up residential development. FHA, VA, and USDA construction loans are restricted to primary residences, but conventional and investor-focused construction loans can be used for non-owner-occupied properties.
New Silver’s ground-up construction loans are built specifically for residential builders and investors, with no owner-occupancy requirement. They cover Residential 1-4 units, condos, townhomes, with loan amounts from $100,000 to $5,000,000. Learn more about New Silver’s construction loan offering.
The documentation required for a construction loan is more extensive than for a standard mortgage. Most lenders will ask for: a detailed construction budget with itemized costs; architectural plans and required building permits; information about your licensed general contractor including credentials and a budget breakdown; proof of your financial position; a project timeline outlining construction phases and milestones; and a clearly defined exit strategy explaining how you plan to repay the loan on completion.
For New Silver specifically, the project must be shovel-ready at closing — meaning plans, permits, and contractor arrangements should all be in place before you apply. See the full construction loan requirements guide for a complete checklist.
Additional Resources
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