Login
Screenshot of the Ultimate Financial Calculator interface
Check it
out now!
All online
calculators
Subscribe
(No limits & no ads)
*Formerly C-Value!
Pick your colors:

Accurate Construction Loan Calculator™

Create an accurate construction loan payment schedule.
advertisement
Your device is too small to show this calculator.
Please rotate to see calculator
Please rotate device or widen browser for a better experience.
Construction Loan Calculator
Construction Loan Calculator

Use this construction loan calculator for multiple, irregular borrows and exact-date interest-only or P&I payments.

  • Payments can be regular or irregular
  • Print date accurate schedules.
  • Supports interest rate changes
  • NEW: Export to XLSX/DOCX files
  • NEW: YouTube video shows you how to use it.

Suitable for bankers, accountants, attorneys and you!

Click to Try It Now!

A construction loan provides short-term financing to cover building costs while a property is being developed. Unlike traditional mortgages, a construction loan is disbursed in multiple phases at predetermined construction milestones, rather than as a single lump sum.

What is a construction loan calculator?

A construction loan calculator tracks multiple loan disbursements issued at irregular intervals, along with any payments made by the borrower. Using these inputs, the calculator determines the outstanding loan balance at any selected date.

How do you use the Accurate Construction Loan Calculator (ACLC)?

This tutorial explains each step in the process. By the end, you will be able to monitor payments and calculate the loan balance as of any chosen date.

How construction loans differ from traditional mortgages

In most cases, lenders do not issue a mortgage on a property that has not yet been built. In these situations, a future homeowner must apply for a home construction loan.

Unlike mortgages, which are funded in a single disbursement, construction loans are issued in multiple draws. The borrower, builder, and lender agree on the total cost of construction and the portion that will be financed. The borrower then receives funds incrementally, as each construction milestone is completed.

This incremental disbursement structure helps reduce risk for the lender and potential cost for the borrower. For example, if the entire loan were issued upfront and the builder defaulted, the borrower would still be responsible for repaying the full amount. By controlling disbursements, the lender protects both parties.

Such issues are uncommon when working with a reputable builder. However, construction loans still help reduce financial risk and limit interest costs.

Why construction loans can save money

The borrower pays interest only on the amounts that have actually been drawn, not on the full loan amount. As new disbursements are made, the outstanding loan balance increases gradually. This helps limit total interest charges.

Although the savings may not always be large, reducing interest expenses is still beneficial. However, construction loans usually have higher interest rates than traditional mortgages. This reflects the additional risk that the lender takes during the construction phase.

More below…

Your device is too small to show this calculator.
Please rotate to see calculator
Please rotate device or widen browser for a better experience.
Subscribe to the Ultimate Financial Calculator for unlimited printing and file saving.

To set your preferred currency and date format, click the “$ : MM/DD/YYYY” link in the lower right corner of any calculator.

Calculatrice Précise de Prêt à la Construction (French)
Idx#SeriesDateAmount# FrequencyDateSeries OptionsCmpFreqValSpecialSeriesTypeSpecialSeriesStructDateValEndDateValSeriesValPmtFreqVal
9101112131415
©2025 Pine Grove Software LLC, all rights reserved
$ : MM/DD/YYYY
Click to make smaller (-) or larger (+).
Drag & drop your saved files here to load.
(UFC *.xml, C-Value! *.cv1, and TValue™ *.tv5 files)

What Are the Two Types of Construction Loans?

  • Stand-alone construction — the borrower must apply for a mortgage separately, in addition to the construction loan.
  • Construction-to-permanent — this loan automatically converts to a mortgage, usually when a certificate of occupancy (CO) is issued by the local authority.

The loan type does not change how the calculation is performed. However, for the borrower, the construction-to-permanent loan is often more favorable because there is no risk of being unable to obtain a mortgage after construction is complete.

However, a construction-to-permanent loan agreement may include a requirement to convert the loan to a mortgage with the same lender. If the borrower chooses another lender, a penalty may apply. This condition may be a disadvantage if interest rates fall during construction, because the borrower may be locked into a higher mortgage rate.

Plus Two Amortization Methods

Once the lender begins disbursing funds to the builder, the borrower is generally required to begin making regular periodic payments. This applies whether the loan is stand-alone or construction-to-permanent.

There are two standard methods for calculating payments:

  • The payment includes both principal and interest (P&I).
  • The payment includes interest only.

The Accurate Construction Loan Calculator supports both options and can generate a complete amortization schedule.

This calculator works equally well for both home construction loans and commercial construction loans.

Step-by-step instructions follow. Because interest-only construction loans are more common, that option is covered first.

All users should first complete the more detailed initial tutorial to understand the Ultimate Financial Calculator’s (UFC) basic concepts and settings.

A Step-by-Step Tutorial
Calculate a Construction Loan with Multiple Loan Advances — Tutorial 11

How to get an accurate construction loan payoff schedule.
Watch on YouTube

Interest-Only Construction Loan

To create a construction loan amortization schedule with interest-only payments, follow these steps:

  1. Set Schedule Type to Loan.
    • Or click to clear any existing entries.
  2. Click Settings > Rounding Options, and set Rounding to Adjust the last amount to reach 0 balance.
  3. In the header section, apply the following settings:
    1. For Calculation Method, select U.S. Rule.
      • This method prevents interest from being charged on previously accrued but unpaid interest when a new loan amount is disbursed. To compare results, you may switch to Normal.
    2. Set Initial Compounding to Exact/Simple.
    3. Enter 5.5 for the Initial Interest Rate.
  1. In row 1 of the cash-flow input area, create a Loan series:
    1. Set the Date to May 16.
    2. Set the Amount to 75,000.00.
    3. Set # Periods to 1.
      • Note: When the number of periods is 1, the frequency cannot be set. If a frequency is entered, the calculator will remove it when you leave the row.
  1. Go to the second row of the cash-flow input area. Create the anticipated payment schedule:
    1. Select Payment for the Series.
    2. Set the Date to July 1.
    3. Set the Amount to Unknown by typing U.
    4. Set # Periods to 5.
      • This example assumes construction will last five months, with one payment due on the first of each month.
      • You can change this value later if needed.
    5. Press Tab to move to the Frequency field. Select Monthly.
    6. The calculator will automatically compute the End Date.
    7. Click . Select Interest-Only, then click Activate "Interest-Only" payment amount for currently selected series. Click Save Changes.
      • If # Periods is set to 1, the button may not appear. Temporarily change it to 2 to access the options, then return it to 1 if required.
  • Your calculator should now look like this (Fig. 1):
Interest-only construction loan—first disbursement with payment series
Fig. 1 — First disbursement and anticipated interest-only payment series.
  • Construction is ongoing. Enter three additional loan disbursements.
  1. In row 3 of the cash-flow input area, create a Loan event:
    1. Set the Date to July 12.
    2. Set the Amount to $35,000.00.
    3. Set # Periods to 1.
  2. In row 4, create another Loan series:
    1. Set the Date to July 26.
    2. Set the Amount to $40,000.00.
    3. Set # Periods to 1.
  3. In row 5, create a third Loan series:
    1. Set the Date to Sept. 10.
    2. Set the Amount to $90,000.00.
    3. Set # Periods to 1.
  • Your screen should now appear like this (Fig. 2):
Construction loan with three additional disbursements
Fig. 2 — Add three additional loan disbursements as construction continues.
  • We expect to receive the certificate of occupancy and convert the construction loan to a mortgage on November 10. At that time, calculate the final loan balance, including accrued interest.
  1. In row 6, select Payment for the Series:
    1. Set the Date to Nov. 10.
    2. Type U to set the Amount to Unknown.
    3. Set # Periods to 1. See Fig. 3.
Setup to calculate loan balance with accrued interest
Fig. 3 — Setup to calculate the outstanding loan balance, including accrued interest.
  • Now calculate the final payment due. See Fig. 4.
Final loan balance with accrued interest
Fig. 4 — Loan balance as of Nov. 10: $240,330.00.
($240,000 principal plus $330.00 accrued interest)
  • After calculation, row 6 shows the loan balance due as of the selected date.
  • To update the calculation, change the payment date. You can also set the amount to Unknown and recalculate. The final payment will adjust based on the new date.
  • Periodic interest payments will also update as additional disbursements occur. Review the amortization schedule to see full details.
  • If the borrower misses a scheduled payment, click and update the affected payment date.
  • If the construction project runs longer than planned:
    1. Adjust the projected number of payments; or
    2. If rows have already been expanded and edited, insert a new, single interest-only payment row.
  • Click to view the detailed interest-only amortization schedule. See Fig. 5.
Interest-only amortization schedule with multiple disbursements
Fig. 5 — Amortization schedule showing interest-only payments for the construction loan.

Construction Loan with Principal and Interest Payments

To create a construction loan amortization schedule with P&I (principal and interest) payments, follow these steps:

  1. Set Schedule Type to Loan.
    • Or click to clear any previous entries.
  2. Set Rounding to Adjust the last amount to reach 0 balance by clicking Settings > Rounding Options.
  3. In the header section, apply the following settings:
    1. For Calculation Method, select Normal.
    2. Set Initial Compounding to Monthly.
    3. Enter 7.25 for the Initial Interest Rate.
  1. In row 1 of the cash-flow input area, create a Loan series:
    1. Set the Date to September 13.
    2. Set the Amount to $75,000.00.
    3. Set # Periods to 1.
      • Note: Because the number of periods is 1, the frequency field will be disabled. If you enter a frequency, the calculator will automatically remove it when you exit the row.
  1. Go to row 2 in the cash-flow input area. Select Payment for the Series. The exact payment amount is currently unknown. To calculate a manageable monthly amount, you will use a 15-year term (180 monthly payments), even though the loan will be repaid earlier.
    1. Set the Date to October 1.
    2. Set the Amount to Unknown by typing U.
    3. Set # Periods to 180.
    4. Press Tab to move to Frequency. Select Monthly.
    5. The End Date will be calculated automatically by the calculator.
  • Your calculator should now look like this (Fig. 6):
Construction loan first borrow
Fig. 6 — Construction loan: the first borrow and first payment calculation.
  1. Calculate the unknown payment amount. The result should be $683.00. See Fig. 7.
Construction loan first payment
Fig. 7 — First payment calculated.
  1. Reset the # Periods for the first payment series to 1. This step is required because only one payment occurs before the next loan is disbursed.
  2. In row 3 of the cash-flow input area, create another Loan event:
    1. Set the Date to October 12.
    2. Set the Amount to $35,400.00.
    3. Set # Periods to 1.
  1. Go to row 4 of the cash-flow input area. Select Payment for the Series. The payment amount is unknown:
    1. Set the Date to November 1.
    2. Set the Amount to Unknown by typing U.
    3. Set # Periods to 179 because one payment has already been made.
  • Before calculating, your screen should resemble this (Fig. 8):
Construction loan second borrow
Fig. 8 — Second borrow and payment setup.
  1. Calculate the unknown. The result is $1,006.65. See Fig. 9.
Construction loan second payment
Fig. 9 — Second payment calculated.
  • Two additional loan disbursements are made in November.
  1. Reset the # Periods for the second payment series (row 4) to 1.
  2. In row 5 of the cash-flow input area, create a Loan event:
    1. Set the Date to November 8.
    2. Set the Amount to $110,500.00.
    3. Set # Periods to 1.
  3. In row 6, create another Loan event:
    1. Set the Date to November 29.
    2. Set the Amount to $110,500.00.
    3. Set # Periods to 1.
  4. In row 7, create a new Payment series. The regular payment amount is unknown:
    1. Set the Date to December 1.
    2. Set the Amount to Unknown.
    3. Set # Periods to 178 because two payments have already been made. See Fig. 10.
  • Before calculating, your screen should look like this:
Construction loan two loan advances
Fig. 10 — Two additional loan advances added.
  1. Calculate the unknown. The result is $3,029.55. See Fig. 11.
Construction loan third payment series
Fig. 11 — Third payment series calculation.
  1. Construction is complete. The mortgage closes on January 16. What is the balance due?
    1. In row 7, set # Periods to 2 for payments on Dec. 1 and Jan. 1.
    2. In row 8, set the Series to Payment.
    3. Set the Date to January 16.
    4. Set the Amount to Unknown.
    5. Set # Periods to 1. See Fig. 12.
Construction loan unknown balance
Fig. 12 — Setting up to calculate the unknown balance.
Construction loan final balance
Fig. 13 — Final loan payoff amount as calculated on January 16.
  1. To view a detailed amortization schedule showing how each monthly payment is allocated between principal and interest, click the tab.
  2. To see a graphical timeline of the loan activity, click the tab.

Final notes: Construction loans are not the same as mortgages. These loans provide temporary financing for building projects. Because construction involves more risk for the lender, the interest rate is typically higher than that of a traditional mortgage. Once the project is complete and a certificate of occupancy (CO) is issued, the loan is usually converted into a conventional mortgage.

The flexibility of the UFC allows you to accurately model staggered disbursements and changing payment structures often found in construction loan agreements.

TValue is a trademark of TimeValue Software.

advertisement

Questions?
Ask them here. We're happy to help.

  • Anthony Hosseini says:

    Hello:

    On row 2 of the cash flow, series option doesnt allow me to adjsut as the first row of the cash flow it was defaulted giving me options.
    Thank you.

    Anthony

    • Karl says:

      Sorry, but I don’t think I understand. Are you saying that the series option/setting (the dropdown) doesn’t give you choices in the 2nd row. If you have selected "Loan" in the first row, then you should have choices for loan, payment, extra payment, etc. in the 2nd row. If this is not what you see, please provide me with all the details of all inputs for both rows.

      Just curious, if you step through the samples in the text on the page, can you do each of those steps.

      What browser are you using? Are you on a desktop computer?

      No one has reported any issues.

  • Ray LaCroix says:

    Is there a way to save results from free calculators?
    Thanks,
    Ray

  • Emma says:

    Thank you! This is perfect. I tried creating my own spreadsheet to work this out. I could get there eventually, but it’d be pretty crude.

    Will C-Value run more or less the same way? I’d like to support you and I’d also like to be able to save my work.

Comments, suggestions & questions welcomed...

Your email address is not published. I use it only to notify you of a reply.
Let me know if you have a website. I might like to visit it.

* Required

advertisement