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Construction loan calculator.
Land plus vertical, drawn against a schedule. Interest accrues on what has been drawn, which is why the timeline matters as much as the budget.
Land funds at closing and the construction budget is drawn against a schedule of values as work is completed and inspected, so interest is charged on the drawn balance rather than the whole facility. Charging the full loan for the full term is the most common way a build pro forma is overstated. The loan is the lower of the advance against cost and the ceiling against finished value. The rate below is an assumption you can change rather than a quote, since pricing is set by credit, experience and the deal; the advance, ceiling and selling costs are typical figures rather than a quote.
Profit at exit
Profit of $126,320 on $120,480 of cash across 12 months, or 104.8%. Interest is charged on the drawn balance, so the build portion costs roughly half what a full-loan estimate would show.
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What the number means.
A construction loan costs less than its headline suggests early on and more than expected late, because interest runs on the drawn balance rather than on the facility. At the first draw you are paying on very little. By the final draw you are paying on nearly all of it, and any month the build slips is a month at the expensive end.
That is why the timeline is a financial input rather than a scheduling detail. A build that runs three months long does not cost three months of the average balance. It costs three months of the highest balance.
The exit belongs in the model from the start. A finished building with no plan for the day it is finished is a deadline nobody priced.
Questions
About the arithmetic.
How is interest charged during construction?
On the drawn balance. Money that has not been released is not accruing, which is why a slow start is cheap and a slow finish is not.
What is a schedule of values?
The agreed breakdown of what each stage of the build is worth, settled before closing. Each draw is then a check against a document both sides already signed rather than a negotiation about what framing was worth.
How long should I assume the build takes?
Longer than the schedule says, and then test what that does to the carry. The carry line is where an optimistic timeline turns into a real number.
Do you fund the land as well as the build?
Yes, in the same facility. Funding them separately is where builders discover that the second lender values the project differently from the first.
Method
Where these numbers come from.
Ground-up construction loan requirements: what gets checked before the first shovel
A construction loan is underwritten on a budget and a schedule, not a house that exists yet. Here is what has to be in place before one funds.
How a construction draw schedule actually works
A build loan funds in stages against finished work. Here is how a draw schedule is set, what releases each payment, and where builds stall.
Contractor bids: what a lender checks before funding a rehab
Bids get reviewed before close, not after. What that review is actually looking for, and why the cheapest bid is usually the one that fails it.
Other tools
The rest of them.
Hard money loan calculator, Fix and flip calculator, ARV calculator, BRRRR calculator, DSCR calculator, Rehab cost calculator, Rental portfolio calculator, Transactional funding calculator.
This is an estimating tool. It runs arithmetic on the figures you enter using the assumptions stated above, and changing an assumption changes the answer. The result is not a quote, an approval, an appraisal, a valuation, or a prediction of what a property will sell for, and it does not commit anyone to lend. Costs, taxes and market conditions vary by location and change over time. Check the numbers that matter against your own contractor, agent and professional advisers before you commit to a deal.
When the numbers work
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