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Home Planning · reviewed September 11, 2026

Construction Loan Interest Calculator

Estimate construction-loan interest from loan size, APR, term and a simplified staged-draw pattern, then include origination points and fixed financing fees.

Quick answer

Construction Loan Interest Calculator

Construction loans usually charge interest on funds actually drawn. This calculator approximates a staged draw by treating the undrawn remainder as increasing evenly over the construction term.

Formula: Average outstanding balance ≈ loan × [initial draw % + (remaining % ÷ 2)]. Interest ≈ average balance × APR × term/12.

Maximum construction loan ($)Maximum committed principal.Interest rate / APR (%)Rate used for the simple interest estimate.Construction term (months)Modeled construction period.Initial draw (%)Share of the loan outstanding near the beginning.Origination points (%)Points charged on the maximum loan amount.Other financing fees ($)Fixed lender/title/closing costs you want included.

Enter your numbers and calculate.

How the calculation works

Average outstanding balance ≈ loan × [initial draw % + (remaining % ÷ 2)]. Interest ≈ average balance × APR × term/12.

Every rate, percentage, cost and value assumption shown in the calculator can be changed. Results are scenario math based on your inputs, not quotes, appraisals, code determinations or predictions.

Questions people ask

Why is interest lower than borrowing the full loan for the whole year?

The model assumes only the initial draw is outstanding at first and the remaining funds are drawn gradually.

Are origination points included?

Yes, as a percentage of the maximum loan amount.

Can this replace a lender quote?

No. Use the lender’s draw schedule and fee disclosure for an exact financing estimate.