Authoritative Data Source & Methodology

AuthoritativeDataSource: CFPB — Construction Loans (Regulatory Consumer Guidance), updated periodically. Supplementary lender practices: Fannie Mae Single-Close Construction (seller guidance).
Tutti i calcoli si basano rigorosamente sulle formule e sui dati forniti da questa fonte.

The Formula Explained

Construction interest (monthly simple on drawn funds)

\[ I_{\text{build}} = \sum_{m=1}^{M} \Big( B_{m-1} + D_m \cdot \tfrac{1}{2} \Big)\cdot \frac{r_c}{12} \]

where \(B_{m-1}\) is balance before month \(m\), \(D_m\) the draw in month \(m\), \(M\) months, and \(r_c\) the construction APR (decimal). The half-month factor approximates average outstanding after a mid-month draw.

Permanent payment (amortized)

\[ P = L \cdot \frac{i(1+i)^N}{(1+i)^N - 1}, \quad i=\frac{r_p}{12},\; N=12\cdot Y \]

Glossary of Variables

  • Total Project Cost: Sum of hard and soft costs for the build.
  • Down Payment (%): Borrower equity paid up-front; loan amount = cost × (1 − %).
  • Construction APR: Interest rate applied to drawn funds during the build (interest-only).
  • Draw Pattern: Timing of disbursements (even/front/back loaded) that drives accrued interest.
  • Points & Fees: Up-front charges expressed as % of loan and/or dollars.
  • Permanent APR & Term: Rate and years used to compute the post-build mortgage payment.
  • Monthly Payment: Amortized mortgage payment after conversion.

How It Works: A Step-By-Step Example

Assume $400,000 total cost, 20% down (loan base $320,000), 10 months build at 8.5% APR, even draws, points 1% and $2,500 fees. Permanent APR 7.25% for 30 years.

  1. Loan Amount: \(L = 400{,}000 \times (1-0.20) = 320{,}000\).
  2. Draws: Even monthly (\(D_m = 32{,}000\)). Interest each month uses outstanding balance plus half the new draw.
  3. Build Interest: Sum monthly per formula; tool computes ≈ shown in the results.
  4. Points & Fees: \(0.01 \times 320{,}000 + 2{,}500 = 5{,}700\).
  5. Permanent Payment: Use amortization formula with \(r_p=7.25\%\), \(N=360\).

Frequently Asked Questions

Does this include interest reserves?

If your lender capitalizes interest, treat the reserve as part of project cost, which changes loan size and interest profile.

Can the permanent loan amount differ from the construction balance?

Yes. Some programs re-underwrite at completion or cap loan-to-value off the final appraisal.

What about variable construction rates?

This tool models a single APR. For floating rates, use a conservative scenario or re-run with alternative rates.

Are inspection fees per draw included?

Add them in “Fees ($)”. Per-draw costs can materially change all-in build-phase costs.

Can I change the draw dates?

Use front/back-loaded patterns to approximate timing. For exact dates, align with the builder’s schedule and re-estimate monthly interest.

Strumento sviluppato da Ugo Candido. Contenuti verificati da, CalcDomain Editorial Board.
Ultima revisione per l'accuratezza in data: