Investor Tools
Construction Draw Calculator
Enter project costs, loan funding, rate, term, and draws to estimate a construction schedule.
How construction draws work
Depending on the program, construction or renovation funds are often held back at closing and released in stages as work is completed and inspected. Draw timing, inspection requirements, and documentation vary by lender and loan structure.
Why interest changes during construction
Some lenders charge interest on funds actually advanced rather than the full commitment. As draws fund, the outstanding balance rises and monthly interest typically increases until the loan is fully advanced or the project completes.
Initial funding vs holdback
Initial funding covers amounts advanced at closing (for example, land or purchase proceeds). The remaining commitment is the construction holdback — the pool that later draws pull from, until the loan is fully funded.
What LTC means
Loan-to-cost (LTC) compares total loan amount with total project cost. It is an estimated project leverage metric for planning — not an approval metric, and not a substitute for lender guidelines.
Why actual draw schedules vary
Real schedules depend on contractor progress, inspections, title updates, budget reallocations, contingencies, and program rules. This calculator uses evenly spaced beginning-of-month draws for planning. It does not imply reimbursement draws, advance funding, inspection timelines, interest reserves, or extension availability.
Methodology
How this calculator works
The model funds construction over time, tracks remaining holdback, and estimates interest on the outstanding balance—not automatically on the full commitment.
- LTC
- Total loan ÷ total project cost, from the inputs you enter.
- Interest during construction
- Accrues on modeled outstanding principal as draws increase the balance.
Draw timing, retainage, and eligible costs are program-specific. This is a planning model, not a draw schedule or commitment.
Frequently asked questions
How does this construction draw calculator work?+
It estimates total project cost, borrower equity, construction holdback, an evenly spaced draw schedule, outstanding balance after each draw, and interest on funds actually advanced during the construction term.
When are draws assumed to fund?+
This calculator assumes evenly spaced draws fund at the beginning of each scheduled month, so that month's interest reflects the increased outstanding balance. Actual draw timing varies by loan structure.
Is interest charged on the full loan commitment?+
Many construction loans charge interest on funds actually advanced, not the full committed amount. Program structures vary, so confirm how interest accrues on a specific loan.
Does estimated LTC mean a loan is approvable?+
No. Loan-to-cost is an estimated project leverage metric for planning only. Approval depends on borrower qualification, collateral, guidelines, inspections, and applicable law.
Keep exploring
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