Ground-Up Construction Calculator

A new build lives or dies on three things: the full budget, how the loan funds it, and what is left after the sale. This calculator lays out the budget, a month-by-month draw schedule, interest on only the money drawn, the cash you need, and your profit at sale.

How the construction calculator works

• Total project cost = land + soft costs (plans, permits, fees) + hard costs (construction) + a contingency on the hard costs.
• Loan = total cost × loan-to-cost. The loan funds its share of land and soft costs at closing, then its share of hard costs and contingency in equal monthly draws.
• Interest is charged only on the balance drawn so far, so it starts small and grows as the house goes up. After completion, the full balance carries until the sale.
• Cash needed = your share of the cost (the part the loan does not fund) + points + interest.
• Net profit = sale price − selling costs − total cost − points − interest. Return on cash = profit ÷ cash needed.

Worked example

The calculator opens with this example. An $80,000 lot, $25,000 of soft costs and $300,000 of hard costs, plus a 10% contingency ($30,000), make a total project cost of $435,000, about $218 per square foot on a 2,000 sq ft house. At 85% loan-to-cost the loan is $369,750: $89,250 funds at closing and about $31,167 funds in each of 9 monthly draws. At 11% interest on the drawn balance, plus 2 months to sell, interest totals about $26,998. That is about $10,300 less than paying interest on the full loan for all 11 months.

With 2 points ($7,395), the cash needed is about $99,643. Selling at $560,000 with 6% selling costs leaves a net profit of about $57,007, a 57.2% return on cash and a 10.2% margin on the sale price.

Change any number to match your build. These figures are example assumptions for discussion purposes only. They are not a Ternus quote or a commitment to lend. Actual draw timing follows completed, inspected work, and any loan is subject to underwriting, valuation and final approval.

Construction loan questions

What is a draw schedule?

Construction money is released in stages as work is completed, not all at closing. Each draw is usually checked against the budget and an inspection of the work in place. This calculator spreads draws evenly by month to show how the balance and the interest build. Real draws follow the work, so they are rarely equal.

Why only pay interest on what is drawn?

Money that has not been drawn has not been lent yet. Interest on the drawn balance keeps carrying costs low early in the build, when little of the loan is out.

How much contingency should I budget?

Builds run over. Many builders carry 5% to 15% of hard costs, more for custom work or a first project. If the contingency goes unused, it is profit. If you leave it out, an overrun comes out of your cash.

What is loan-to-cost?

Loan-to-cost is the loan amount divided by the total project cost. Lenders also look at the loan against the completed value. In this example that is 66%.

Ternus makes ground-up construction loans to investors and builders. Price your construction loan in the Loan Sizer, budget a renovation in the Rehab Budget Tool, or check a resale value with the ARV Calculator.