Michigan Construction Loan Calculator
A construction loan doesn’t work like a normal mortgage — you pay interest only on what’s drawn, so the payment starts small and climbs as the home goes up, then converts to a regular payment. This construction loan calculator shows exactly how that looks for your build — sizing the loan on the lesser of cost or the as-completed appraised value, charging interest only on the average drawn balance, and comparing a single-close to a two-close structure — from dual-licensed Realtor and Mortgage Loan Originator Edward Kalavitz.
Realtor License #6501386956 · Turnkey Realty LLC • NMLS #138424 · Private Mortgage Guarantee LLC
Michigan Construction Loan Calculator — See Your Build Before You Break Ground
The short answer: a construction loan only charges interest on the money drawn so far, so your payment starts small and climbs as the home is built — then converts to a normal principal-and-interest mortgage when it’s done. This construction loan calculator models that ramp draw by draw, totals the interest you’ll pay during the build, and shows your permanent payment, so there are no surprises before you break ground. It uses separate construction and permanent rates, folds in soft costs and a contingency cushion, and sizes the loan on the lesser of total cost or the as-completed appraised value — the same limits a lender applies.
My name is Edward Kalavitz, creator of this construction loan calculator. As a dual-licensed Michigan Realtor and Mortgage Loan Originator, I help buyers and builders structure a One-Time Close so the land, the build, and the permanent mortgage all come together in a single, predictable plan.
📊 Key takeaways
During the build you pay interest only on what’s drawn, so the payment ramps up over the build period; then a One-Time Close converts it to a regular mortgage. Your loan covers land + hard costs + a contingency cushion, minus your down payment. Run your numbers in the construction loan calculator below to see the ramp, the total build interest, and your permanent payment.
Estimate Your Michigan Construction Loan
One-Time Close construction
Construction cost & draw estimator
Enter your land, hard and soft costs, a contingency cushion, your appraised completed value and down payment, plus the construction and permanent rates. The construction loan calculator sizes your loan (the lesser of cost or appraised value at max LTV), the interest-only payments as funds are drawn, and your permanent payment.
Total project cost
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Loan amount
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Required down / equity
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Contingency (financed)
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First interest-only payment
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Peak interest-only payment
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Total interest during build
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Permanent payment (P&I)
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How your payment ramps as the home is built
🔑 Single close vs. two closings
A One-Time Close (construction-to-permanent) uses one application, one closing, and one rate lock — the construction phase converts automatically to this permanent payment when the build passes final inspection. A two-close structure closes the construction loan first, then requires you to re-qualify and pay a second set of closing costs to refinance into the permanent mortgage. The estimate above assumes a single close.
Estimate only — not a loan approval or commitment to lend. Construction interest is modeled on a linear draw schedule at the construction rate; actual interest depends on the real timing and size of each draw as work is completed and inspected. Loan amount is the lesser of total project cost less your equity, or the as-completed appraised value times the max loan-to-value, subject to program limits and underwriting.
Get a Real Construction Loan Plan
Edward will structure your One-Time Close, get your builder approved, and email a real draw-and-payment plan with a rate — within 24 hours, no obligation.
Free. No obligation. Available 7 days a week.
How a Construction Loan Works
A construction loan is not a normal mortgage. With a normal mortgage you borrow the full amount on day one and pay principal and interest on all of it. With a construction loan, the money is released in stages as the home is built, and you pay interest only on what has been drawn so far. Early in the build, very little is drawn, so the payment is small; near the end, almost the whole loan is drawn, so the payment is at its peak. The construction loan calculator models that month by month so you can budget for the climb, not just the final number.
Draws & the Payment Ramp
A draw is a release of funds tied to completed, inspected work — foundation, framing, mechanicals, drywall, finishes. As each draw funds, your loan balance steps up and so does the interest-only payment. The construction loan calculator lets you set the number of draws and the build period, then shows the running balance and payment at each stage — the same ramp your lender bills. Knowing the peak interest-only payment before you start is the difference between a comfortable build and a cash-flow squeeze.
What’s in the Construction Loan
The construction loan calculator builds your loan from three pieces, minus your down payment:
- Land / lot cost — if you already own the lot, its value can often count toward your equity.
- Construction (hard) costs — what the builder charges to build the home.
- Contingency — a financed cushion (often ~5% of hard costs) for change orders and overruns, so a surprise doesn’t derail the build.
Your down payment is applied to the earliest costs, so interest doesn’t start until the loan funds are actually tapped — which the construction loan calculator reflects in the ramp.
✓ A note on the model
The construction loan calculator uses a 5% default contingency and a smooth, linear draw schedule to estimate interest. Real builds draw unevenly — a big draw at framing, smaller ones at finishes — so your actual interest will differ. I’ll build a precise draw schedule for your project. Call (616) 633-3692.
The One-Time Close: From Build to Mortgage
The smartest way to finance a build in Michigan is a One-Time Close (construction-to-permanent) loan: one application, one closing, one rate lock that covers both the construction phase and the permanent mortgage. When the home is finished and the final inspection passes, the loan automatically converts to a regular principal-and-interest payment — no re-qualifying, no second closing costs. The construction loan calculator shows both halves: the interest-only ramp during the build and the permanent payment after. See full Michigan construction loan details →
Worked Example: A $500,000 Michigan Build
A $100,000 lot, $400,000 of construction, $25,000 of soft costs and a 5% contingency, with $50,000 down against a $600,000 appraised completed value (90% LTV cap). The construction rate is 8.5% (prime-based) over an 8-month build with 8 draws, converting to a 7% permanent loan. Here is how the construction loan calculator reads it:
Illustrative figures on a linear draw model. Your real interest depends on the actual draw timing. Run your own build in the construction loan calculator above.
Notice the story the construction loan calculator tells: the payment starts near $551 and climbs to about $3,309 by the time the house is done, costing roughly $15,400 in interest along the way — then settles into a $3,293 permanent payment. Budgeting for that peak interest-only payment, not just the final mortgage, is exactly what keeps a build on track.
Ready to Build in Michigan?
I’ll structure your One-Time Close, approve your builder, and lock your rate — the land, the build, and the mortgage in one plan. No obligation.
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View All Tools →Reviewed by Edward Kalavitz — Realtor & Mortgage Loan Originator, Private Mortgage Guarantee
Edward is dual-licensed in Michigan as a Realtor (#6501386956) and a Mortgage Loan Originator (NMLS #138424), serving buyers and builders across Grand Rapids and West Michigan. With 25+ years on both the real estate and mortgage sides, he structures One-Time Close construction loans — land, build, and permanent mortgage — in a single plan.
📞 (616) 633-3692 · Get pre-approved · Last updated: June 2026 · Figures are estimates, not a commitment to lend.
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Competitive pricing personalized to your scenario. Rates shown reflect 740+ credit, 30-year fixed terms unless noted.
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Construction Loans — Frequently Asked Questions
QHow does a construction loan work?
During the build you only pay interest on the money drawn so far, so the payment starts small and climbs as the home goes up. When construction finishes, the loan converts to a regular mortgage. The construction loan calculator shows that ramp draw by draw plus your permanent payment.
QWhat is a One-Time Close construction loan?
A One-Time Close (also called construction-to-permanent) is a single loan that funds the build and then becomes your permanent mortgage — one closing, one set of costs, one rate lock. It avoids re-qualifying and a second closing after the home is built.
QHow are construction draws scheduled?
Funds are released in stages (draws) as work is completed and inspected — for example foundation, framing, mechanicals, finishes. You pay interest only on the cumulative amount drawn, which is why the construction loan calculator models the payment climbing over the build period.
QWhat is the contingency for?
A contingency (often around 5% of hard costs) is a financed cushion for cost overruns and change orders during the build. The construction loan calculator adds it to the project so your interest and loan amount reflect a realistic budget, not a best case.
QWhen does a construction loan convert to a regular mortgage?
With a One-Time Close, it converts automatically when the home is complete and the final inspection passes — typically at the end of the build period you entered. From there you make a normal principal-and-interest payment, which the construction loan calculator shows as the permanent payment.
QHow much down do I need for a construction loan?
It varies by program and whether you already own the land, which can count toward your equity. The construction loan calculator lets you enter your down payment and applies it to the earliest costs, so interest does not start until the loan funds are tapped. A loan officer can confirm the minimum for your build.
🤖 See Your Permanent Payment Options
Our free Michigan Mortgage Advisor shows your permanent payment across loan types — with real rates — once your build converts.
Launch Mortgage Advisor → Talk to Edward Instead🏠 Already Own the Lot?
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Get to know Edward Kalavitz and see how one dual-licensed professional handles your land, your construction loan, and your permanent mortgage — all under one roof.
What Michigan Clients Are Saying
5.0 / 5.0 — Verified Google Reviews. Edward is a dual-licensed Michigan realtor & Mortgage Loan Originator; reviews include clients from both his real estate and mortgage practices.
“Very Professional and Thorough”
“Edward is very professional and thorough. Had a great experience working with him. Everything went very smooth.”
— Susan Parsley | Google Review
“Works Hard 24/7”
“Ed is wonderful to work with! He is very thorough, experienced, and friendly. Ed works hard 24/7 to give you the best mortgage experience and is always able to help with whatever you need!”
— Justin Schneider | Google Review
“Great to Have 2 in 1”
“Ed was very responsive, knowledgeable, and made our first home buying experience great! He's a relator and lender, which was great to have "2 in1". We were able to look at houses and run number the same day. He was very flexible with times we needed to set up showings, as well as very informative and organized with paperwork! I appreciate his expertise greatly!”
— Mallory Anderson | Google Review
“Above and Beyond”
“Edward is a great relator and loan officer. He helped my fiance and I buy our first home. We called him back when we were ready to sell and buy our forever home. He again went above and beyond to make the process swift and easy. I recommend him to my friends and family who are looking into buying, selling or refinacing their home!”
— Anthony Smolenski | Google Review
“Closing Came Sooner Than Anticipated”
“Edward was up front, professional and most helpful in first determining if I was a good candidate for a mortgage re-Fi. My case was Probably not the easiest , however, he made my "homework" manageable. The closing came sooner than anticipated , thanks to his perseverance, knowledge and professionalism .”
— Dennis Bowman | Refinance Client | Google Review
“Not Only My Realtor — My Friend”
“Edward was an excellent help in the most stressful time of my life. My son passed away in 2018 and I had to sell his home. Edward alleviated some stress by being patient, organized and communicated thoroughly the entire process. He not only was my realtor/loan officer but he was my friend! Highly recommend him for any home needs!”
— Paula Hilliard | Google Review
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