Land and Construction Loan Calculator
Count the equity in a lot you own toward your down payment, or finance the land and the build together. See the loan amount, month-by-month draws, interest during construction and the mortgage payment after.
Month-by-month draw schedule
| Month | Draw | Loan drawn | Interest payment |
|---|---|---|---|
| 1 | $31,250 | $31,250 | $208 |
| 2 | $31,250 | $62,500 | $417 |
| 3 | $31,250 | $93,750 | $625 |
| 4 | $31,250 | $125,000 | $833 |
| 5 | $31,250 | $156,250 | $1,042 |
| 6 | $31,250 | $187,500 | $1,250 |
| 7 | $31,250 | $218,750 | $1,458 |
| 8 | $31,250 | $250,000 | $1,667 |
| 9 | $31,250 | $281,250 | $1,875 |
| 10 | $31,250 | $312,500 | $2,083 |
| 11 | $31,250 | $343,750 | $2,292 |
| 12 | $31,250 | $375,000 | $2,500 |
Planning estimate, not a lender quote. Draws are assumed at the start of each month and construction interest is paid monthly, not added to the loan. Excludes closing costs, fees, taxes, insurance and lender-specific land valuation rules.
How land changes a construction loan
Lenders size a construction loan against the whole project: land plus construction. The land matters in two ways. It can count toward your contribution, and if it is financed, it changes when money is drawn and how much interest you pay during the build.
You already own the land
Your equity in the lot (appraised value minus any balance owed) is often credited toward the required contribution. With a $100,000 lot owned outright, a $400,000 build and $25,000 cash, the project costs $500,000, your contribution is $125,000 and the loan is $375,000. At 8% with 12 equal draws, interest runs from about $208 in month 1 to $2,500 in month 12, about $16,250 in total, and the 30-year mortgage at 6.5% is about $2,370 a month. If you still owe on the lot, the construction loan usually pays it off at closing, so that amount is drawn on day one.
You are buying the land with the loan
With the same numbers but buying the $100,000 lot, your $25,000 cash goes toward the land and the loan finances the other $75,000 at closing. The loan is $475,000. Because the land is drawn in month 1, the first interest payment is about $722, rising to about $3,167; construction interest totals about $23,333 and the 30-year payment is about $3,002.
What lenders check
- How the land is valued: appraisal, or the lower of price and appraisal for a recent purchase.
- Title, zoning, utilities and access, since the lot secures the loan.
- The as-completed appraisal of the finished home and your loan-to-value.
- Credit, income, reserves and an approved builder with a fixed budget.
For a month-by-month view with custom draws, use the construction loan calculator. To see the mortgage after conversion across terms, use the construction-to-permanent loan calculator. To estimate the build cost itself, try the construction cost estimator.
Land and construction loan FAQ
Can I use land equity as a down payment on a construction loan?
Many lenders accept equity in a lot you already own toward the required contribution. Equity is usually the appraised value of the land minus anything still owed on it. Some lenders use the lower of purchase price or appraised value if you bought the lot recently, so check how yours values it.
Can I finance the land and the construction in one loan?
Yes, some lenders offer a single loan that pays for the lot at closing and then funds the build in draws. Others want the land bought first, with a separate lot loan that is paid off when the construction loan closes. This calculator handles both: choose "I am buying the land" or enter what you still owe on land you own.
How does financing the land change my construction payments?
The land portion is usually paid out at closing, so you pay interest on it from the first month, while the build money is drawn over time. In the default example, financing $75,000 of land raises the first-month interest payment from about $208 to about $722.
How much down payment do I need if I own the land outright?
It depends on the lender, but if your land equity already covers the required percentage of the total project cost (often around 20% to 25% of land plus construction for conventional construction loans; government-backed programs can differ), you may need little or no extra cash. Lenders still look at reserves, credit and the appraisal of the finished home.