Calculate payments for a construction loan, which typically involves an interest-only period during construction followed by a standard principal and interest mortgage.
Construction loans are short-term loans used to finance the building of a home. Unlike a traditional mortgage, the funds are paid out in stages (draws) to the builder as work progresses. During the construction period, the borrower typically only pays interest on the amount of money that has been drawn to date. Once construction is complete, the loan is usually converted into a standard, long-term mortgage where payments include both principal and interest.