Commercial Ground-Up Construction Loan Sizing Calculator
Commercial construction financing requires multi-tiered capital allocation. This calculator models total project development budgets (land, hard costs, soft costs, contingency), calculates allowable senior debt commitments under LTC limits, and projects construction interest carry.
Standard Default Parameters
Underwritten Results Preview
Interactive real-time sliders and calculation engine enabled on live page.
Ground-Up Development Capital Stack Model
Construction loans disburse in stages according to verified inspection milestones. Interest is only charged on funds drawn to date (Dutch interest structure), with an average drawn balance typically modeled at 50% to 60% of total loan commitment.
Formula Components
Mid-Rise Multifamily Development (60 Units)
A developer builds a 60-unit garden apartment community with an $11,000,000 total budget over an 18-month construction timeline at 75% LTC.
Inputs
Sizing Outcomes
Underwriting Limitations & Disclosures
- Commercial construction loans almost always require a completion guarantee and repayment guaranty from principals with aggregate net worth equal to or greater than the loan amount.
- Lenders hold back a standard retainage (typically 10%) from contractor invoices until substantial completion and lien waiver sign-offs.
- All calculated figures are provided for educational and deal screening purposes. Actual lender term sheets depend on full underwriting review.
Frequently Answered Financing Questions
Verified answers to common borrower and broker inquiries regarding loan sizing, guidelines, and execution.
How do construction loan draw schedules and retainage work in commercial real estate?
Contractors submit monthly American Institute of Architects (AIA) G702/G703 payment applications, and lenders dispatch third-party inspecting architects to verify progress before releasing funds.
Lenders retain 5% to 10% of every draw as retainage, which is withheld until final Certificate of Occupancy and receipt of unconditional final mechanic lien waivers.
Submit Financing Scenario →What is Dutch interest vs. interest on drawn funds in commercial construction lending?
Dutch interest charges interest on the entire loan commitment from day one, whereas standard commercial construction loans only charge interest on funds actually disbursed.
Most commercial banks and debt funds charge interest solely on drawn funds, allowing borrowers to save significant capital during early foundation and site work phases.
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