Most construction loans are interest-only during the build phase, then convert into a standard amortizing mortgage once the home is finished. This calculator models that final permanent-loan payment so you can budget for life after construction — for the interest-only build phase itself, talk to your lender about the draw schedule.
Most construction loans disburse funds in stages ("draws") as building milestones are completed, and you typically only pay interest on the amount drawn so far during the build. Once construction finishes, the loan either converts into a standard mortgage or is paid off by a separate permanent mortgage.
Because the interest-only construction phase isn't a fixed monthly payment in the way a standard loan is — it depends on the draw schedule. This calculator instead estimates the ongoing payment for the permanent mortgage that follows construction, which is what most homeowners actually budget around long-term.
Yes, the construction phase typically carries a higher rate than a standard mortgage due to the added risk of an unfinished project, and that rate may be variable. Once converted to a permanent mortgage, rates are generally in line with standard mortgage pricing.