Mortgage & Construction Loan Calculator
Small differences in your interest rate make a big difference to what your land and build loan costs over 30 years. Work out your repayments, how much you can borrow and how to pay your new home off sooner, on principal and interest or interest only.
Not sure what the build itself will cost? Start with the build cost estimator and bring the figure back here.
Disclaimers
- This is a model, not a prediction. Amounts and repayment periods are estimates only. Actual amounts may be higher or lower.
- Results are based on the information you provide and do not take your personal circumstances into account.
- On the principal and interest setting it applies to loans where your regular repayment includes both interest and the gradual repayment of the amount borrowed. On the interest-only setting it applies to loans with an interest-only period, after which both principal and interest are repaid for the rest of the loan term.
- The calculator is not intended to be your sole source of information when making a financial decision. Consider getting advice from a licensed finance professional or mortgage broker if you need it. Homebuilds.com.au is not a licensed credit provider or financial adviser.
- Using this calculator does not guarantee you will be eligible for a loan. You will need to satisfy your lender's lending criteria. Construction loans usually also require a fixed-price building contract, council-approved plans and the builder's insurance details.
- The average interest rate reflects the most recent Economic and Financial Statistics data (Housing Lending Rates, September 2026) published by the Reserve Bank of Australia.
- The method follows the Moneysmart mortgage calculator published by the Australian Securities and Investments Commission, with an interest-only option added.
Assumptions
- Interest rates do not change for the life of the loan.
- Interest is calculated by compounding at the same frequency as the repayment selected: weekly, fortnightly, monthly, quarterly or yearly.
- Fees entered at a different frequency to the repayments are spread evenly across each repayment.
- It does not take into account up-front costs such as loan establishment fees, lenders mortgage insurance, stamp duty, or the deposits on your land and building contract.
- It does not consider your ability to make the repayments shown. Lenders assess your loan at a rate above the one you are offered (currently a 3% buffer), so use the what-if explorer to see repayments at a higher rate.
- Affordable repayments cannot be less than the fees entered.
- Interest only: the full amount is treated as borrowed from day one. A real construction loan is drawn down in progress payments as each stage of the build is completed, so interest during the build is usually lower than shown here.
- Interest only: during the interest-only period the balance does not reduce. Afterwards the loan is repaid as principal and interest over the remaining term, so the interest-only period must be shorter than the length of the loan.
- Interest only, borrowing power: the loan is sized on the principal and interest repayments after the interest-only period, which is how lenders assess serviceability. The interest-only repayments shown are therefore lower than the repayment you entered.
- Interest only, repay sooner: only interest and fees are paid during the interest-only period. Your repayment is applied to principal and interest once that period ends.
Average rates are sourced from the Reserve Bank of Australia statistical tables. The calculation method follows the Moneysmart mortgage calculator.
Financing a new build
Progress payments, not one lump sum
A construction loan is released to your builder in stages, usually at deposit, slab, frame, lock-up, fixing and completion. Interest is charged only on the amount drawn so far, which is why the first few months of repayments are small and grow as the house goes up.
Interest only during the build
Most lenders set construction loans to interest only until the final progress payment, then convert them to principal and interest. Some let you keep an interest-only period of up to five years. The toggle above shows the step-up in repayments when that period ends, and what it adds to the lifetime cost of the loan.
Land first, build second
If you buy a block before signing a building contract you will usually settle a land loan first and add the construction loan later, often with the same lender. Enter the combined balance here to see the repayments once the home is complete.
Budget for what the contract leaves out
Site costs, soil tests, driveways, landscaping, fencing, window furnishings and council fees are often outside the base price. Lenders also want a contingency. Add these to the amount borrowed, or test a higher figure with the alternative loan comparison, so the repayments you plan for are realistic.
Frequently Asked Questions
- How can I see the effect of a lump sum payment on the length of my loan?
- Choose 'Repay sooner', enter your current loan details, then reduce the amount owing by the lump sum. The difference in time to repay and total repayments shows what the lump sum saves you.
- How is a construction loan different from a normal home loan?
- A construction loan is drawn down in stages as the build progresses, typically at the slab, frame, lock-up, fixing and completion stages. You only pay interest on what has been drawn, and most lenders set the loan to interest only until the home is finished. It then converts to a standard principal and interest loan. Turn on 'Interest only' above to model this.
- Should I use interest only or principal and interest?
- Interest-only repayments are lower while the house is being built, which helps if you are also paying rent. The trade-off is that the balance does not reduce, so you pay more interest over the life of the loan and your repayments step up when the interest-only period ends. The repayments calculator shows both the step-up and the extra lifetime cost compared with principal and interest from day one.
- What amount should I enter for a land and build loan?
- Enter the total you expect to borrow across the land and the building contract, less your deposit. If your land loan has already settled and you want to model the build loan on its own, enter just the build contract amount. Remember that site costs, upgrades and council fees are often not in the base contract price.
- What interest rate should I use?
- Start with the Reserve Bank of Australia average for new loans shown at the top of the page, then compare it with the rates lenders are advertising. Construction loans are sometimes priced slightly above standard variable rates. Use the what-if explorer to check you could still afford repayments if rates rose by 2% to 3%, which is close to the buffer lenders apply when assessing you.
- Why does 'Borrowing power' give a different figure from my bank?
- This calculator only works back from the repayment you say you can afford. Lenders look at your income, expenses, other debts, the number of dependants and the loan-to-value ratio, and apply an assessment rate above the actual rate. Their figure may be higher or lower than this estimate. Treat it as a starting point for a conversation with a broker or lender.
- Does this calculator include stamp duty, lenders mortgage insurance or grants?
- No. It models the loan repayments only. Stamp duty on the land, lenders mortgage insurance if you borrow more than 80%, and any First Home Owner Grant or stamp duty concession change the amount you need to borrow, so adjust the amount borrowed to suit.