Construction-to-Permanent ADU Loan Calculator
A construction-to-permanent loan (construction-perm) funds an ADU build in draws during construction, then converts into a traditional 30-year mortgage at completion. This is the standard structure for ground-up ADU builds over $200,000. Compare its payment against a HELOC and cash-out refi on the same build.
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Loan amount: $208,000
Construction-Perm
Draws during build, converts to mortgage
Funds disbursed by milestone. Permanent loan activates at completion.
HELOC
Variable rate, interest-only draw option
Flexible line of credit. Only pay interest on what you draw.
Cash-Out Refi
Replaces your current mortgage
Combines existing mortgage + ADU cost into one new 30-year loan.
Rent-coverage estimate
Typical ADU rent in the National region runs about $1,800/mo. That covers roughly 102% of the featured Construction-Perm monthly payment shown above.
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ADU loan product comparison
| Product | Typical rate | Term | Best for |
|---|---|---|---|
| HELOC | 7.5–10.5% variable | 10 draw + 20 repay | Homeowners with 20%+ equity who want flexibility |
| Home Equity Loan | 7.3–10.3% fixed | 10–30 yr | Borrowers who want a fixed monthly payment |
| Cash-Out Refi | 7.5–8.5% fixed | 30 yr | Current mortgage rate already near market |
| Construction-Perm | 8.0–12.0% | 12–18 mo then 30 yr | Ground-up builds over $200K |
| DSCR | 8.5–12.0% | 30 yr | Investors qualifying on rent |
| RenoFi | 8.0–11.0% | 10–20 yr | Limited current equity, new-build ADUs |
Frequently asked questions
What is a construction-to-permanent loan ADU loan?
A construction-to-permanent loan is a financing product structured specifically around the cash-flow and appraisal profile of an ADU build. The calculator above shows how its monthly payment, rate, and term compare to a standard HELOC on the same build cost.
Who should use a construction-to-permanent loan for their ADU?
Borrowers pick a construction-to-permanent loan when its structure (draw schedule, rate lock, qualification basis, or post-construction appraisal) lines up with their project. Compare the payment side-by-side against a HELOC and cash-out refi to confirm it is actually the cheapest path.
What credit and equity do I need for a construction-to-permanent loan?
Most ADU-specific loan products require a 680+ FICO and leave 15–20% home equity after the draw. DSCR loans are the exception — they qualify against projected ADU rent instead of personal income but tend to price 1.0–1.5% higher than a conventional HELOC.
Can I combine a construction-to-permanent loan with a HELOC?
Sometimes. Stacking products is legal but requires explicit lender approval on both sides. Many homeowners instead use a HELOC for the first phase (plans, permits, site prep) and refinance into a single long-term product once the ADU is complete and appraised.
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Managing a Construction Loan? Stay on Top of Every Draw.
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