Bridge to Permanent Loan Cost Calculator 2026
Bridge-to-permanent loans finance construction then convert to standard 30-year mortgage at completion. Saves one round of closing costs vs construction + separate take-out loan but rate locks 12-18 months ahead create market risk. This tool models total cost.
How Bridge-to-Permanent Loans Work
Single loan funds construction then converts to permanent 30-year mortgage at certificate of occupancy. Construction phase: interest-only on outstanding draw balance. Conversion: pre-locked permanent rate becomes effective, monthly P&I payments begin. One closing instead of two separate construction + take-out loans.
Rate Lock Risk and Float-Down
Bridge-to-perm rates locked at closing of construction loan — typically 12-18 months before conversion. If market rates rise during construction, you win (locked at lower rate). If rates fall, you're stuck at higher rate unless lender offers float-down option (typically 0.25%-0.5% fee, exercised 30-60 days before conversion).
Cost Components
Three cost categories: (1) Construction-phase interest on outstanding draws (typically Prime + 0.5-2.0%, average draw 50-65% of loan). (2) Origination + lock fees $5-15K. (3) Conversion fee at completion (~1% of loan). Total typically $20K-$50K vs $30K-$70K for separate construction + take-out loans.
Source: MBA Construction Lending Survey 2025, NAHB Construction Financing Report 2026. Last updated: May 2026.