How to Use the Arizona Construction Loan Calculator: A Real Scenario Walkthrough

Most borrowers come to their first construction loan conversation with a rough number in their head and no idea how it was calculated. The Arizona Construction Loan Calculator is designed to change that. This walkthrough uses a real Queen Creek build scenario to show you exactly how each input flows through to your estimated funds to close.

The calculator has six sections. Each one corresponds to a category of cost or credit that your lender will account for at closing. Work through them in order and the summary panel updates in real time. Here's what each section means and how to fill it in.

The Scenario: A Queen Creek Custom Build

To make this concrete, we'll use a real-world example. The Hendersons are building a 2,800 square foot custom home in Queen Creek. They've already purchased their lot, have a signed contract with an ROC-licensed general contractor, and have paid deposits to their architect and builder. Here's what their project looks like:

Section 01: Land

Enter the appraised value of the lot — not what you paid for it, but what it appraises for today. The lender will order a lot appraisal, and the loan will be based on the lower of the appraised value or purchase price. In the Hendersons' case, they paid $138,000 for the lot two years ago and it now appraises at $145,000. They enter $145,000.

The Lot Adjustments field is for site preparation costs that aren't in the construction contract: grading, demolition, fill, or clearing. The Hendersons had minor grading done for $3,200, so they enter that here. Their Section 01 total is $148,200.

Section 02: Soft Costs

Soft costs are everything that doesn't go directly into the structure: architecture, engineering, interior design, well drilling (if rural), and utility hookup fees. These are real costs that the lender will finance as part of the total project budget, but they need to be documented. The Hendersons enter $22,000 for architecture and $8,500 for structural and civil engineering. Their Section 02 total is $30,500.

A common mistake is leaving soft costs at zero because "the builder handles all of that." Your architect and engineer are separate from your GC. If you've already paid deposits to them, those amounts will show up as credits in Section 06.

Section 03: Hard Costs

This is the largest section. Enter your GC's contract amount, then set the contingency percentage. Most Arizona lenders require at least 5% contingency; 7–10% is more conservative and often appropriate for custom builds. The calculator multiplies the contract amount by the contingency percentage automatically.

The Hendersons have a $686,000 contract at 7% contingency ($48,020), plus $14,000 in permits and $6,500 in builder's risk insurance. Their Section 03 total is $754,520. Combined with land and soft costs, their total project cost is $933,220.

Section 04: Loan Request

Enter the loan amount you plan to request. The calculator immediately shows your LTV. The Hendersons want to put 10% down, so they enter $839,898 (90% of $933,220). The LTV indicator turns amber at 90%, which is within the eligible range but flags for review. Dropping to 85% LTV would turn it green and may improve pricing.

This is the most useful section to experiment with. Try different loan amounts and watch how LTV changes. The difference between 90% and 85% LTV on a $933,000 project is about $46,600 in additional down payment — but it often unlocks meaningfully better rate pricing.

Section 05: Loan Closing Costs

This section is pre-filled with Arizona-typical estimates broken into three groups: lender fees, title fees, and third-party fees. The defaults reflect what you'd see on a Loan Estimate from Liberty Federal Credit Union with a typical Arizona title company. Adjust any line item to match actual quotes you've received.

The Hendersons leave the defaults in place for now. Their total closing costs come to approximately $6,623. Once they receive their actual Loan Estimate, they'll update the line items to match. Note that construction loan closing costs are higher than a standard purchase mortgage because of the additional title endorsements and draw administration involved.

Section 06: Credits and Adjustments

Credits reduce your funds to close dollar for dollar. The Hendersons have already paid $8,000 to their architect, $3,500 to their engineer, and $15,000 as a builder deposit. They also own the lot free and clear, so they enter $145,000 under Lot Equity. Their total credits are $171,500.

The Result: What the Summary Panel Shows

In this scenario, the Hendersons' credits exceed their funds-to-close requirement. Their lot equity alone ($145,000) covers the entire down payment. The remaining cash they'll need at closing is primarily the closing costs minus any deposits already credited. This is exactly why lot equity is so powerful on a construction loan.

Keep in mind this is a planning estimate. The actual funds to close will be confirmed on your Loan Estimate and Closing Disclosure. Your lender will also order an "as-completed" appraisal of the finished home, and the loan amount will be based on the lower of the appraised value or total project cost.