Change the Starting Balance of a Construction Loan

How the Fund-Up Interest Only Loan Works

When you create a new model with a fund-up interest only loan, the default behavior is for the program to begin the loan at $0 and then evenly increase the loan amount over the number of months specified.

For example in the scenario below, even though the term of the interest only loan is 36 months, the user has specified that the loan will be fully funded by month 18.  Therefore the loan will fund at a rate of $555,556 per month for 18 months and then remain fully funded for the remainder of the interest-only term.

Blog 2015-7 IO Funding Status

How to change the Beginning Balance

Occasionally you may want to have the interest-only loan begin at a value other than $0.  For example, a construction loan may be partially funded at closing to cover some of the land costs.  To accomplish this you must switch over to the Loan Amortization tab.  There, you can enter the Beginning Balance for the first month in cell “E51”.  The model will automatically take the remaining balance and apply it equally among the remaining months to fund up.

Blog 2015-7 Begining Balance