Your construction loan is a line of credit, much like a home equity line of credit. You will be billed for interest only payments based on the amount drawn monthly. In the beginning, this may only be closing costs and the purchase of your lot (if applicable). Interest payments will increase steadily over the course of your project as you request further draws from your loan. Towards the end of your project, the interest will include all builder and subcontractor draws for their completed work as well as the draw requests you have made.