Construction Loans

Building is different from buying

When you buy an established home, the lender pays the full price on settlement day. When you build, the money is paid out in stages as the builder completes each part of the job. You only pay interest on what’s been drawn so far.

That makes construction loans more involved. The lender values the home based on plans that don’t exist yet, approves each payment as the build progresses, and needs paperwork from the builder at every stage. If one step is missed, your builder waits for payment and the build can stall. We manage that process so it doesn’t.

How progress payments work

Most Queensland building contracts are paid in stages, typically:

At each stage the builder issues an invoice. You approve it, and the lender usually sends a valuer to confirm the work is done before paying the builder directly. We coordinate each claim with the lender so payments go through on time.

What lenders need

• A fixed-price building contract from a licensed builder (check their QBCC licence)
• Plans and specifications approved for the build
• A valuation “as if complete”, based on the plans and contract
• Proof of QBCC Home Warranty insurance, which the builder arranges for residential work
• A quote or budget for anything outside the contract, such as driveways, landscaping or fencing, if you want those included in the loan

Things that catch people out

Variations. Changes after the contract is signed usually have to be paid by you before the lender pays anything further. Lock in as much as you can before you sign.

Costs outside the contract. Driveways, fencing, landscaping, window coverings and connection fees are often not included. Budget for them up front.

Valuations below cost. If the “as if complete” valuation comes in below the land and build cost, you’ll need to cover the gap. We’ll flag this risk early.

Timeframes. Most lenders expect the build to start within a set period and finish within a set time. Delays can mean extra interest and, in some cases, a reassessment.

Choosing your builder. Check the builder’s QBCC licence and history before signing. Your loan relies on the builder finishing the job.

Types of construction loans we arrange

• House and land packages: land settles first, then the construction loan funds the build.
• Building on land you already own: your land equity can often count towards the deposit.
• Knockdown-rebuild: replacing your existing home on the same block.
• Major renovations and extensions: where the work is big enough to need progress payments.
• Investment builds and duplexes: new builds for rental, including dual-occupancy.
• Owner-builder: possible with some specialist lenders, but criteria are much stricter.

First home buyers building a new home

If you’re building your first home in Queensland, you may be eligible for the $30,000 First Home Owner Grant (for a new home valued under $750,000, including land). You’ll also pay no transfer duty on the land or new home for contracts signed from 1 May 2025. See our first home buyers page for details.

Example: a builder with 20 progress payments

A client asked us to finance a new home they were building in Rockdale, NSW, on land they already owned outright. The land was valued at about $1 million, and the build cost was close to $893,000.

The problem was the builder’s contract. It had 20 progress payments, while most lenders will only fund a build in about seven stages. One lender after another said no.

We worked through the client’s position and compared lenders until we found a different way to structure it. Because the loan was less than the value of the land alone, the lender agreed to fund 100% of the construction cost secured against the land, and to release the funds at settlement. That meant the client could pay the builder directly at each of the 20 stages, without waiting for the lender to approve every claim.

The final construction loan was about $893,000, and the build went ahead on the builder’s own payment schedule.

Client details and figures have been changed or omitted for privacy.

Frequently asked questions

Do I pay interest on the full loan while building?

No. You pay interest only on the amount drawn so far. Repayments are usually interest-only during the build, then switch to principal and interest once it’s finished.

How much deposit do I need to build?

Usually 20% of the total land and build cost to avoid lenders mortgage insurance, though some lenders accept less. Equity in land you already own can count towards it.

Can I use the First Home Owner Grant towards my build?

Yes, if you’re eligible. In Queensland it’s paid towards a new home valued under $750,000, and the timing of payment depends on your lender and build stage.

What happens if my build goes over budget?

The lender generally won’t increase the loan mid-build without a new assessment. You’ll usually need to pay variations or overruns yourself, which is why we build a buffer into the plan.

Talk to Joe about your build

Call (07) 5538 8334 or book a time with Joe.

General information only. It does not take into account your objectives, financial situation or needs. Grant and concession details are current as at October 2026 and may change; check eligibility with the Queensland Revenue Office. Lending criteria, fees and charges apply, and all loans are subject to lender approval. Fast Funding (Australian Credit Representative Number 397509) is a Corporate Representative of BLSSA Pty Ltd (Australian Credit Licence 391237).