Construction Loans · Land & Build
A construction loan is drawn stage by stage. Plan the structure the same way.
Land settles, then the build draws down in progress payments... and you pay interest only on what's drawn, usually while paying rent or another mortgage at the same time. I structure construction lending for investors building duplexes, first home buyers on house-and-land packages, and families doing a knockdown rebuild... so the drawdown, the valuation and the month-by-month cost are mapped before the slab goes down.
Last reviewed
Rebecca Tickner
Finance Broker · Maxfin
Sound familiar?
The problems I hear most often.
The repayments start before the house exists
From land settlement you're paying interest, and every progress payment lifts it... while you're still paying rent or your current mortgage. Most people budget the build price and forget the months in between.
Nobody explains the drawdown
Deposit, base, frame, lock-up, fixing, completion... what gets paid, when, and what each stage does to your repayment is usually discovered one invoice at a time. It should be mapped before you sign the contract.
The contract price isn't the whole cost
Site costs, variations, driveways, landscaping, window coverings... items outside the fixed-price contract generally can't be drawn from the loan. If they're not budgeted, they surface at the worst possible time.
How It Works
Five stages. Walked together.
The same client journey from your first call through to settlement... and the loan reviews that follow.
Tap a stage to explore
01.
Discover
- 15-minute discovery call
- Hello Pack lands in your inbox
- Click “Get Started” to begin your Fact Find
02.
Plan
- Your Fact Find returned
- I assess your servicing
- You receive your Game Plan with my recommendation
03.
Apply
- Game Plan signed
- I lodge your application
- We wait... lender may come back with clarifying questions
04.
Approve
- Conditional approval
- Final conditions satisfied (e.g. insurance)
- Formal approval
05.
Settle
- Loan documents signed
- Settlement booked, solicitor takes the lead
- Loan settled!
In Practice
The build cost that surprises people is rarely the contract price. It's the months of interest and rent between slab and handover... and that's entirely mappable before you sign.
Rebecca Tickner
What you get working with me.
The drawdown mapped before you sign
Stage by stage: what draws, when, and what the repayment becomes at each point. The calculator on this page is the exact map... I build it into every construction application.
Land and build structured together
Two contracts, one funding position. Whether you're buying the land or already own it, the structure is set up so the land settlement and the build approval don't trip over each other.
Equity as your contribution
Your contribution doesn't have to be cash. Equity in land you already own, or in another property, can fund the front end... structured carefully so it doesn't tangle the securities.
Lender selection that fits the project
A duplex build, a knockdown rebuild and a house-and-land package suit different lenders. Construction policy is where lender differences show up most, and where the right match saves the most friction.
Grants and concessions, applied properly
The First Home Owner Grant targets new builds, and buying land-then-building changes how stamp duty is assessed in most states. I'll confirm exactly what applies to your project and state.
Structured for the move after this one
Investors especially: how the build is financed decides how soon you can act again. I keep the structure clean... securities separate, capacity preserved, next purchase open.
The Mechanics
How progressive drawdown actually works.
A construction loan isn't handed over as a lump sum. The lender pays your builder directly, in stages, as the work passes inspection... these are the progress payments. If you're buying land too, the land settles first and the build draws down on top of it.
The stages below are the common schedule in fixed-price residential contracts. Your contract sets the real ones, and in Queensland the deposit is capped at 5% for contracts of $20,000 or more.
- 015%
Deposit
Paid to the builder at contract signing, before work starts.
- 0215%
Base / slab
Foundations and slab poured, site works complete.
- 0320%
Frame
The frame is up and approved... the skeleton of the house.
- 0425%
Enclosed / lock-up
Roof on, external walls, windows and doors in. The house can be locked.
- 0520%
Fixing / fit-out
Internal fittings... plumbing, electrical, plaster, cabinets, doors.
- 0615%
Practical completion
Finished and ready for handover, subject to final inspection.
The Part Nobody Budgets
You pay interest on what's drawn... not the full loan.
During the build, repayments are interest-only on the balance drawn so far. Early on that's small. By lock-up it isn't. And for most people those months of interest run alongside rent or an existing mortgage... that overlap is the cost that catches builders-to-be off guard, and it's exactly what the calculator below maps stage by stage.
During the build, interest is charged on the stepped line... not on the full loan.
The Assessment
What lenders look at before the slab.
A fixed-price building contract
Most lenders want a fixed-price contract from a licensed builder before they'll approve construction lending. Cost-plus contracts and owner-builder projects are possible with some lenders, but the pool shrinks and the required contribution usually grows.
The on-completion valuation
The valuer assesses what the finished home will be worth, not what you're spending. If the land plus the build costs more than the on-completion value, the shortfall comes from you. I flag that risk before you commit, not after the valuation lands.
What's outside the contract
Driveways, landscaping, fencing, window coverings, sometimes flooring... items outside the fixed-price contract usually can't be funded by the progress draws. They need their own line in your budget, in cash or planned borrowing.
The build timeframe
Most lenders require construction to start within a set period of approval and finish within a set period of the first draw... commonly around 12 to 24 months, varying by lender. Delays outside those windows can mean reassessment.
Who Builds
Three ways people build... and how the finance differs.
Investors
Building to invest... duplexes, dual-occupancy and small builds
New builds can suit investors: depreciation is strongest on new dwellings, and a duplex or dual-occupancy build can put two incomes on one block. The finance question is where construction lending stops and development lending starts. As a general pattern, one or two dwellings usually stays within standard construction lending, assessed mostly on you. Three or more is commonly where lenders start assessing the project itself. If you're weighing up a subdivide-and-build, I've written up how the finance sequences.
Read the subdivision finance guideFirst Home Buyers
House-and-land packages... where the grants actually live
The First Home Owner Grant is targeted at new homes, which is exactly what a house-and-land package is. In Queensland it's currently $30,000 for eligible contracts, for new homes valued under $750,000 including land... amounts and caps vary by state and change over time, so I'll confirm what applies where you're buying. House-and-land is usually two contracts (land, then build), which is what makes it construction lending rather than a standard purchase.
See the first home buyer pageKnockdown Rebuild
Love the street, not the house
A knockdown rebuild runs like building on land you own... the land is your equity, and the loan funds the build. The details that catch people: demolition usually sits outside the fixed-price contract, you'll need somewhere to live during the build while repayments are running, and if there's an existing loan on the property it has to be restructured before the builder starts. All solvable... in the right order.
Grant amounts, eligibility and property caps are state-based and change... figures above are Queensland's, correct at August 2026. Depreciation and tax treatment sit with your accountant. All lending subject to lender criteria, credit assessment and individual circumstances.
Run The Numbers
See the drawdown, stage by stage.
Land, build contract, your contribution. I'll map the drawdown.
RBA rate update · 11 August 2026 applied
1 · Your project
Project typeLand settles first, then the build contract draws in stages.
Cash savings or released equity. Lenders apply your funds first, then draw the loan.
Sets the land transfer duty estimate. Buying land then building means duty is generally assessed on the land only... not the finished house.
2 · Your loan
Default variable rate. Construction pricing varies by lender... edit anytime.
Contract signing to practical completion.
3 · Progress payment schedule
A common schedule for fixed-price contracts... your building contract sets the actual stages. Tap any stage to match yours.
Estimate only. Not a credit offer, quote or approval. Subject to lender criteria, fees, charges and individual circumstances. Progress payment stages are set by your building contract... these are common percentages, not a rule. Get in touch for a personalised assessment.
Questions
Frequently asked.
How does a construction loan actually work?
The loan is drawn progressively, not as a lump sum. If you're buying land, the land settles first. Then the lender pays your builder directly at each completed stage of the build... the progress payments. During the build you pay interest only on the balance drawn so far, and at practical completion the loan converts to principal and interest.
What are the progress payment stages?
A common schedule for fixed-price contracts is deposit, base or slab, frame, enclosed or lock-up, fixing, and practical completion. Your building contract sets the actual stages and percentages... and in Queensland the deposit is capped at 5% for contracts of $20,000 or more. The lender typically inspects or values before releasing each payment.
Do I pay full repayments while the house is being built?
Generally no. During construction, repayments are interest-only on the drawn balance, so they start small and grow with each stage. The real budgeting question is the overlap... most people are paying rent or an existing mortgage at the same time. The calculator on this page maps that month-by-month cost.
How much deposit do I need to build?
It varies by lender and project, and it works slightly differently to a standard purchase: lenders apply your contribution first, then draw the loan. Your contribution can be cash savings or equity... in land you already own, or in another property. Where the overall position is above a lender's threshold, lenders mortgage insurance can apply, the same as any loan. I'll give you the specific numbers for your project, subject to lender criteria.
Can I use the equity in my land or my home as the deposit?
Often, yes. If you own the land, it's usually the security and your equity in it forms part of your contribution. Equity in another property can be released to fund the front end... plans, approvals, the builder's deposit. I structure it carefully so the securities stay separate. There's more on that thinking in my investment lending page.
Is buying off the plan the same as a construction loan?
No. Off the plan is a completed-property purchase that settles when the building is finished... one settlement, standard loan, no progressive drawdown. A construction loan is for a build contract in your own name, drawn in stages. The finance risk profiles are quite different, which is worth understanding before you choose between them.
What happens if the build costs more than the contract?
The loan funds the fixed-price contract. Variations, site cost surprises and anything outside the contract... driveways, landscaping, window coverings... generally can't be drawn from the progress payments. The answer is a contingency buffer planned at approval time, not discovered at fixing stage. This is one of the first things I pressure-test in a build budget.
Does the First Home Owner Grant apply if I build?
Building new is exactly what the FHOG targets. In Queensland it's currently $30,000 for eligible contracts, for new homes valued under $750,000 including land... amounts, caps and rules vary by state and change over time, so I'll confirm what applies to your project. More on grants and schemes on the first home buyers page.
Queensland figure correct at August 2026, per the Queensland Revenue Office. Eligibility criteria apply.
Is stamp duty cheaper when you build?
Generally, buying vacant land and then building means duty is assessed on the land contract only... you're not paying duty on a house that doesn't exist yet. Compared with buying an established home at the same total value, the difference can be substantial. It's state-dependent, so run your numbers in the stamp duty calculator.
Can you finance an owner-builder project?
Some lenders will, most won't, and those that do usually want a larger contribution and more documentation. If you're licensed or building under an owner-builder permit, it's worth a conversation early... the lender pool defines what's possible before the plans do.
I'm an investor... duplex or dual-occupancy build. Is that still a construction loan?
Usually, yes. As a general pattern, one or two dwellings stays within standard construction lending, assessed mostly on you and the security. Three or more is commonly where lenders treat it as a development and assess the project itself... different pricing, different requirements. If a subdivision is part of the plan, read my subdivision finance guide.
People reading this usually
Tell me about the build
A few questions so I understand the project before we talk. Nothing here commits you to anything, and I don't need your financials for a useful first conversation.
Written & reviewed by
Rebecca Tickner
Finance Broker, Maxfin · Diploma of Finance & Mortgage Broking Management (FNS50322) · ASIC Credit Rep 571611 · MFAA Member
I built a seven-property portfolio with my partner. I structure clients' finance the same way I run mine.
More about Rebecca