Building Your Own Home

Finance your build from land to handover, in Sydney and across Australia.

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How do construction loans work?

A construction loan pays out in stages as your build progresses. Not one lump sum like a standard home loan. You only pay interest on the portion that's actually been drawn, so early repayments stay small and grow as the builder gets closer to handover. Before approving the loan, the lender values the home based on the completed plans and specifications, not the unfinished build.

ASIC Moneysmart notes construction loans usually run interest-only during the build, then switch to principal and interest once the home's finished. That's what makes a construction loan quite different from a normal home loan.

Talk to the experts

With access to a wide range of lenders and loan options, we'll help you find the right loan terms and repayment structure for your build, whether you're building in Sydney, elsewhere in New South Wales or across Australia.

We'll be with you every step of the way, so your loan is set up to match your timeline and budget.

Best of all, we don’t charge you a fee to use our services as we are paid by the lender when your home loan settles.

The five progress draw stages, explained

Your builder gets paid as work is done, not before. At each stage, the lender sends a valuer to inspect the site, then releases the next payment. Your building contract sets out the stages, and each progress payment should match work actually completed. The rules on what a builder can claim, and when, are set by each state.

Here's how a typical progress draw loan flows through a build.

Stage	What's built	Typical % of loan drawn
1. Slab / base	Foundations poured	15-20%
2. Frame	Wall and roof framing up	20%
3. Lock-up	Roof, windows, external doors on	20%
4. Fixing / fit-out	Internal linings, cabinetry, tiling	30%
5. Practical completion / handover	Final clean, certification, keys	10-15%

Percentages shift a bit by lender and by what's in your fixed-price building contract. The principle doesn't. Money's only released once the work in front of it is done and signed off. For the wider picture, we've mapped out building a house separately.

What you need to qualify for a construction loan

Lenders want the same evidence every time, no matter which builder you've picked.

A signed fixed-price building contract, or an owner-builder permit if you're managing the build yourself
Council-approved plans and specifications
A construction loan deposit, usually 5-20% of the combined land and build cost
Income and serviceability evidence (serviceability is just the lender's sum that says you can comfortably repay with a buffer built in)
A licensed and insured builder

On the deposit side, your state's home building laws limit how much your builder can ask you for up front. That's separate from the deposit the lender needs from you. Best to work out your borrowing power before you sign anything, so the land price, build cost and grants all line up.

Most construction delays don't start with the builder. They start because the paperwork wasn't ready when the lender asked for it. Getting everything in place before you sign saves a lot of headaches later.

Owner-builder loan vs fixed-price contract loan

Both are legitimate ways to build. They're not the same in the eyes of a lender.

Owner-builder rules are set by each state. In NSW, as elsewhere, you generally need an owner-builder permit before you undertake or supervise the work yourself, and there can be extra obligations if you sell the property within a few years of completion. Check the current rules for your state before you commit.

An owner builder loan is harder to secure than a standard construction loan. Most lenders prefer a fixed-price contract because the risk is easier to price. Here's how the two stack up.

Factor	Owner-Builder	Fixed-Price Contract
Lender acceptance	Few lenders	Most lenders
Max LVR	Typically 60-80%	Up to 95% with LMI
Deposit needed	20% or more common	5% possible
Documentation	Permit, detailed costings, quotes, insurance	Signed contract, plans, builder details
Risk profile	Borrower carries build risk	Builder carries most risk

What a construction loan actually costs

Construction loan rates are generally variable during the build phase, with the option to fix once the loan rolls to principal and interest at completion. Some lenders let you split at that point too.

On top of the rate, you'll cop valuation and inspection fees at each progress draw. Small on their own, but they add up over five stages, so factor them in. If your deposit's under 20% of the total land and build cost, Lenders Mortgage Insurance (LMI) will apply. LMI protects the lender, not you, and can be added to the loan.

Land and construction vs house and land package

Feature	Land and construction	House and land package
Settlement structure	Land settles first; construction loan (or split facility) follows once the building contract is signed	One settlement; land and build funded together under the same facility
Timing gap	Often a gap between land settlement and build start	Minimal gap; tidier cash flow
Interest during the gap	Interest paid on the land portion while waiting to build	Not applicable, given the combined structure
Paperwork	More moving parts, separate contracts	Simpler, single facility
Flexibility	More flexibility to choose builder and design later	Locked into a specific builder and design from the start
Best suited to	Buyers who want flexibility or aren't ready with build plans	Buyers with plans finalised who want simplicity

First home buyer benefits when you build

Building a new home can open up grants and concessions that don't apply to existing properties.

The First Home Owner Grant and stamp duty concessions depend on your state and circumstances. In NSW they are administered by Revenue NSW. Most come with conditions on the value of the new home and on living in it, so it pays to check before you sign a land or building contract.

The First Home Guarantee lets eligible buyers build with a 5% deposit and no LMI. Some states also offer a first home vacant land concession, cutting the duty when you buy land to build your first home on. Phillip will check what you are eligible for before you commit.

Why use a construction loan broker in Sydney

Not every lender does construction loans. Even fewer accept owner-builders. That narrows your list fast.

We work across a panel of 50+ lenders and know which ones say yes to what. As your construction loan broker, we structure the loan, prep the documents, and help manage the progress draws with the builder and the valuer so payments land on time.

You deal directly with Phillip Bui, our Founder and Principal Mortgage Broker and a Full Member of the MFAA, whether you're building in Sydney or elsewhere in New South Wales. We're your local Sydney mortgage broker, and there's no fee to you. We're paid by the lender at settlement.

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Here’s the truth

Don’t let these common misconceptions about construction loans stop you

Building your own home is more within reach than many people think. These are the four we hear most often.

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Myth
“You need a large deposit before you can build.”
Fact
You can start building with a 5% deposit saved, plus buying costs.
Myth
“Grants can't help with a construction loan.”
Fact
If you're eligible, you can use a First Home Owner Grant to boost your deposit.
Myth
“You must be in your job for at least 12 months.”
Fact
You don't have to be in your job for 12 months to get a construction loan.
Myth
“All your debts must be paid off first.”
Fact
Your debts don't need to be paid off to get your first construction loan.

Our Process

Construction loan home builders guide

Here’s our simple process to get a construction loan so you can build your own home.

Download the step by step map below.

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Preparation

We answer all your questions like how much deposit you need, your borrowing power and which government grants and concessions you may be eligible for (these depend on your state and circumstances). We...

Find a block of land

Once you've chosen a block of land and confirmed with the builder that your ideal home design suits the block, you will need to sign a contract of sale. It's worth organising a building and pest inspe...

Choose home design and builder

After choosing your home design and builder, you’ll usually pay the builder another initial, non-refundable deposit, again using your own savings. The builder will then draw up your plans and a buildi...

Start construction loan application process

This is where the money to build comes together! You will need to send us your supporting paperwork like payslips, bank statements, contracts and quotes so we can understand your financial situation i...

Read the full version here

Renovating an existing home instead of building new? See renovation loans. Need to buy your new build block before selling your current home? See bridging loans.

Testimonials

See what clients say about our service

5.0 Stars

Based on 48 user reviews

Darren W.

“Refinanced through our mortgage broker and couldn’t be happier. Phillip secured us a great interest rate, helped consolidate our loans, and ended up saving us a heap of money each month. Everything was explained clearly and the process was smooth from start to finish. Highly recommend.”

Michael D.

“Phillip was amazing. Not only did he help us find the loan we desired, he was proactive with our conveyancer, the bank and all other parties involved to make sure we had our i's and t's, ticked and crossed. As a first home buyer this was invaluable. Thankyou Phillip for helping us with our first home.”

Julie H.

“Phillip was great to work with! Helped us with refinancing and obtaining the best rate in the market. He was very efficient and made the whole process very easy. Would recommend him to anyone looking for a mortgage broker.”

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Frequently Asked, Clearly Answered

Usually 5-20% of the combined land and build cost. With 5%, you'll typically pay LMI unless you qualify for the First Home Guarantee. A 20% deposit avoids LMI and opens up more lenders. Keep in mind the builder's deposit is separate, and how much a builder can ask for is limited by your state's home building laws.

Yes, but the field of lenders is much smaller. Most cap the LVR at 60-80%, so you'll need a bigger deposit. You'll also need an owner-builder permit if your state requires one for your project, plus detailed costings, quotes and insurance. Allow time for the permit before you apply.

The builder invoices you at each stage. You forward the invoice to the lender, a valuer inspects the site to confirm the work's done, and the lender pays the builder directly. Your building contract sets out the stages, and each payment should match work actually completed.

Build delays can happen due to weather, material shortages or council approvals. If the timeline changes, let your broker and lender know early. Most lenders can work with reasonable delays, but keeping everyone informed helps avoid issues with progress payments.

Your builder can't simply request the next payment because the date arrives. The lender releases each draw only after the required stage has been completed and, where required, inspected. If paperwork is missing or the work hasn't reached that milestone yet, payment can be delayed.

Yes, but any changes that increase the build cost usually need to be approved by the lender. It's best to speak with your broker before agreeing to contract variations, so you know how they'll affect your loan.

No, only on funds that have actually been drawn. Repayments start small after the first draw and grow as more of the loan is released at each stage. ASIC Moneysmart notes the loan is interest-only during construction, then converts to principal and interest at completion.

Often, yes. First home buyer grants and stamp duty concessions depend on your state and circumstances. In NSW they are administered by Revenue NSW, and Phillip will check what you are eligible for. Timing matters. The grant's usually paid at the first progress draw, so it can reduce how much of your own savings you need upfront.

On a fixed-price contract, variations have to be agreed and documented in writing. If you approve extras, you fund the difference. Either from savings or, if the lender agrees, a top-up. That's why we sanity-check the contract price against your borrowing power and buffer before you sign.

Most lenders run variable during the build, then let you fix once the loan rolls to principal and interest at handover. A few offer fixed rates earlier, but with less flexibility on draws. We'll match you to the structure that fits your timeline.

Two to four weeks from full application is typical, assuming plans, contract and income docs are ready. Getting home loan pre-approval before you sign a land contract shortens the run to formal approval and stops surprises later.

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