House-and-land, knockdown rebuild, owner-builder or a major renovation. One loan that buys the land and funds the build which is released in stages, with interest charged only on what’s been drawn.
Buying a block and building on it, or signing a house-and-land package. The loan settles on the land first, then funds the build in stages against your fixed-price building contract. In most states you pay stamp duty on the land value rather than the finished house which is often a meaningful saving.
You already own the block and you’re demolishing to start again. Your existing equity usually does the work of a deposit, so there may be nothing further to contribute. Lenders will want demolition costs, permits and the new build contract all accounted for in one budget.
You’re managing the build yourself instead of engaging a licensed builder. Only a limited number of lenders will fund this, and they ask for more: an owner-builder permit, a line-by-line cost breakdown, and typically a larger deposit. Knowing which lenders say yes is most of the battle.
Extensions, second storeys, reconfiguring the floorplan. Structural work generally needs a construction loan with staged payments, valued on what the property will be worth once finished. Cosmetic-only work is usually better funded another way and we’ll tell you which side yours falls on.
Funds are released in stages as your build hits each milestone which is usually after a valuer confirms the stage is complete. During construction you only pay interest on what’s actually been drawn, so repayments start small and grow as the house does.
General guide only. Stage percentages vary from build to build — your actual drawdown schedule is set by your building contract and your lender.
Construction lending is more document-heavy than a standard home loan, because the lender is funding something that doesn’t exist yet. Getting these together early is the single biggest thing you can do to keep the approval moving.
Signed with a licensed builder, with the full scope and price set out. Lenders are cautious about open-ended or cost-plus contracts because the final number isn’t known.
Final plans and specifications, plus the relevant approvals or permits for your council and state. The valuer works from these.
Builder’s licence and their insurance with home warranty or equivalent depending on your state. If your builder can’t produce these, most lenders won’t proceed.
The lender values the property as if the build were already finished, then lends against that figure. This is why the plans and contract matter so much.
Usually around 20% of the land and build combined. Below that, lenders mortgage insurance generally applies. Budget separately for stamp duty, legals and connections.
Site costs, driveways, landscaping and anything outside the contract. Lenders want to see these funded, and a buffer for variations is worth having.
Your block, your builder, your budget and where you’re up to. Five minutes, no obligation.
Not every lender handles construction well. We match your build to the ones that do and explain why we’re recommending them.
We manage the valuation, the paperwork and the conditions through to unconditional approval and land settlement.
We handle each drawdown with the lender as your builder completes a stage, so the build never waits on money.
Reviewed by Jackie Wang, Partner at Formation Finance
Jackie Wang holds a Master of Professional Accounting from the Royal Melbourne Institute of Technology (RMIT), and has over 10 years of experience in finance and lending, structuring tailored funding solutions for Australian developers and investors.
Last update: 22/07/2026
As a general guide, around 20% of the combined land and build cost. You can often borrow with less, but once you go above 80% of the property’s on-completion value, lenders mortgage insurance usually applies. If you already own the land, the equity in it commonly counts toward your contribution sometimes covering it entirely.
Yes, though your options narrow considerably. Fewer lenders offer owner-builder construction loans, and those that do generally want an owner-builder permit, a detailed itemised cost schedule, evidence of relevant experience, and a larger deposit than a builder-contracted project. This is one of the clearest cases where a broker helps and we know which lenders are genuinely open to owner-builders rather than just technically allowing it.
Variations are common, so it’s worth building a buffer into your budget from the start. If the cost rises beyond the contract, you’ll usually need to fund the difference yourself or apply to increase the loan, which means a fresh assessment.
In most cases the lender pays your builder directly at each stage, rather than depositing funds into your account. Your builder invoices for the completed stage, the lender arranges an inspection or valuation to confirm the work, and the payment is released. As your broker we coordinate that process each time.
