Construction loans
Construction loan criteria, made simple
Building a new home is financed differently to buying one. Here is what lenders generally look at and how staged payments work. When you're ready, we gather a few details and arrange for someone to get in touch to discuss your options.
Quick take
Paid in stages.
The loan is usually drawn down as the build progresses, not all at once.
Contract matters.
Many lenders prefer a fixed price contract with a registered builder.
Interest grows as you go.
You typically pay interest only on what has been drawn so far.
New build perks.
Some lenders may accept a smaller deposit for a new build.
What lenders generally look at
- The build contract. A fixed price contract usually makes things simpler. Some lenders may not lend on labour only or cost plus contracts, or may need more deposit.
- The builder. Some lenders may check the builder's track record and whether they offer build protection or a warranty.
- Plans and consents. Final plans, building consent and a valuation based on the plans are commonly needed.
- Deposit and income. As with any home loan, you need a deposit and income that covers the finished loan, plus a buffer for overruns.
Types of build
- House and land package. One contract covers the section and the build. Common in growth areas.
- Build on your own section. You buy the land first, then take out the construction loan.
- Knock down and rebuild. Some lenders may consider this, with the existing home as part of the security.
How it works
How staged payments typically flow
| Stage | What happens | Payment |
|---|---|---|
| Deposit | Contract signed | Paid from your deposit |
| Foundations | Slab or floor poured | First drawdown |
| Frame | Frame and roof up | Next drawdown |
| Lock up | Windows, doors, cladding | Next drawdown |
| Completion | Code compliance issued | Final drawdown |
Construction loan checklist
- Signed or draft build contract
- Plans and specifications
- Building consent, or where it's at
- Builder details and any build warranty
- Section title or purchase agreement
- Your deposit, income and current debts
Renovating rather than building?
Renovation and top-up lending is different. See our new build and renovations page.
Get more information on a construction loan
About 2 minutes. We gather a few details and arrange for someone to get in touch to discuss your options.
Common questions
- What are the criteria for a construction loan?
- Generally a build contract, plans, consent, a registered builder, a deposit and income that covers the finished loan. Each lender sets its own criteria.
- How do construction loan drawdowns work?
- The lender pays the builder in stages as work is completed, often after an inspection. You usually pay interest on the amount drawn so far.
- Can I get a construction loan with a small deposit?
- Some lenders may accept a smaller deposit for new builds. It depends on the lender and your situation.
- Can I use a labour only contract?
- Some lenders may, but many prefer a fixed price contract. Expect more checks if the contract isn't fixed price.
- What happens after I leave my details?
- We gather a few details and arrange for someone to get in touch at the time you choose to discuss your options. There is no obligation.