Construction loans
Construction loan criteria, made simple
A construction loan works differently to buying an existing home, mostly because it's paid out in stages as the build goes up, and someone can get in touch when you're ready.
Quick take
Paid in stages.
The loan is drawn down as the build progresses, and you typically pay interest only on what's been drawn.
Contract matters.
Many lenders prefer a fixed price contract with a registered builder.
New build perks.
Some lenders may accept a smaller deposit for a new build.
What lenders generally look at
- The contract and builder. Fixed price keeps it simpler, while labour only or cost plus may need more deposit. Some lenders may check the builder's track record and warranty.
- Plans and consents. Usually final plans, consent and a valuation on the plans.
- Deposit and income. A deposit, income that covers the finished loan, and a buffer for overruns.
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, specifications and building consent, or where it's at
- 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.
- 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.