How construction loan progress payments work
You pay the builder in stages, not all at once. Here's what happens from slab to handover.
When you buy an existing home, the loan is generally paid at settlement. When you build, the money usually goes out in stages as the work is done.
The usual stages
This is one lender's general guide. Your building contract sets your actual stages and amounts.
| Stage | Approximate share |
|---|---|
| Foundations or slab | 20% |
| Frame | 20% |
| Lock-up | 30% |
| Fixing | 20% |
| Practical completion | 10% |
How a payment works
- Your builder finishes a stage and sends you an invoice.
- You check it, then approve it and send it to your lender.
- Your lender may inspect the work.
- Your lender pays the builder.
Your own contribution often has to go to the builder first, before the lender releases its first payment. Check this with your lender, as processes differ.
What to budget for during the build
- Rent: you may be paying rent and loan repayments at the same time.
- Interest: many construction loans start with interest-only repayments during the build. Ask how yours works.
- Changes: upgrades and variations can add to the amount you need.
- Site costs: ask what's fixed and what's only an allowance.
Want to see the whole process? Here's how we manage house and land packages from first meeting to keys.
Sources: Macquarie, understanding construction home loans. Rules and rates change, so confirm before you sign.
General information only, not financial, credit, tax or legal advice. Last checked 4 November 2026. Back to all articles.