How does a construction loan work?

Funds release in stages — typically slab, frame, lock-up, fixing and completion. You pay interest only on what's drawn. Once construction completes, the loan converts to a standard P&I home loan.

How much deposit do I need for a construction loan?

Most lenders want 20% of total project cost (land + build) — some accept 10-15% with LMI. With a $1.4M Sydney project that's $140K-$280K deposit.

Can I be an owner-builder?

Yes — but it's harder. Most owner-builder loans require 30-40% deposit and trade experience evidence. We work with lenders who actively support owner-builders.

What happens if my build runs over budget?

Cost overruns aren't covered by the original construction loan. You'd need a contract variation or top-up loan, and lender approval. We help you set the contingency at the start to avoid this.

Can I use the First Home Guarantee for a construction loan?

Yes — the First Home Guarantee scheme allows construction. The land + build total must stay within the price cap for your area. We'll check your specific eligibility.

Construction Home Refinancing

Who this guide is for

Buyers planning a knock-down rebuild on existing land
Owners building a custom home with a registered builder
Owner-builders with construction or trade experience
Investors building dual-occupancy or duplex for income or resale

The real challenge

Most major banks treat construction lending as a niche product and either decline outright or require unusually high deposits. Builder choice, contract type, valuation method, and progress payment schedule all become friction points.

Owner-builders face an even steeper challenge — many lenders won't touch owner-builder loans without significant equity and trade evidence.

How Mortgagefy helps

We know which lenders actively want construction business — and which ones treat it as an exception. We pre-screen your scenario, builder contract, and valuation expectation before lodging.

We've helped Sydney families fund builds from $400K to $3M+. Our goal is to make the progress payment process predictable so you and your builder don't get stuck mid-build waiting on funds.

How it works — 4 simple steps

Scope review

Land, contract, builder, total cost — we map every element of your build.

Lender match

We identify the 2-3 lenders most likely to approve your builder, contract type and progress schedule.

Application + contract

We lodge with builder contract, plans, council approvals and your income/deposit evidence.

Progress payments

Funds release at slab, frame, lock-up, fixing and completion stages — we coordinate with builder and lender.

Frequently asked questions

We use offer letters and vesting schedules to value RSUs conservatively. We present current vesting value + projected future vesting as a 3-5 year income average. This gives lenders confidence in your income stability while accounting for market volatility.

Both. We work with W2 employees, 1099 contractors, and consultants. For contractors, we use 2 years of tax returns plus business financials. We have lenders who specialise in contractor income—they understand the variability.

Unvested options have zero value for refinancing. We count only vested equity. If you have a 4-year vest, we use 25% of the grant value (what's vested) plus a conservative projection of future vesting.

If you've been in your new role 6+ months, most lenders will refinance. We'll use your offer letter plus 6 months of pay stubs. If less than 6 months, it's harder but possible with specialist lenders.

Yes, if you have 2+ years of bonus history. We average the past 2 years and present it conservatively. Some bonuses get counted at 50% to be conservative with variable compensation.

ESPP is counted as deferred compensation. If your company matches or you have a discount, we value it as part of total compensation package.

Get a free construction loan assessment

We model the full build budget, lender options and progress payment schedule — before you sign with a builder.

Start Your Free Assessment Call 0432 634 648

Get your personalised answer in 2 minutes

Free, no obligation. We'll match you with the right lender for your situation.

Specialist Lending Solutions

Model your scenarios: Use our free home loan calculators to estimate borrowing capacity, repayments, and savings.

Construction Home Loans for Sydney Builders and Owners