Construction Loans

Build your dream home your way

5Drawdown stages, typically

$15,000SA First Home Owner Grant, up to*

What’s the difference?

Construction Loan Vs Home Loan

Construction Loan

Built for a new home, a knock-down rebuild or a major structural renovation. The lender releases the money in stages as the build progresses, and during construction most lenders charge interest only on the amount drawn so far rather than on the whole approved loan.
New builds
Owner-builder or project builder
Major structural renovations

Home Loan

Ideal for purchasing an established property. Move-in ready or lightly cosmetic work only.
Some lenders allow first home buyers a higher loan to value ratio, and whether lenders mortgage insurance applies depends on the lender, your deposit and your circumstances.*
Buying an existing home
First home buyers & investors
Refinancing to reduce repayments
The ‘must knows”

Why choose a construction loan?

unnamed file - Loanity
Interest only periods
during construction
image 64 - Loanity
Pay as you build
stage by stage
37 - Loanity
Built for new builds, rebuilds and renovations
0 - Loanity
Pay $0 fees to us
for your application
4 - Loanity
Stamp duty relief on
an eligible new home*
36 - Loanity
Refinance once the
build is complete
A land and build package settles twice

Land & build packages

Your new land

The land settles first and your loan starts on that amount alone, so the early repayments are small. Stamp duty is assessed on the land. In South Australia a first home buyer building a new home may pay no stamp duty, subject to RevenueSA’s conditions.
Land settles first
Loan starts on the land amount
Stamp duty assessed on the land
Council-approved plans before the build draws
Grant claimed once the home is complete

Build your home

The build stage draws down against your fixed-price contract. Each stage is paid straight to the builder once the lender’s valuer confirms the work is finished, so you are not paying for work that has not happened. How much you can borrow against the completed value depends on the lender, your deposit and your circumstances, and lenders mortgage insurance may apply.
Each stage paid straight to the builder
Valuer confirms the work before each draw
Interest only on what has been drawn
Converts to principal and interest at completion
image 75 min - Loanity

How much can you borrow?

Vector 10 - Loanity
Use our borrowing power calculator for a rough idea of what you could borrow on a construction loan. It is an estimate, not a quote, and the rate you enter changes the answer, so treat the result as a starting point and talk to us about what lenders will actually assess.
Vector 10 - Loanity
No pressure. No credit hit. Big potential reward.

Construction loan process

30 minute free
consult

Tell us your situation and what you’re aiming to get out of your construction finance

1

compare & find
the best deal

We’ll do the hard work and find you the best construction loan options, to make the best decision

2

Start progress
payments

Once approved you’ll be able to take out your first drawdown and start building!

3

1

30 Minute Free
Consult

Tell us your situation and what you’re aiming to get out of your construction finance

2

Compare & Find
the Best Deal

We’ll do the hard work and find you the best construction loan options, to make the best decision

3

Start Progress
Payments

Once approved you’ll be able to take out your first drawdown and start building!
What are you waiting for?
Get started with a free chat
No obligation, just guidance…

We compare the lender panel for you

Updated lender panel desktop loa - Loanity
Mobile version of Loanity Lender panel scaled - Loanity

Don’t worry we’ve got your back every step of the way

Live human support

24/7

Contact us to discuss your questions with a real human

Up to and over

+100

Free accessible videos, articles, and tools designed to ease your journey

30 minute consultation

For Free!

Want direct help? No worries. Stop waiting and book your free consult immediately!

Before you sign the building contract

The risk in a construction loan is usually not the rate. It is the build.
Construction has been the largest single sector in Australia’s company insolvency figures for several years, at roughly a quarter of all company failures on ASIC’s insolvency statistics. The most recent year showed the first annual fall since the post-pandemic wave began, which is welcome, but the level is still high. A page that only talks to you about rates is not describing the risk you are actually taking on.
In South Australia the safety net is building indemnity insurance. Your builder has to take it out before starting residential building work above the threshold, which rose from $12,000 to $20,000 on 10 November 2025, and it is an offence to start without it. It covers you if the builder dies, disappears or becomes insolvent before the work is finished, and it covers defects for up to five years from completion.
Three things about it are worth knowing before you sign. The limit for new policies taken out on or after 10 November 2025 is $250,000, up from $150,000, and policies issued before 1 October 2025 keep their original limit. That limit is the total for the whole project, shared between non-completion and defects, so it is not a second budget sitting behind your contract price. And it does not cover delays or a dispute with your builder, which are the two things most likely to happen.
That matters to the loan, not just to the build. Interest keeps accruing on every dollar already drawn, whether or not anyone is on site. A build that stalls for six months is six months of interest on a half-built house while you are still paying rent somewhere else. The deposit stage is worth care for the same reason: until the insurance is in place, money you have already paid the builder is not covered, and a builder can generally take only a deposit of up to 5 per cent plus certain third-party costs.
The practical version. Ask for the building indemnity insurance certificate and check the policy limit against your contract price before you sign. Keep a contingency outside the loan rather than assuming you can draw it later. And if a builder cannot produce a certificate, call Consumer and Business Services on 131 882 before you pay anything.
Related reading: buying an established home, home loans in Adelaide if you are building locally, medico home loans if you work in health, and refinancing once the build is finished. If the build itself needs trucks, excavators or other earth moving plant, our equipment and machinery finance page covers that separately.
Sources. ASIC insolvency statistics. South Australian Government Financing Authority, building indemnity insurance. Consumer and Business Services South Australia. RevenueSA, First Home Owner Grant and stamp duty relief for first home buyers. Moneysmart, interest only home loans. Checked 9 October 2026.
Important information about this page.
This page is general information only and does not take your objectives, financial situation or needs into account. It is not credit assistance and it is not a quote. Lender policy, grants and stamp duty rules change, and eligibility depends on the lender and on your circumstances. Calculator results are estimates. Loan approval, the loan amount, the loan to value ratio and whether lenders mortgage insurance applies are decided by the lender, not by us. Grant and duty details are as published by RevenueSA and were checked on 9 October 2026. Confirm your own position before acting on anything here.
Still got questions?

Answer to your questions

How does a construction loan differ from a standard home loan?

Unlike a traditional home loan that provides a lump sum upfront, a construction loan releases funds in stages, known as “progressive drawdowns”. You only pay interest on the portion of the loan that has been drawn down to pay your builder for completed work. Once construction is finished, the loan typically reverts to a standard principal-and-interest mortgage.

Most construction loans follow a five stage payment schedule: slab, frame, lock-up, fit-out and completion. As each stage is reached your builder issues an invoice and, once the lender’s valuer confirms the work is done, the lender releases that stage directly to the builder. We help coordinate the paperwork so a stage is not held up by a missing document.

No. During the construction phase, commonly up to 12 to 24 months, most lenders require interest only repayments on the funds already released. That keeps monthly costs lower while you may still be paying rent elsewhere. Full principal and interest repayments generally start once the final stage is paid to the builder.

Beyond the usual income evidence, lenders want build specific documents: a fixed price building contract, council approved plans, and a copy of your builder’s licence and insurance, including the building indemnity insurance certificate. We coordinate with your builder so the technical paperwork meets the lender’s requirements for an on completion valuation.

Yes. Self-employed borrowers can access construction finance through full doc or low doc options. Major banks often want two years of tax returns, while some specialist lenders may accept BAS statements or an accountant’s letter. What is acceptable varies by lender, so it is worth checking before you commit to a contract date.

Yes, though the timing is the part people get wrong. In South Australia the First Home Owner Grant is up to $15,000 on an eligible new home, and on a build you become eligible once you enter the contract to build rather than when you buy the land. Applications can be made from the commencement of the transaction but must be lodged within 12 months of completion, so it is generally not money you can count on for the land deposit. You also have to live in the home as your principal place of residence for at least six continuous months, starting within 12 months of settlement. The rules are set by RevenueSA and depend on your contract date.

The loan does not disappear. You still owe what has already been drawn, and interest keeps accruing on it while the house is unfinished. What happens next depends on your building indemnity insurance, your contract and the lender, and in practice it means a claim on the insurance, a new builder, a fresh valuation and often a variation to the loan. Tell your lender and your broker early rather than after the fact. In South Australia, Consumer and Business Services is the agency to contact on 131 882.

It covers you if the builder dies, disappears or becomes insolvent before finishing the work, and it covers defects for up to five years from completion. For new policies taken out on or after 10 November 2025 the limit is $250,000, up from $150,000, and policies issued before 1 October 2025 keep their earlier limit. That amount is the total available for the whole project, shared between non-completion and defects. It does not cover delays, and it does not cover a dispute with your builder. Check the certificate and the policy limit against your contract price before you sign.

Most lenders allow interest only for the construction period, commonly up to 12 to 24 months, after which the loan converts to principal and interest. Moneysmart notes that interest only rates are usually higher than principal and interest rates, and that you build no equity while the loan is interest only, so a shorter build costs you less. If the build runs over, ask about an extension early, because granting one is the lender’s decision and is not automatic. Our interest only calculator shows the repayment step up when the period ends.

Yes, and three SA specifics matter. Building indemnity insurance is required on residential building work above a $20,000 threshold from 10 November 2025, and it is an offence for a builder to start without it. The First Home Owner Grant is up to $15,000 on an eligible new home, with no property value cap for contracts entered on or after 6 June 2024, and for contracts on or after 13 February 2025 you are not eligible if you or your spouse or partner have previously owned Australian residential property. Stamp duty relief for first home buyers applies to an eligible new home or to vacant land you are building on, not to an established home. All of it is set by RevenueSA, so check your contract date against their current rules. Our home loans in Adelaide page has the local detail.

Stop waiting.
Just do it now.

No fees. No obligation. A free consult and handy resources.