Building a new home can be an exciting and rewarding experience, but it can also be a complex and expensive undertaking. A home construction loan is a type of loan specifically designed to help you finance the cost of building a new home. These loans are typically used to cover the costs of materials, labour and other expenses associated with building a new home.


Read on to find out more about the different types of home construction loans available, the process of obtaining a loan, current rates, and what you need to know to make an informed decision about financing your new home construction project.



Apply if you

✓ are at least 18 years of age,

✓ are a citizen or permanent resident of Australia,

✓ are currently in paid employment,

✓ have not been bankrupt.


What's next? 

As your application progresses, you'll be kept up to date with email notifications and calls from your dedicated home loan specialist.

Why us?

We're an award-winning customer-owned bank, putting people and community before profit. Our primary focus is to support the needs of our customers. We offer a wide range of banking products and services to ensure that our customers receive the right solution for their financial goals. This customer-focused attitude extends far beyond just the products we offer. With competitive interest rates, advanced security measures and online and mobile banking services, Qudos Bank is a smart choice for those looking for a reliable bank that prioritises customer experience.

"Excellent customer service and very smooth transfer of mortgage from other bank to Qudos."

Excellent customer service and very easy to talk to and ask questions. Smooth process transferring mortgage over and fixing rate. Excellent response time - very quick and easy to get a hold of an actual person. Highly recommend.

Bec, NSW

Home Construction Loans FAQs

Got questions? We've got answers.

A construction home loan is a type of mortgage loan that is used to finance the construction of a new home or renovation. The loan is typically used to pay for the cost of the land, the cost of the construction, and the cost of any associated fees and permits.

Generally, the loan is dispersed in stages, with funds being released as the construction progresses. Once the home is completed, the home construction loan is converted into a traditional mortgage loan.

Find out more about the different types of home loans in our home loan comparison page.

The terms ‘fixed price’ and ‘cost plus’ refer to the method by which the cost of the construction is determined.

A fixed price contract, also known as a ‘lump sum’ contract, is a contract in which the borrower and the builder agree on a set price for the construction of the home. The builder takes on the risk if costs of materials rise beyond the costs estimated when providing the tender to the borrower for acceptance.

Borrowers should read their building contracts carefully and ensure that they are vetted by a solicitor if there is anything that is not understood before signing.

Not all banks will consider finance for a “cost plus” contract due to the variable nature of the construction costs.

The terms ‘structural’ and ‘non-structural’ refer to the specific elements of the construction project that the loan will be used to fund.

A construction loan will generally be used to fund the cost of a new home construction or major renovation. Items that would indicate a major renovation are altering the foundation, adding or changing beams, roofing, columns, and load-bearing walls. These elements are essential to the structural integrity of the building, and the loan is typically used to ensure that these elements are constructed to meet specific building codes and regulations. Construction loans may have a higher interest rate due to the lender considering it a higher risk.

A regular mortgage loan, on the other hand, will typically be used to fund the cost of non-structural elements or a small renovation, including painting or cosmetic repair of walls, floor covering, ceilings, and finishes. These elements are not necessarily essential to the structural integrity or habitability of the building. This type of home loan might have a lower interest rate as the risk is considered lower, and is generally not subject to progress payments.

The frequency of progress payments for a construction home loan are generally aligned to the stages in the building contract. As the builder meets certain milestones in the construction contract, the bank will release funds to compensate the builder for the work already completed.

The loan funds will be released progressively in line with your building contract and its payment schedule. These payments are known as “progress payments.” All progress payments will be paid directly to your builder upon your approval.

If you’re contributing funds to the construction, these funds will also need to be paid in line with your building contract and its payment schedule and are generally required to be paid before the bank will advance funds from the loan.

Qudos Bank will consider construction loans for borrowers engaging in “Fixed Price” Building Contracts.

You’ll need to provide us with the following documents:

  • Copy of the Builder’s all risk insurance policy
  • Copy of the Builder Home Owners warranty scheme policy (per state jurisdiction)
  • Copy of the Builder’s licence
  • Copy of the executed Fixed Price HIA/MBA Building Contract, which must include all components of construction
  • Copy of Council approved plans and specifications

It’s important you supply these as soon as possible to ensure processing your first progress payment isn’t delayed.

Before we can make a payment to your builder, you’ll need to provide us with:

  • Confirmation that your cash contribution towards the construction costs have been utilised (if applicable)
  • An invoice from your builder, signed by all borrowers stating that you authorise payment.

When the invoice is received, we’ll:

  • Have the property inspected (if required) and then if all is in order;
  • Draw the progress payment from the loan account and pay your builder directly.

We’re required to have your property inspected, so please be aware it could take up to 5 business days to process the payment.

Once construction is complete, you’ll need to provide us with:

  • A copy of the Council Occupancy Certificate or equivalent
  • A copy of your home building insurance.

If all items are satisfactory, your final payment will be processed and we’ll let you know what your repayments will be.

All documents can be:

  • Emailed to
  • Mailed to Locked bag 5020 Mascot NSW 1460 Attention: Lending Operations
  • Sent to one of our home loan specialists at your local branch

Documents and forms

6.54 % p.a. Interest rate 6.36 % p.a. Comparison rate

T&Cs, fees, charges and lending criteria apply. Rates displayed above are available for new borrowings of $150,000 and over only, owner-occupied, interest only, deposits 20% or more.

How to apply?

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Helpful Tips and Guides


  • 1 Excludes existing loans, switching and variations. These offers can be withdrawn by Qudos Bank at any time. Rates displayed above are available for new borrowings of $150,000 and over only. Minimum deposit or equity of 10% is required. After completion of construction, your interest rate will revert to the current interest rate applicable to a new principal and interest Low Cost Home Loan with a deposit or equity of 20% or more, for the relevant purpose (ie. owner-occupied or investment).
  • 2 WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. Our comparison rate assumes a loan of $150,000 for 25 years. The comparison rate is based on a 12 months interest only period, reverting to the interest rate applicable to a new principal and interest Low Cost Home Loan with a deposit or equity of 20% or more for the relevant purpose (ie. owner-occupied or investment).

Approved applicants only. Normal lending criteria, terms and conditions and fees and charges apply.

Lenders mortgage insurance is required for home loans over 80% LVR and is subject to approval.

For interest only loans, only monthly repayment option available. During an interest only period, your interest only payments will not reduce your loan balance. This may mean you pay more interest over the life of the loan.

You should read and consider the relevant terms and conditions (available on request) and our Financial Services Guide before deciding whether to obtain any of our financial products or services. Target Market Determination available here.