Navigating Construction
Finance In 2026
Building a new home is exciting. Financing one is where a lot of people come unstuck — because a construction loan doesn’t behave like the home loan you’d use to buy an existing house.
A construction loan doesn't hand over the money all at once
These Stages Typically Include:
Base / slab
the foundation is laid
Frame
the timber or steel frame goes up
Lock-up
external walls, windows and roof are on, and the home can be locked
Fixing
internal fit-out: plaster, cabinetry, doors
Completion
final finishes and handover
A construction loan doesn't hand over the money all at once
These Stages Typically Include:
Finance & grants
- The Foudation is laid
Lock-up
- Externalwalls, Windows And Roof Are on, And the home can be locked
Completion
- Final finishes and handover
Frame
- The Timber or steel frame goes up
Fixing
- Internal fit-out:plaster, cabinetry, doors
Finance & grants
- The Foudation is laid
Frame
- The Timber or steel frame goes up
Lock-up
- Externalwalls, Windows And Roof Are on, And the home can be locked
Fixing
- Internal fit-out:plaster, cabinetry, doors
Completion
- Final finishes and handover
Why borrowing can feel tighter than your income suggests
Here’s something that catches a lot of buyers off guard in 2026. When a lender works out how much you can borrow, they don’t test you at today’s interest rate. They add a buffer on top — currently 3 percentage points, a rule set by the regulator — to check you could still afford the repayments if rates rose.
You may need a far smaller deposit
than you think
The old rule was a 20% deposit to avoid Lender’s Mortgage Insurance. In 2026, that’s no longer the only way in. Several government schemes let eligible buyers build with much less:
- The First Home Guarantee allows a 5% deposit with no LMI, and since late 2025 it has no income caps or place limits.
- The Help to Buy shared-equity scheme lets eligible buyers in with as little as a 2% deposit, with the government taking a share of the home.
Five ways to navigate construction
finance smoothly
- Know your real numbers first. Understand your borrowing capacity and your true deposit — including the schemes you may qualify for — before you commit to a block or a design.
- Budget for the whole thing. Land, site costs, the build, and a buffer for variations. Site costs alone can swing from $10,000 to over $80,000 depending on the block.
- Keep your finances clean in the lead-up. Reducing debts and credit card limits, and avoiding new loans, all lift your borrowing power.
- Choose a lender that's good at construction. Not every lender handles progress payments well — a slow one can stall your build.
- Don't change the plans after approval. Lock the design in, then leave it. Post-approval variations are the fastest way to a funding gap.
Five ways to navigate construction
finance smoothly
- Know your real numbers first. Understand your borrowing capacity and your true deposit — including the schemes you may qualify for — before you commit to a block or a design.
- Budget for the whole thing. Land, site costs, the build, and a buffer for variations. Site costs alone can swing from $10,000 to over $80,000 depending on the block.
- Keep your finances clean in the lead-up. Reducing debts and credit card limits, and avoiding new loans, all lift your borrowing power.
- Choose a lender that's good at construction. Not every lender handles progress payments well — a slow one can stall your build.
- Don't change the plans after approval. Lock the design in, then leave it. Post-approval variations are the fastest way to a funding gap.
Where VIC Home Brokers fits in
We help you understand your borrowing capacity, work out which grants and low- deposit schemes apply to you, and connect you with experienced mortgage professionals who know construction lending inside out.
Because we coordinate the whole journey, we keep your finance, your land settlement and your builder’s payment schedule moving together — so your budget is settled before the plans are, not after. That’s the difference between a build that runs smoothly and one that stalls.
Thinking about building in Victoria?
Have a free, no-obligation chat with us before you sign
anything. It’s the cheapest hour you’ll spend on the whole
project.