Financing for New Home Builders

Posted on: 5 May 2015

If you are planning on building a new home, once you have your budget and design figured out, it is time to apply for financing. There are many things that are considered by financial institutions before building loans are given out. The more you know about the process of getting this type of financing, the easier it is going to be to find the right financer and get what you need.

Here are some of the things that you need to be aware of when applying for new home builders financing.

Amount You can Borrow

Before you apply for financing, you need to know how much you are able to borrow. Licensed builders are able to borrow more than those who are not builders. If you are not a licensed builder, you could borrow up to 80% of the cost of your building project. If you have a license, you can borrow up to 95%. If you have chosen to use a kit home, you can get financing for the actual construction, but you must pay for the actual kit with your own funds.

Documents You will Need

When you are a new home builder applying for financing, you will need to bring along certain pieces of documentation. These include:

  • Floor plans
  • Estimated total construction (itemised)
  • Copy of your builder's insurance policy (if required)
  • Copy of the construction permit

Building License

You will also need to show what type of building license you have, as there are different types of licenses and they all have different restrictions. It is best to try and get what is known as an unlimited building license, because lenders prefer this over limited licenses. You will have more lending options available if you have an unlimited license. If you do not have this type of license, you can still get financing, but you may not be able to get as much as you would with an unlimited license.

How You will Receive the Funds

When you apply for a regular home loan, you receive all of the funding all at once. This is not the case with a new home builders' loan. Instead, you get funds throughout the construction of your new home, as each phase of construction is completed. Upon completion of each phase, someone from the bank will come out to check the work. If it is completed to their satisfaction, the next part of the funding will be released so you can do the next phase.

For more information, consult new home builders before getting too deep into the project.


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Welcome to my real estate blog! My name is Karen, and I love old homes. Whether they are Victorians, Queen Anne, Queenslanders or any other type of old house, they appeal to me stylistically. However, not everyone sees the appeal. Others seem to see old wiring, leaky roofs and the other issues sometimes affiliated with older houses. All of these facts can make it hard to sell an old house in a contemporary market. However, I have sold several of my own 'old' houses, and I have helped friends sell theirs by recommending which repairs need to be done and which staging elements will help. If you want help selling an old home in a modern market, take a look at these posts. Thanks for reading!