How Construction Loans Work: Understanding Progress Payments

Once you’ve settled on your land and your construction begins, your loan is released in stages - known as progress payments.

Instead of receiving the full loan upfront, the bank releases funds gradually as your builder completes each phase of the project. These stages typically include:

• Base stage – when the foundation is laid

• Frame stage – once the frame of the house is complete

• Lock-up stage – when external walls and doors are installed

• Completion stage – final touches and handover

At each stage, your builder issues an invoice, which you send to your bank or lender for payment. This process ensures the funds are only released as work is completed, helping protect both you and the lender throughout the build.