Construction
A modular home construction loan, stage by stage: how much cash you need and when
6 min read · By Daniel Lagden · 25 October 2026
The short version
- In the worked example the total equity is $166,000. How much of it you need at once depends on whether the lender funds the factory stage.
- If the lender funds nothing until delivery, the peak cash need is $280,000, which is $114,000 more than the equity the project needs in the end.
- If the lender funds the factory stage with your equity going in first, the peak is the same $166,000 you were always going to contribute.
- Every dollar the builder takes before delivery is a dollar of peak cash if the lender will not fund it, so compare payment schedules as well as price.
The hardest part of a modular build is not the total deposit. It is when the cash is due. A modular builder is paid in stages, and the early stages fall before the home ever reaches your land. This worked example puts numbers on that, so you can see what it does to the cash you need and when you need it.
Quick summary: on an $830,000 project with 20 per cent equity, you contribute $166,000 in total either way. If the lender funds the factory stage, that is also the most cash you need at any one time. If the lender will not fund anything until the home is delivered, the peak is $280,000 and you carry $114,000 more than the project needs until the home is delivered.
The example
These are illustrative figures to show the mechanics. Your land, contract and payment schedule will be different, so read the payment terms in your own contract rather than assuming these.
- Land: $450,000, settled first.
- Modular home: a $380,000 fixed price contract.
- Total project: $830,000. The lender lends 80 per cent of the total, which is $664,000, leaving $166,000 of equity.
- Your equity goes in first, before loan funds are drawn for the build.
- Stamp duty, legal fees, site works, connections and a contingency are left out. They are extra cash on top of everything below.
The builder's payment schedule in this example:
| Stage | Share of contract | Amount |
|---|---|---|
| Deposit on signing | 10% | $38,000 |
| Factory stage | 40% | $152,000 |
| Delivery and installation | 30% | $114,000 |
| Completion | 20% | $76,000 |
What if the lender does not fund the factory stage?
Then the first two stages come out of your own pocket. You pay the $90,000 land equity at settlement, then $38,000 on signing and $152,000 at factory stage. That is $280,000 of your money in before the lender releases a dollar for the build.
Your equity for the whole project is only $166,000, so the $114,000 difference is a bridge. It usually comes from savings, from equity in another property, or from a builder willing to take less before delivery. What happens next depends on the lender. Some will count your earlier payments and reimburse you from later draws. Others will only fund the stages that remain, which in this example would leave the loan at $550,000, about 66 per cent of the project, because you have already paid more of the build than the lender would have asked of you.
What if the lender does fund the factory stage?
Then your equity is spent first and the lender funds the rest of each stage. The factory payment splits between you and the lender, and your total contribution stays at the $166,000 you planned for.
| Stage | Lender funds from delivery | Lender funds the factory stage |
|---|---|---|
| Land settlement | You $90,000, lender $360,000 | You $90,000, lender $360,000 |
| Deposit on signing | You $38,000 | You $38,000 |
| Factory stage | You $152,000 | You $38,000, lender $114,000 |
| Delivery and installation | Lender $114,000 | Lender $114,000 |
| Completion | Lender $76,000 | Lender $76,000 |
| Your total cash | $280,000 | $166,000 |
| Lender total (no reimbursement) | $550,000 | $664,000 |
The only thing that changed between the two columns is who funds the factory stage. The project cost is the same, and so is the equity the lender wants in the end.
What should you ask before you sign a builder's contract?
- Does the lender fund the factory stage, and up to what share of it?
- If it will not, does it reimburse your earlier payments from later draws, or only fund the work remaining?
- What does the lender need to see before it releases money against a home that is still in a factory?
- How much of the contract does the builder take before delivery, and can that schedule change?
- Have you allowed for the costs that sit outside the contract: stamp duty, legal fees, site works, connections and a contingency?
Compare payment schedules across builders as well as price. A builder who takes more before delivery is asking you to hold more cash earlier, and if your lender will not fund it, that comes straight off your peak.
Illustrative figures only. Lender policy and builder payment schedules vary and can change. Current as at October 2026.
Run the numbers
Frequently asked questions
Does factory stage funding reduce the deposit I need?
No. In the example the equity is $166,000 either way. What changes is when you need the cash: all of it early, or spread across the build.
Can equity in another property cover the gap?
Often, yes, depending on the lender and your overall position. It is one of the most common ways to bridge the factory stage, and it is better planned before the contract is signed than arranged afterwards.
What if my builder's schedule is different?
The mechanics are the same and only the numbers move. If the builder takes more before delivery and the lender will not fund it, your peak cash rises by the same amount.
See your own stage by stage numbers
Send us the builder's contract and payment terms and we will map the cash you need at each stage, and which lenders can fund the factory stage.
Map my modular fundingGeneral information only. This article does not take your personal circumstances into account and is not credit advice.
