Construction Loans › What is a fixed price building contract?

What is a fixed price building contract?

A fixed price building contract is an agreement with a licensed builder that sets a guaranteed total cost for the build. Lenders generally require one, because it limits the risk of cost blowouts during construction.

Written by Ross McFarlane, Licensed Mortgage Broker (Credit Representative 526725). About the author

Why this matters

A fixed price contract gives the lender, and you, confidence that the build will cost what was agreed. It is usually a condition of finance. Changes you make after signing, called variations, sit outside the fixed price and you fund them yourself, so it pays to finalise your choices before the contract is locked.

The key points

A guaranteed total build cost from a licensed builder.
Usually required by the lender.
Limits the risk of cost blowouts.
Variations you add later are funded by you.

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Last reviewed: June 2026

General information only. This page provides general information about home loans and is not financial or credit advice, a quote, or a guarantee, and your personal circumstances have not been considered. Lending policies, interest rates, fees and eligibility vary by lender and change over time. Always confirm your own situation with a licensed mortgage broker or lender before acting. Ross McFarlane (Credit Representative 526725) is an authorised Credit Representative of Australian Associated Advisers Pty Ltd t/a Keylend, Australian Credit Licence 392169.