A mortgage for building a house is paid out in stages as the build progresses, not in one sum. The bank values the finished house rather than what stands on the plot today, and calculates the 80 % LTV from that future value (90 % if at least one applicant is under 36). Until the loan is fully drawn, you pay only interest on the amount drawn, not the full annuity payment.
A typical case in October 2026: a house with a future value of CZK 6,000,000 on your own plot worth CZK 2,000,000, a construction budget of CZK 4,000,000 and a loan of CZK 4,000,000 at 5.00 % over 30 years. Over 18 months of building you pay roughly CZK 175,000 in interest, and after that CZK 21,473 a month. The drawdown deadline is usually 18–24 months. With the application, the bank wants the building permit, the project documentation, an itemised budget and a valuation.
How much will the bank lend to build a house?
The bank lends up to 80 % of the future value of the finished house, or 90 % if at least one applicant is under 36. That is the only binding ČNB (Czech National Bank) limit; the ČNB deactivated the DSTI and DTI ratios in 2023 and 2024, and banks now apply them as internal thresholds of their own. The future (collateral) value is what the valuer appraises: the house as it will stand when finished to the approved project.
A construction mortgage can cover the plot and the build together, or just the build on a plot you already own. The plot and everything built on it serve as collateral.
A plot you own counts towards your own funds (vlastní zdroje). That is where building differs from buying a flat: you do not necessarily need 20 % in cash, as long as the plot and your money together reach 20 % of the future value.
- You own the plot (CZK 2,000,000), the build costs CZK 4,000,000 and the future value is CZK 6,000,000. The bank can lend up to CZK 4,800,000, you need CZK 4,000,000, so LTV is 67 % and no extra cash is needed.
- You buy the plot and build (CZK 2,000,000 + 4,000,000). The loan tops out at CZK 4,800,000 and the remaining CZK 1,200,000 must come from you. Under 36 the figures are CZK 5,400,000 and CZK 600,000.
Two numbers have to agree: the itemised budget and the valuation of the future value. Build an expensive house where homes do not sell for that much and the valuer will mark the value down; LTV is then calculated from the smaller figure and you pay the difference. If the plot belongs to your parents, the bank will want it as collateral. Your parents become pledgors without having to be borrowers.
If you are buying a finished house, there is no build budget, no building permit and no staged drawdown. How a mortgage for buying a house works is covered separately.
Documents to prepare before you apply
A construction mortgage needs one more layer of paperwork than a purchase. The standard part stays the same: 2 identity documents, an income confirmation (potvrzení o příjmu) or 3–6 payslips, 1–2 tax returns if you are self-employed (OSVČ), and the title sheet from the land registry (list vlastnictví). On top of that comes the construction part:
- Building permit (stavební povolení), or another document under the Building Act showing you may build. Without it most banks will only pre-approve the loan, not approve it.
- Project documentation verified by the building authority, from which the valuer works out the future value.
- Itemised budget (položkový rozpočet). For a turnkey build it is part of the works contract; for a self-build you draw it up yourself or with your designer, and the valuer reviews it.
- Works contract (smlouva o dílo) with the builder, including the timetable and payment terms, if you use a contractor.
- Valuation of the future value by the bank's contracted valuer (a bank valuation, not an expert opinion) for CZK 3,000–6,000. Unlike flats, houses are rarely valued online.
- Proof of own funds: a bank statement, a deed of gift, or the title sheet for the plot.
- Building insurance assigned (vinkulace) to the bank. You need it for the first drawdown, not for the application.
Approval takes 2–4 weeks from complete documents. With a build, the usual hold-ups are an incomplete budget or a project that does not match the permit.
How does the bank pay out a construction mortgage?
The loan is released in tranches, usually 3–5, tied to stages: foundation slab, shell, roof and windows, services and plastering, completion. Banks work in one of two ways:
- Drawdown in arrears against documents. You pay the contractor's or supplier's invoices, submit them to the bank (often with a record of work done) and the bank reimburses you. It is safe for the bank, but you need the means to pre-finance each stage.
- Advance drawdown. The bank releases a tranche up front according to the budget and timetable, and after the stage asks for proof that the money went into the build: a visit by the valuer or the bank's technician, or sometimes just photos and an updated valuation. This is the usual mode for self-builds, where invoices do not cover your own labour.
The conditions for the first drawdown never change: the lien registered in the land registry (katastr nemovitostí), which the office may enter no sooner than 20 days after it notifies the owner of the pending change (plomba), for a fee of CZK 2,000; assigned building insurance; and proof of own funds. The bank wants to see your share go into the build first, and only then releases its own money. Each further drawdown takes a few days to process and may carry a fee, so check the fee schedule in advance.
You must draw the full loan within the period set in the contract, most often 18–24 months. Miss it and the bank either cancels the undrawn part or charges a non-drawdown fee and extends the period by an addendum. Sort it out before the deadline, not after.
Until full drawdown you pay interest only on what you have drawn. At a rate of 5.00 % that is CZK 4,167 a month per million: after the first tranche CZK 4,167, after the second CZK 8,333, after the third CZK 12,500, after the fourth CZK 16,667. The annuity, which starts paying off principal, begins only after full drawdown or when the drawdown period runs out.
Draw only what each stage needs: every million drawn six months early costs CZK 25,000 in interest that adds nothing to the house. And agree with the bank that the annuity starts only after occupancy approval, because some contracts trigger it automatically when the drawdown period expires, whatever state the build is in. Compare term options with the payment calculation.
Self-build or a construction company?
Banks finance both, on different terms. It comes down to how easily the bank can check that the money ended up in the building.
| Build with a contractor (turnkey) | Self-build | |
|---|---|---|
| Basis for the budget | works contract with a fixed price | your own itemised budget, assessed by the valuer |
| Drawdown mode | in arrears against invoices, sometimes in advance per timetable | in advance, with a valuer's check after each stage |
| Own labour | not recognised | some banks recognise it as own funds, but the future value is reduced for it if documents are missing |
| Cost-overrun risk | borne by the contractor (fixed price) or by you (budget with addenda) | borne by you; the bank wants to see a reserve in the budget |
| Drawdown deadline | 18 months is usually enough | 24 months often needed, or an addendum |
| Banks' approach | no restrictions | some banks apply a lower LTV or require the shell to be completed from own funds |
The most common compromise is a contractor for the shell, roof and windows under a works contract, with the finishing done by you. The bank gets invoices for the largest tranches, and you save on work you can manage yourself.
From plot to occupancy approval
- Plot and project. If you are still buying the plot, you can finance it with a separate mortgage for land or with one mortgage for plot and build together. One mortgage is usually cheaper and simpler, but you need the project and permit before the money for the plot.
- Building permission. Under the new Building Act No. 283/2021 Coll., since 1 July 2024 this is a decision permitting the project (rozhodnutí o povolení záměru), issued in a single procedure that replaced the former separate zoning and building procedures. You apply for the mortgage once you have it; before that you can only get a pre-approval (předschválení) based on income.
- Application and approval: 2–4 weeks from complete documents, valuation of the future value included.
- Loan agreement, pledge agreement and the application to register the lien (CZK 2,000). The land registry may enter it no sooner than 20 days after it notifies the owner of the plomba.
- First drawdown once the conditions are met (lien, insurance, own funds invested).
- Further tranches, each after the previous stage has been documented.
- Full drawdown by month 18–24 at the latest, after which the annuity starts.
- Occupancy approval (kolaudace; under the new Building Act an occupancy decision, kolaudační rozhodnutí, rather than an occupancy consent) and registration of the building in the land registry. The bank sets a deadline for registering the house as a completed building, and afterwards usually updates the valuation and with it the LTV.
Mortgage-financed builds most often stall for one of four reasons. The first is a budget with no reserve: valuers and banks want one on top of the itemised costs, because material and labour prices move over two years of building. Second, changing the project without the bank's consent; a different house from the one valued means a new valuation and sometimes a new permit. Third, underestimating how long drawdown interest and rent overlap. Fourth, building on a plot whose owner refuses to pledge it.
If the budget grows during the build, increasing the existing mortgage by an addendum is usually cheaper than covering the shortfall with a consumer loan, provided the increase still fits within 80 % of the future value and your income.
How do you register a new house in the land registry?
The land registry enters a finished house on the owner's notification (ohlášení) under § 31 of the Cadastral Act (Act No. 256/2013 Coll.). With it you file the document that allows the building to be used, which for a house permitted under the new Building Act is the occupancy decision (kolaudační rozhodnutí), and a geometric plan (geometrický plán) drawn up by a surveyor (§ 30).
This is not a registration on application (vklad), so the CZK 2,000 fee charged for a vklad application does not apply; what you pay for is the geometric plan. Then send the bank a current title sheet (list vlastnictví) showing the house. Watch the deadline your loan agreement sets for this. Until the house is registered, many banks will not update the valuation, and the finished house is what raises the value of the collateral and lowers your LTV.
Sources
- ČNB – recommendation on managing the risks of mortgage loans (LTV limit 80/90 %; DSTI and DTI deactivated in 2023/2024)
- Act No. 257/2016 Coll., on consumer credit (creditworthiness assessment, pre-contractual information, drawdown)
- Act No. 283/2021 Coll., the Building Act (building permission, occupancy approval)
- Act No. 256/2013 Coll., on the land registry (registration of the lien, plomba, registration of the building)
- ČBA Hypomonitor – average rate on new mortgages 5.00 %, August 2026