Bank Financing vs. Financing Directly with the Builder: Which to Choose?

This is probably the first practical decision you will make when buying a studio off-plan: pay the builder directly, seek bank financing, or combine the two? The right answer depends on your current financial situation and on how long remains until the property is delivered.

How financing directly with the builder works

In this model, you pay the builder over the course of construction, generally with a down payment split into installments plus monthly installments adjusted by the INCC (Índice Nacional de Custo da Construção, Brazil's national construction cost index). The credit check, when there is one, tends to be simpler than a bank's — some builders do not even require formal proof of income for smaller down payments.

Advantages:

• Faster process, with fewer documentation requirements
• Often no interest during construction, only inflation adjustment
• More flexible negotiation of terms and installment amounts

Limitations:

• Total term generally shorter than bank financing
• FGTS cannot be used directly in this format
• The remaining balance at delivery usually requires bank financing or your own funds

How bank financing works

Here the bank assesses your income, credit history and ability to pay, and finances part of the property's value (generally up to 70-80%, depending on the bank and your profile). The term can reach 35 years, with market rates that usually range between 9% and 12% per year plus TR (Taxa Referencial, Brazil's reference rate), varying by bank and economic conditions.

Advantages:

• Much longer terms, smaller installments day to day
• Possibility of using FGTS to reduce the down payment or the installment
• Regulated, predictable rates within the contract

Limitations:

• Stricter, slower credit check
• More documentation required
• The financing is generally only released close to or after delivery of the property

Side-by-side comparison

This article is for general information only and does not replace individualized financial advice. Rates, terms and conditions vary by bank, builder and economic conditions — always confirm the current conditions before deciding.

Frequently asked questions

Does financing directly with the builder carry interest?
During construction, many builders charge no interest — only inflation adjustment (usually by the INCC index). After delivery, if the balance is financed with the builder itself, interest may apply as set out in the contract.

Can I switch from direct financing to bank financing later?
Yes, it is common: you pay the builder directly during construction and, when the keys are handed over, take out bank financing to pay off the outstanding balance.