The new National Asset Management Agency spin-off that will fund house builders is expected to charge developers an interest rate of 8%.
The initiative, announced in Budget 2018, is called House Building Finance Ireland (HBFI) and will draw on the expertise of NAMA and have €750m of funds.
Currently developers can borrow between 60% and 75% of the price of the construction of housing estates or apartment blocks from AIB and Bank of Ireland.
That means builders need to provide the balance of the funds from their own resources, however, the HBFI will lend up to 80%.
As the new organisation is taking on additional risk its interest rate of 8% will be about 1% higher than either of the two main banks.
It will lend to projects were it gets appropriate security, where sites have planning permission and where they are ready to begin immediate construction.
At present it is estimated that AIB and Bank of Ireland lend a total of about €1 billion to finance house construction.
The new funding of €750m will add significantly to the amount of finance available on the market.
It is expected to commence lending early next year and will have a staff of more than 100.
The Government said the initiative will not have an impact on the ongoing wind-down of NAMA.