When you are having a new home built, ideally what will happen is that you'll pay a deposit (usually 10-20%) of what the price of the house is, and when the house is complete, you'll pay the rest of the price at closing.
Sometimes, usually with smaller builders who don't have large enough credit lines at their banks, you'll have to get a construction loan. This means you'll be paying out the entire time your home is being built, with payments coming due at different points of the construction process.
Here is a perfect illustration of why I hate this concept. Having to get a construction loan will sometimes be unavoidable, but you should try!