diff --git a/configs/config_build.go b/configs/config_build.go
index 948b2c8ff..1ca1d77e5 100644
--- a/configs/config_build.go
+++ b/configs/config_build.go
@@ -76,6 +76,7 @@ func buildChildModules(parent *Config, walker ModuleWalker) (map[string]*Config,
 		}
 
 		child.Children, modDiags = buildChildModules(child, walker)
+		diags = append(diags, modDiags...)
 
 		ret[call.Name] = child
 	}
diff --git a/configs/config_build_test.go b/configs/config_build_test.go
index 95abe94d2..b244ea4cf 100644
--- a/configs/config_build_test.go
+++ b/configs/config_build_test.go
@@ -69,3 +69,48 @@ func TestBuildConfig(t *testing.T) {
 		t.Fatalf("child_a.child_c is same object as child_b.child_c; should not be")
 	}
 }
+
+func TestBuildConfigDiags(t *testing.T) {
+	parser := NewParser(nil)
+	mod, diags := parser.LoadConfigDir("testdata/nested-errors")
+	assertNoDiagnostics(t, diags)
+	if mod == nil {
+		t.Fatal("got nil root module; want non-nil")
+	}
+
+	versionI := 0
+	cfg, diags := BuildConfig(mod, ModuleWalkerFunc(
+		func(req *ModuleRequest) (*Module, *version.Version, hcl.Diagnostics) {
+			// For the sake of this test we're going to just treat our
+			// SourceAddr as a path relative to our fixture directory.
+			// A "real" implementation of ModuleWalker should accept the
+			// various different source address syntaxes Terraform supports.
+			sourcePath := filepath.Join("testdata/nested-errors", req.SourceAddr)
+
+			mod, diags := parser.LoadConfigDir(sourcePath)
+			version, _ := version.NewVersion(fmt.Sprintf("1.0.%d", versionI))
+			versionI++
+			return mod, version, diags
+		},
+	))
+
+	wantDiag := `testdata/nested-errors/child_c/child_c.tf:5,1-8: ` +
+		`Unsupported block type; Blocks of type "invalid" are not expected here.`
+	assertExactDiagnostics(t, diags, []string{wantDiag})
+
+	// we should still have module structure loaded
+	var got []string
+	cfg.DeepEach(func(c *Config) {
+		got = append(got, fmt.Sprintf("%s %s", strings.Join(c.Path, "."), c.Version))
+	})
+	sort.Strings(got)
+	want := []string{
+		" <nil>",
+		"child_a 1.0.0",
+		"child_a.child_c 1.0.1",
+	}
+
+	if !reflect.DeepEqual(got, want) {
+		t.Fatalf("wrong result\ngot: %swant: %s", spew.Sdump(got), spew.Sdump(want))
+	}
+}
diff --git a/configs/testdata/nested-errors/child_a/child_a.tf b/configs/testdata/nested-errors/child_a/child_a.tf
new file mode 100644
index 000000000..6c5759701
--- /dev/null
+++ b/configs/testdata/nested-errors/child_a/child_a.tf
@@ -0,0 +1,4 @@
+
+module "child_c" {
+  source = "child_c"
+}
diff --git a/configs/testdata/nested-errors/child_c/child_c.tf b/configs/testdata/nested-errors/child_c/child_c.tf
new file mode 100644
index 000000000..19ba443c8
--- /dev/null
+++ b/configs/testdata/nested-errors/child_c/child_c.tf
@@ -0,0 +1,6 @@
+output "hello" {
+  value = "hello"
+}
+
+invalid "block" "type " {
+}
diff --git a/configs/testdata/nested-errors/root.tf b/configs/testdata/nested-errors/root.tf
new file mode 100644
index 000000000..c9db02049
--- /dev/null
+++ b/configs/testdata/nested-errors/root.tf
@@ -0,0 +1,3 @@
+module "child_a" {
+  source = "child_a"
+}