How Does Property Development Finance Work in Australia?
Property Lending
Development Finance · Construction Finance · Property Developers
How lenders size a development loan, what it costs, what to check before you buy a site, what to have ready when you apply and what gets a project approved.
Quick Answer
Property development finance is business-purpose funding for a whole project, from buying the site to selling or refinancing the finished stock. Lenders primarily size it on the project's numbers rather than ordinary personal serviceability, although they still assess the borrower, guarantors, experience, liquidity and financial position. They release the money in stages as the build is certified. Test the deal with a lender or broker before you sign for a site, not after.
Also called: development finance, a development loan or property development loans. It is not the same as a construction loan, which funds the build only; development finance can fund the site, the costs and the build as one project.
What is property development finance?
Property development finance is a short-term, business-purpose loan that funds a development project, and it is repaid when the finished stock is sold or refinanced. It can cover the site, the professional and council costs and the build, and it is drawn in stages rather than paid out in one sum.
The key difference from most lending is what the lender assesses. A development loan is primarily sized on the project rather than ordinary personal serviceability: the gross realisation value (GRV) of the finished product, the total development cost (TDC), any presales, the builder and the exit. The lender still assesses the borrower, guarantors, experience, liquidity and financial position, especially as a fallback if the project runs over budget or over time. Interest is usually capitalised, meaning it is added to the loan through the build rather than paid monthly, and the whole debt is cleared from sales settlements or a refinance at the end.
That is why a self-employed developer with lumpy income can still fund a sound project, and why a weak feasibility cannot be rescued by a strong tax return. If you want the short definition first, start with the development finance glossary entry; if you have a site in mind, see development finance for your project.
How does property development finance work, stage by stage?
If you are working out how to fund a property development, it runs in six stages, and the lender's money arrives in instalments.
- Secure the site. You buy or control the land with cash, a land loan or a short acquisition facility. Some developers lock in a site with an option first; see how a put and call option is funded, and for land bought before approval, site finance before the DA is approved.
- Get the DA and build the feasibility. The development approval fixes what you can build, and the feasibility shows what it will cost and what it will sell for.
- Win credit approval. The lender issues an approval with conditions precedent: typically its own valuation, a quantity surveyor's report, a fixed price building contract and insurances.
- Draw down in stages. Each drawdown is released against progress that the lender's quantity surveyor has certified.
- Reach practical completion. The build is finished and certified, and the clock on the facility starts to matter; see what happens to the loan at practical completion.
- Exit. Presales and other sales settle and repay the facility, or unsold stock is refinanced, often with a residual stock loan over the unsold units.
Raising finance for a development is therefore less one application than a sequence of approvals that each depend on the last. When we package a development file, the order of those documents matters as much as the numbers in them. If you are at stage one or two now, talk to us about development finance before the site settles.
What should you do before you sign a contract on a development site?
Test the deal with a lender or broker before you exchange, not after. Once you sign, the settlement date is fixed, but the development facility still depends on the lender's valuation, the cost plan and your equity, and none of those run on your contract's timetable.
- Check what the DA allows. If there is no approval yet, a lender funds the land as a site, not as a project; see how a site is funded before DA approval.
- Run a rough feasibility. Your likely GRV, your total cost, and whether the margin still works if costs rise or prices soften; see what lenders test in a feasibility.
- Work out your equity. Cash, land equity or a partner, and whether it can be in place when the lender requires it, which is often before the first drawdown.
- Plan how the land settles. Cash, a land loan, a bridging loan or the first drawdown of the development facility.
- Ask your solicitor about the contract terms. A finance clause, a longer settlement or an option can give you time to line up the funding; see how a put and call option is funded. Options and nomination clauses can also change the stamp duty you pay, and the rules differ by state.
If the DA is delayed or refused, a site loan does not wait. It still has to be repaid or refinanced at the end of its term, so match the site facility's term to a realistic DA timeline and know your fallback, such as holding the land on a longer facility or selling the site. We map that timeline in a caveat loan from DA to settlement, and the carrying costs in land holding costs on a private loan.
Bring those five answers to a first conversation and a broker can tell you which lender types fit before you are committed. Contract terms and cooling-off rights differ between states, so the contract itself is a question for your solicitor.
How much can you borrow for a development?
A lender works out two limits, one against the finished value and one against the total cost, and lends the lower. The first is a loan to value ratio measured against the gross realisation value of the finished project. The second is a loan to cost ratio against the total development cost. Whichever produces the smaller loan sets your senior debt, and your equity has to fill the rest.
The only published benchmark applies to banks. Under APRA's capital standard APS 112, a bank's residential development loan qualifies for the lower 100 per cent risk weight only where total debt is less than 75 per cent of qualifying development costs, and larger exposures must also meet a presale test. Lending above that line costs a bank more capital. Non-bank and private lenders are not bound by APS 112 and set their own limits.
| Measure | What it measures | How a lender uses it | What to check |
|---|---|---|---|
| Gross realisation value (GRV) | The value of the finished project if every unit sold, assessed as if complete; confirm whether the lender and valuer are using gross sale prices or a net figure after GST treatment | The base for the loan to value ratio | Whether the valuer accepts your price list |
| Total development cost (TDC) | Land, construction, fees, contingency, interest and selling costs | The base for the loan to cost ratio | That interest and contingency are inside it |
| Loan to value ratio (LVR) | The loan as a share of GRV | One of the two limits | Which GRV the lender uses: yours or the valuer's |
| Loan to cost ratio (LTC) | The loan as a share of TDC | The other limit; the lower of the two applies | Whether land is counted at cost or at value |
| Developer equity | Your contribution to TDC, in cash or land equity | Often has to be contributed before or alongside lender drawdowns, depending on policy | Whether the lender counts land at its current value |
Sources: Switchboard Finance broking practice, October 2026. General information only; each lender sets its own limits.
From our broking, indicative
Across the development deals we place, a few patterns hold often enough to be worth sharing. They are qualitative only, and they are not a quote or an approval.
- The lower of the two limits is usually the cost limit on a small project, so a tight cost plan does more for the loan size than an optimistic price list.
- Land equity can often count toward your contribution, at the lender's valuation rather than what you paid.
- Non-bank senior pricing sits above bank senior pricing, and mezzanine sits above senior; treat that as a relativity, not a rate you will get.
- Facilities are usually written for the build plus a sell-down period, and extension options are worth reading before you sign, not after.
Indicative and general only, based on development deals we have arranged, as at October 2026. Not a quote, an offer or a prediction of approval; what a lender will fund depends on the lender, the project, presales, the builder, your experience and the exit. Not financial advice.
The numbers behind those two limits are worked through in the approval numbers lenders run on GRV and TDC.
How much equity or deposit do you need for development finance?
There is no single Australian deposit percentage for development finance. Your required equity is the gap between the project's accepted total cost and the lower amount the lender will advance against GRV or total cost, plus any costs the lender excludes from the facility. That contribution can be cash, existing land equity, or another source the senior lender accepts.
A site deposit and your total developer equity are not the same thing. The contract deposit only gets you into the site; the lender then tests how much equity remains in the whole project after land, construction, professional fees, finance, contingency, GST treatment and selling costs are included.
Is GRV inclusive or exclusive of GST?
Do not assume every lender or valuer uses the same GST convention. Development feasibilities often bridge from gross contract sale prices to a net realisation figure after the project's GST treatment, and the facility may fund GST-inclusive cash outflows differently from the way the lender measures GRV and TDC. Confirm the definitions in the valuation, feasibility and term sheet before comparing two offers. The project's GST and margin scheme treatment is a question for your accountant.
What development margin do lenders require?
There is no legislated or universal Australian minimum development profit margin. Each lender sets its own credit hurdle and can define profit differently, so a percentage is meaningless until you know whether it is profit on cost, margin on revenue or another measure. A lender stress-tests the feasibility by changing the GRV, construction cost, contingency, interest and project duration to see whether enough margin and equity remain if the project does not run exactly to plan. See what lenders actually test in a development feasibility.
How does the valuer assess GRV?
On an "as if complete" basis. The Australian Property Institute's guidance paper ANZVGP 112, Valuations for Mortgage and Loan Security Purposes (effective 1 January 2025, read 5 October 2026), says an as if complete valuation assumes the proposed work is already finished at the date of valuation and reflects market conditions at that date, and that an "as is" value should be reported alongside it. Three points from the same paper matter to a developer:
- The lender instructs the valuer. Instructions are ideally received from the lender, and a valuation you order yourself cannot be relied on until the valuer consents in writing and reissues it to the lender.
- The valuer does not set your loan. The paper says it is generally not appropriate for the valuer to recommend a maximum or minimum loan percentage; the lender's policy does that.
- Cost gaps get reported. Where a valuer's check cost differs significantly from the builder's tender, the valuer should tell the lender and recommend further advice, usually a quantity surveyor.
Does land equity count toward your contribution?
Often, yes, but at the lender's valuation, not at what you paid for the site. If the land has risen in value since you bought it, that uplift may count; if the valuer comes in lower, your equity shrinks with it. We cover how lenders test this in what lenders test in a development feasibility.
Can you get 100 per cent development finance?
Rarely as a senior facility secured only by the development site with no developer equity at risk. A lender may fund 100 per cent of project costs where enough existing land equity or additional acceptable security keeps the overall transaction within policy, but that is different from a no-equity development loan. Where the senior facility does not cover total cost, the gap has to be closed another way, and each way trades cost or control:
- Land equity. Usually the lowest-cost source if you already own the site, but it depends on the valuation.
- A joint venture partner. A landowner or capital partner contributes equity in return for a share of the profit and a say in decisions; see how joint venture developments are funded.
- Mezzanine or preferred equity. A second layer of funding behind the senior lender, priced well above senior debt; see how mezzanine finance works.
- Deferred land payment. The vendor agrees to be paid later, usually at a higher price and with the senior lender's consent.
Do you need presales?
Banks usually want them; many non-bank and private lenders do not. The reason banks ask is partly their own capital rules. Under APRA's prudential standard APS 112 (Attachment A, paragraphs 29 and 30, read 5 October 2026), a bank may apply a 100 per cent risk weight to a residential development loan only if total debt is less than 75 per cent of qualifying development costs and, where the exposure to one development exceeds $5 million, qualifying presales are at least equal to 100 per cent of the total debt. All other development exposures take a 150 per cent risk weight, which makes the loan more expensive for the bank to hold. This applies to banks and other ADIs only, not to every lender.
What makes a presale count is set by each lender's policy. APRA's practice guide APG 112 describes good practice for banks as requiring presale contracts that are:
- Legally binding on the buyer.
- At arm's length, not sales to related parties.
- Backed by a non-refundable minimum deposit.
- Subject to sunset dates consistent with the expected completion date.
Read 5 October 2026; this is guidance for banks, not a rule for non-banks or private funds. The detail is in what counts as a qualifying presale, and if buyers walk away mid-build, see when presales fall over during the facility. Without any presales, the path usually runs through a non-bank or private lender; we cover it in funding a development with no presales. For the term itself, see the presales glossary entry.
In New South Wales only, the government's Pre-sale Finance Guarantee commits it to purchasing off-the-plan dwellings in eligible residential developments to help developers secure lenders' finance approval, through a $1 billion revolving fund (NSW Planning, last updated 3 August 2026, read 5 October 2026). Eligibility is set by the program.
How do drawdowns and the quantity surveyor work?
The lender pays the builder in stages, and only after its own quantity surveyor certifies the work. The cycle runs like this:
- Conditions precedent are met before the first drawdown: valuation, quantity surveyor report, insurances and the signed building contract.
- The quantity surveyor checks the cost to complete, confirming the undrawn facility plus your equity still covers the rest of the build; see what a cost to complete report tests.
- The builder submits a progress claim for the stage just finished, and the quantity surveyor inspects and certifies it.
- The lender releases the matching tranche, so funding always tracks the work actually done; see how progress claims and drawdowns are paid.
- Retention and the final claim are settled at practical completion.
Valuers qualify an as if complete report so that no construction funds are released until the approved plans are sighted and match the plans the valuation relied on (ANZVGP 112, section 6.4). If your plans change after the valuation, expect the lender to ask for it to be reviewed before the next drawdown.
What the lender's surveyor looks for in the report is set out in the quantity surveyor report on a development loan. For the terms, see staged drawdowns explained and the role of a quantity surveyor.
What happens if the development goes over budget?
If the quantity surveyor finds that the remaining facility and approved equity no longer cover the cost to complete, the lender can stop or condition further drawdowns until the shortfall is resolved. The usual solutions are to use approved contingency, inject more equity, obtain approval for a variation, reduce scope where that is legally and commercially possible, or restructure the funding. The important number is not what has already been spent; it is whether there is enough committed money left to finish the project.
What can go wrong after approval, and what happens next?
Credit approval is not the end of the lender's assessment. A development facility is monitored through the build, and a material change to value, cost, presales, builder, plans or timing can change what the lender will release or what it requires from you next.
| What changes | Why the lender cares | What usually happens next |
|---|---|---|
| The QS finds a cost shortfall | The remaining money may no longer finish the build | Drawdowns can be conditioned on more equity, approved contingency, scope changes or a funding restructure |
| The valuer reduces GRV | The loan can move above the lender's value limit and the exit becomes weaker | The lender can reduce available debt, require more equity or ask for stronger presales or exit evidence |
| Presales fall over | A bank or lender may no longer meet its presale condition or expected repayment path | Replace the sales, inject equity, move lender or restructure the exit; see what happens when presales fall over |
| The builder changes or fails | Price, program, licence, insurance and completion risk all change | Expect a new builder review, revised contract, updated QS work and lender consent before further funding |
| Plans or product change | The valuation and credit approval were based on the approved design | The valuer and lender may need to reassess the project before the next drawdown |
| The project runs past the facility term | The loan does not automatically extend because construction or sales are late | Seek an extension or refinance before maturity; completed unsold units may move to a residual stock loan |
The practical rule is to tell the lender early. A problem that is disclosed with an updated cost-to-complete, program and exit plan is easier to restructure than the same problem discovered at the next drawdown or at maturity.
What does development finance cost?
Development finance costs more than the interest rate. Expect interest, usually capitalised through the build, plus an establishment fee, a line fee on the undrawn limit, an exit fee, valuation and quantity surveyor fees and the lender's legal costs. Facilities are usually quoted either as a margin over a reference rate or as a fixed rate, and the interest is normally capitalised through the build, drawn from an interest reserve set aside inside the facility. Because the reserve comes out of the loan limit, it reduces what is left for land and construction.
| Cost | When it is usually charged | What to check in the offer |
|---|---|---|
| Interest | Usually capitalised and paid at exit | How it is quoted, and whether it is drawn from an interest reserve inside the facility |
| Interest reserve | Set aside from the facility at approval | That it covers the full build plus the sell-down period |
| Establishment fee | At approval or first drawdown | Whether it is a percentage of the facility limit or of the amount drawn |
| Line fee | On the undrawn limit, through the term | Whether it runs on the whole limit or only the undrawn part |
| Exit or discharge fee | At repayment | Whether it applies if you refinance rather than sell |
| Valuation and quantity surveyor fees | Before approval and at each drawdown | Who orders them and how often the QS inspects |
| Lender legal costs | At documentation | Whether you pay the lender's solicitor as well as your own |
| Default interest and extension fees | If the project runs past the term | The rate, when it starts, and whether an extension is offered at all |
Sources: Switchboard Finance broking practice, October 2026. General information only; your offer document governs.
Comparing offers is harder than it looks, because few private lenders publish their rates. In ASIC's review of private credit funds, only four of the 28 funds published information about the interest rates or ranges charged to borrowers (ASIC REP 820, released 5 November 2025, page 4, read 5 October 2026). That is ASIC's sample, not the whole market, and the report is about protecting the investors in those funds, not borrowers. The practical point stands: compare the total cost to exit, not the headline rate.
Can development finance cover professional fees and other soft costs?
Often, yes, if the lender accepts them as part of total development cost and the facility still fits its value and cost limits. Depending on the lender and project, that can include architecture, engineering, planning, council charges, quantity surveying, valuation, legal, marketing, selling costs, finance costs and contingency. Funding a cost inside the facility does not make it free: it increases peak debt and can increase capitalised interest, so check which costs are funded, which must be paid from your equity and when each one is due.
How do you compare two development finance offers?
Compare the amount of cash the facility actually contributes to the project and the total amount you must repay at exit, not just the advertised rate or headline facility limit. Put both offers on the same feasibility and check the net advance, interest reserve, establishment and line fees, valuation and QS costs, lender legal costs, exit or discharge fees, default interest, extension rights, minimum interest periods, presale conditions, required equity and the events that let the lender stop a drawdown.
What is the difference between the gross facility and the money you can actually use?
The gross facility limit is not always the amount available to pay for land and construction. Capitalised interest, an interest reserve, establishment fees and other funded costs can sit inside the same limit, so two facilities with the same headline amount can leave very different net usable funds. Ask the lender to show the facility limit, every amount retained or funded inside it, the amount available for acquisition and construction, and the developer equity required, including how much must be in before the first drawdown.
How do bank, non-bank and private lender pricing differ?
Typically, banks price lowest but ask for the most: presales, lower leverage and a longer assessment. Non-bank lenders usually price above banks in exchange for more flexible policy on presales and experience. Private lenders and funds tend to price higher again, and are often used for speed, a non-standard project or a short gap. Mezzanine sits above all senior debt. Policy differs widely between funders; see how non-bank lender policies compare, or go to our development finance page for how we set up the comparison.
Is property development finance regulated?
Most development loans sit outside the National Credit Code, because most are made to companies or for a business purpose, but a loan to an individual to purchase, renovate or improve residential property held as an investment can be inside it. Several regulators still touch development lending, each from a different angle.
When does the National Credit Code apply to a development loan?
ASIC states that the Code applies where the lender is in the business of providing credit, a charge is made for it, the debtor is a natural person or strata corporation, and the credit is for personal, domestic or household purposes, or to purchase, renovate or improve residential property for investment purposes (ASIC's National Credit Code page, last updated 1 August 2025, read 5 October 2026).
ASIC addresses developers directly: if the loan is to a natural person and the credit is wholly or predominantly to purchase, renovate or improve residential property for investment purposes, the loan is regulated; but most property development is done through companies, and loans to companies are not subject to the credit legislation (ASIC, FAQs: Does the credit legislation apply?, last updated 20 October 2020, read 5 October 2026).
Two sections of the Code are worth knowing, both read in the National Consumer Credit Protection Act 2009, Schedule 1 (compilation of 1 July 2026, read 5 October 2026):
- Section 13, "Presumptions relating to application of Code". A lender can rely on your declaration that the credit is not for a Code purpose, but the declaration is ineffective if the lender knew, or had reason to believe, that the credit was in fact for a Code purpose, and inducing a false or misleading declaration is an offence.
- Section 88, "Requirements to be met before credit provider can enforce credit contract or mortgage against defaulting debtor or mortgagor". For credit inside the Code, the lender must give a default notice allowing at least 30 days to remedy the default before enforcing. Outside the Code, that requirement does not apply and your loan documents set the default process.
Whether a particular loan is covered is a question for your solicitor. General information, not legal advice.
How do APRA's rules shape bank development lending?
APRA supervises banks and other ADIs, not non-bank or private lenders. Its capital standard APS 112 makes development loans without qualifying presales, or above the debt-to-cost threshold, more expensive for a bank to hold, as set out in the presales answer above. Its practice guide APG 112 notes that development lending is not restricted to companies or special purpose vehicles and includes loans to individuals developing investment properties. That is why bank policy on presales and leverage tends to be tighter than non-bank policy.
What does ASIC's private credit work mean for developers?
Much of the non-bank development market is funded by private credit, and regulators are watching it. In September 2025, ASIC's report REP 814 reviewed Australia's private credit funds and called out opaque remuneration and fee structures, related party transactions and governance arrangements, and valuation practices (ASIC media release 25-209MR, 22 September 2025, read 5 October 2026).
APRA estimates domestic private credit at around $200 billion, or about 3 per cent of the size of the Australian banking system (APRA System Risk Outlook, 21 May 2026, read 5 October 2026); that is an estimate. The Reserve Bank notes that Australian private credit funds are typically concentrated in real estate lending, including for construction and development (RBA Financial Stability Review, October 2026, chapter 3, read 5 October 2026). For a developer, the practical step is to read a private lender's fees, related party arrangements and default terms closely; see how private lending works.
Can you take a dispute to AFCA?
Sometimes, but many development facilities fall outside it. AFCA defines a small business as one with less than 100 employees, and it cannot consider a complaint about a small business credit facility that exceeds $6.3 million, for complaints lodged on or after 1 January 2024 (AFCA's small business page, read 5 October 2026). Access also depends on the lender being an AFCA member, so check membership before you sign. ASIC explains the protections that remain in its guide to disputes about commercial loans.
Development finance, construction loan, commercial property loan or bridging: which fits which stage?
Development finance funds the whole project, often the site, the costs and the build as one facility, and is repaid from sales or a refinance. A construction loan funds only the build, against a fixed price contract, once the land is held. A commercial property loan holds a finished property, and a bridging loan covers a short gap, such as settling the site before the development facility is ready. Most developments use more than one, in sequence.
| Facility | What it funds | The stage it fits | What the lender relies on | How it usually ends |
|---|---|---|---|---|
| Development finance | The project: often the land, costs and build as one facility | From site or DA through to completion | GRV, TDC, presales, the builder and the exit | Sales settlements, or refinance of unsold stock |
| Construction loan | The build, against a fixed price contract | Once the land is held and the contract signed | The contract, the QS and the on-completion value | Refinance or sale on completion |
| Commercial property loan | A completed, income-producing or owner-occupied property | After completion, to hold | The property's value and income or your business income | Term repayment or refinance |
| Bridging loan | A short gap, such as buying before selling | Before the project, or between facilities | Equity in property you already own and a clear exit | Sale of the other property, or the next facility |
| Caveat loan | A short business-purpose advance secured by equity | Deposits, holding costs or a short gap | Equity and the exit | Refinance or sale within the term |
| Residual stock loan | Completed, unsold units | After practical completion | The value of the unsold stock | Sales of the remaining units |
Sources: Switchboard Finance broking practice, October 2026. General information only.
The construction loan detail, including how a build-only facility is assessed, is in our construction finance guide, with the commercial version in how commercial construction loans work. Builders weighing the two are covered in commercial property loan or development finance for builders; for holding the finished asset, see commercial property loans for business owners.
Does development finance work differently for subdivisions, apartments, mixed-use and commercial projects?
Yes. The same core tests still apply, but the lender changes what it treats as value, what evidence supports the exit and how the debt is released. A small residential project may be assessed mainly on unit GRV and sales, while a subdivision adds lot-release mechanics, an apartment project can put more weight on presales and concentration risk, and a commercial or mixed-use project can depend on leasing evidence and the value of the completed income-producing component.
| Project type | Main value or exit evidence | Extra finance questions |
|---|---|---|
| Residential subdivision | Land value, completed lot values and the staged sales program | Stage funding, civil-works cost to complete, minimum lot release prices and whether sale proceeds must reduce debt |
| Apartments or multi-unit residential | As-if-complete unit values and the presale profile | Presale quality, purchaser concentration, settlement risk, construction program and residual stock exit |
| Mixed-use | Separate residential and commercial values combined into the project feasibility | How commercial space is valued, whether pre-leases are required, and whether each component has a different exit |
| Commercial or industrial development | Completed value supported by market evidence, lease evidence or an owner-occupier exit | Pre-leases, tenant covenant where relevant, fitout, stabilised income and the refinance terms available at completion |
These are structural differences, not fixed lender rules. For subdivisions, see private lending for a builder's first subdivision; for commercial builds, see how commercial construction loans work.
When do you move from one facility to the next?
- Before the project: a site or bridging facility settles the land; see how bridging finance works, or for a short equity-backed gap, how caveat loans work.
- At approval: the development facility refinances the site debt and funds the build in stages.
- At completion: sales settlements repay the facility, or a residual stock loan refinances the units still unsold.
How the facilities stack across one project is laid out in the property lending stack from development to commercial and private. Planning that sequence from the start is part of development finance for self-employed developers.
What happens if the development loan expires before the project is sold?
A development facility does not automatically extend because the build or sales are late. Before maturity, the usual options are an agreed extension, refinancing the development facility, refinancing completed unsold stock onto a residual stock loan, injecting equity, or accelerating sales. If the loan passes maturity without an agreed solution, default interest, extension fees and enforcement rights can become relevant under the loan documents. Start planning the exit while there is still time to choose between options; see what happens at practical completion and how residual stock finance works.
What do lenders look for before approving development finance?
Lenders approve the project first and the developer second. They look for five things: a feasibility that reconciles to the quantity surveyor's cost plan, GRV evidence from comparable sales, a fixed price contract with a licensed builder, equity in place and a credible exit. In the deals we see, which side of the table below a file lands on is usually decided before the application goes in.
Does approval mean the lender has committed to fund the whole project?
No. A credit approval is normally subject to conditions precedent before the first drawdown and continuing conditions during construction. Before funding starts, the lender may still require its valuation, the quantity surveyor's initial report, the accepted building contract, evidence of your equity, insurances, presales where required and signed loan documents. During the build, each drawdown can still depend on certified progress, an acceptable cost to complete, no material adverse change and compliance with the facility terms. Read the conditions precedent and ongoing drawdown conditions as carefully as the headline approval amount.
| What the lender tests | What gets it approved | What gets it declined |
|---|---|---|
| Feasibility | A feasibility that reconciles to the QS cost plan | Costs that move after approval |
| Sales value (GRV) | GRV evidence from comparable sales | An untested sales assumption |
| Builder | A fixed price contract with a licensed builder | A builder the lender will not accept |
| Equity | Equity in place | An equity gap found late |
| Exit and presales | A credible exit | Presales that do not qualify |
Sources: Switchboard Finance broking practice, October 2026. General information only.
How a lender tests each line is in the feasibility checks a development lender runs, and why a fixed price building contract carries so much weight is in the glossary.
Does your income matter if you are self-employed?
Less than on a home loan, but it still counts. The loan is sized on the project, yet lenders still look at your overall financial position: your assets and liabilities, where your equity is coming from, and whether you could cover a cost overrun or a slow sell-down. What they ask you to show varies by lender type, and non-bank and private lenders are usually more flexible than banks on how a self-employed borrower evidences income.
Which entity should borrow, and will you have to give a personal guarantee?
Most development loans are made to a company or a trust set up for the project, often a special purpose vehicle that holds only that site, which keeps the project separate from your other business. Lenders that lend to a company or trust usually ask the directors for personal guarantees, so the structure separates the project but does not remove your personal exposure. A loan to a company also generally sits outside the National Credit Code; see how development lending is regulated. Which structure suits you, and its GST and tax treatment, is a question for your accountant and solicitor.
Can a first-time developer get development finance?
Yes, usually with more equity and a stronger team around you. Lenders look for experience somewhere in the project: an experienced builder, a project manager, or a partner who has delivered before. A first project is often a smaller one; see funding a small-scale development, and for builders taking the step, the finance steps from builder to developer, first development finance as an owner-builder and private lending for a builder's first subdivision.
How long does development finance approval take?
There is no standard approval time. It depends on six things, and the slowest one sets the pace, so we do not quote a timeframe in weeks:
- The valuation, and whether the valuer accepts your price list.
- The quantity surveyor's report on your cost plan.
- The builder's contract, signed and in the lender's accepted form.
- Presales, where the lender needs them.
- Credit committee, and any conditions it adds.
- Legal documents, and how quickly both sets of solicitors move.
A complete document pack at the start is the part of that list you control; the next section sets out what goes in it.
What do you need to apply for development finance?
Most lenders ask for the same core pack: the DA and plans, a feasibility, a cost plan, a fixed price building contract, evidence of your equity, any presales, and the financials of you and the borrowing entity. Each lender sets its own list, but a complete pack at the start avoids the back-and-forth that slows a file down.
| Document | What it shows the lender | Who usually provides it |
|---|---|---|
| Development approval and plans | What you are allowed to build | You, your planner or your architect |
| Feasibility | Your costs, GRV, margin and equity | You, often with your accountant or a development manager |
| Cost plan or QS estimate | That the build budget is realistic | Your quantity surveyor or builder |
| Fixed price building contract | The build cost and who carries the risk of overruns | Your builder |
| Builder's licence and insurances | That the lender can accept the builder | Your builder |
| Trade-by-trade cost schedule, if you are the owner-builder | The build cost when there is no head contract | You, with your licence number |
| Sales evidence | That your price list is supported | Your agent's comparable sales; the lender orders its own valuation |
| Presale contracts, if any | Sales already secured | Your agent or solicitor |
| Evidence of equity | Where your contribution comes from | You: title, statements or a valuation of land you hold |
| Financials and entity documents | Your position and the borrowing structure | You and your accountant |
Sources: Switchboard Finance broking practice, October 2026; valuer instruction documents from the Australian Property Institute's ANZVGP 112, section 6.2, read 5 October 2026. General information only; each lender sets its own document list.
If you are self-employed, have your latest tax returns or BAS and a statement of assets and liabilities ready for you and the borrowing entity. If the project has no DA yet, start with site finance before DA approval; if you want a view on whether the pack is ready, check your eligibility.
Who lends, and how do you apply?
Development finance in Australia comes from three lender types: banks, non-bank lenders and private lenders or funds. The application steps are the same with each, but the lender type changes the price, the leverage and whether presales are needed.
- Banks: usually the lowest price, with the tightest policy on presales, leverage and experience.
- Non-bank lenders: more flexible policy, priced above banks; compare them in the non-bank lender policy matrix.
- Private lenders and funds: the most flexible and usually the most expensive; see private lending for business owners.
- Build the feasibility, with your costs, GRV and equity.
- Gather the documents in the document checklist above.
- Talk to a broker or a lender about which lender types fit the project; see using a broker or going direct.
- Receive indicative terms and compare the total cost.
- Valuation and QS report are ordered by the lender.
- Credit approval is issued with its conditions.
- Documents are signed and the first drawdown is released once the conditions are met.
If you are ready for step three, read How does Switchboard arrange development finance?
Property development finance is a project loan: the lender backs the numbers, the builder and the exit, then pays out in stages.
Before you buy: test the deal with a lender or broker before you exchange on a site, not after.
Sizing: two limits, one against the finished value and one against the total cost, and the lower one wins. Your equity fills the gap between that senior debt and the accepted project cost.
Cost: the rate is one line; establishment, line, exit, valuation, quantity surveyor and legal costs sit beside it.
Presales: banks usually need them because of how their capital rules treat development loans; many non-bank and private lenders do not.
Regulation: most development loans sit outside the National Credit Code, but an individual borrowing to purchase, renovate or improve residential property held as an investment can be inside it.
Approval: a feasibility that reconciles to the quantity surveyor's cost plan, a fixed price contract, equity in place and a complete document pack do more than any single number.
After approval: cost overruns, a lower valuation, failed presales, builder changes, plan changes or a late project can trigger a new lender review, so surface problems before the next drawdown or maturity date.
For related lending, see the property lending hub and construction and development finance.
Key takeaway: get the feasibility, the builder and the equity right before you sign for a site, because they decide the loan more than the rate does.Frequently Asked Questions
There is no single Australian deposit percentage. Your required equity is the gap between the project's accepted total cost and the lower amount the lender will advance against GRV or total cost, plus any costs the lender excludes from the facility. Existing land equity can often form part of that contribution.
If the remaining facility and approved equity no longer cover the cost to complete, the lender can stop or condition further drawdowns until the shortfall is resolved. The usual solutions are approved contingency, more equity, an approved variation, scope changes where possible, or a funding restructure.
Often, if the lender accepts them as part of total development cost and the facility still fits its value and cost limits. Depending on the project, that can include architecture, engineering, planning, council charges, quantity surveying, valuation, legal, marketing, selling costs, finance costs and contingency.
The loan does not automatically extend. Before maturity, the usual options are an agreed extension, refinancing the development facility, refinancing completed unsold stock onto a residual stock loan, injecting equity, or accelerating sales. If no solution is agreed, default interest, extension fees and enforcement rights can become relevant under the loan documents.
GRV, gross realisation value, is what the finished project would sell for. TDC, total development cost, is what it costs to deliver, including land, build, fees, contingency and interest. Lenders test the loan against both and lend the lower. See how lenders size a development loan.
Usually with your own equity, in cash or land, plus a development facility released in stages as the build is certified, and sometimes mezzanine finance or a joint venture partner to close a gap. The facility is repaid from sales or a refinance. See the six stages of a development loan.
Test the deal with a lender or broker before you exchange, not after. Check what the DA allows, run a rough feasibility, confirm your equity, plan how the land settles and ask your solicitor about a finance clause, a longer settlement or an option. See what to do before you sign for a site.
Interest, usually capitalised through the build, plus establishment, line, exit, valuation, quantity surveyor and legal costs. Compare the total cost to exit, not the headline rate. See the full cost table.
A line fee is charged on the part of the facility limit you have not yet drawn, through the build, so you pay it on money you are not using yet. Check whether it runs on the whole limit or only the undrawn part. See what a development loan costs on top of the rate.
Usually not as consumer credit, because most development loans are made to companies or for a business purpose. The exception is an individual borrowing to purchase, renovate or improve residential property held as an investment, which the National Credit Code can cover. ASIC explains when the Code applies.
Generally no. The Code applies where the debtor is a natural person or a strata corporation, and ASIC notes that loans to companies are not subject to the credit legislation. ASIC answers the property developer question directly.
APRA supervises banks and other ADIs, and its capital rules shape their development lending. ASIC licenses credit providers and oversees private credit funds. Many business-purpose lenders sit outside the credit licensing regime. See how development lending is regulated.
Only if the lender is an AFCA member, your business is a small business, and the facility is within AFCA's limit for small business credit facilities. Many development facilities are above that limit. AFCA sets out its small business rules.
A feasibility that reconciles to the quantity surveyor's cost plan, GRV evidence from comparable sales, a fixed price building contract, equity in place and a credible exit. See how lenders test a feasibility.
Usually not as it stands. Under the Australian Property Institute's guidance, a valuation for loan security is ideally instructed by the lender, and one you order yourself cannot be relied on until the valuer consents in writing and reissues it to the lender. See how the valuer assesses GRV.
Usually, if the loan is made to a company or trust. Lenders typically ask the directors for personal guarantees, so a special purpose vehicle separates the project but not your personal exposure. See which entity should borrow.
Usually the DA and plans, a feasibility, a cost plan, a fixed price building contract, evidence of your equity, any presales, and the financials of you and the borrowing entity. Each lender sets its own list. See the full document checklist.
For a short gap, such as settling the site before the development facility is ready, yes. A bridging loan is not built to fund the construction itself; that is the development facility's job. See when bridging finance fits.
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