Property development finance in Australia funds the lifecycle of a property project, buying the site, holding it through DA, building it out, and selling or refinancing the finished stock. It is structurally different to a standard mortgage. The funding is staged, the LVR is calculated against a forecast end value rather than a current valuation, and the covenants are tied to milestones the borrower has to deliver.
This guide explains the structure of an Australian development finance facility in 2026, where the major banks fund, where second-tier non-banks pick up, and where private development lenders are the natural home. Written for developers and the brokers who package their files.
Four stages of a development file
A residential or mixed-use development in Australia typically moves through four funded stages:
- Land acquisition. Funds to buy the site, usually before a DA is granted. LVR sits at 60-70% of land value; tenor 6-18 months pending DA outcome.
- DA hold. Funds to carry the site through the DA approval process, including holding costs, planning consultant fees, and any acquisition shortfall. Often an extension of the land acquisition facility.
- Construction. Staged drawdowns against quantity-surveyor-monitored progress claims, funding the physical build. Typical 12-24 month tenor depending on project scale.
- Residual stock. Funds to carry completed but unsold stock through the sell-down period. Tenor 6-18 months with LVR against the appraised market value of unsold lots or units.
Most developers don't fund all four stages with the same lender. The bank or private lender writing land acquisition might not also write construction; the construction lender might exit at completion to a residual stock specialist. Each transition is a refinance, and each refinance is a credit decision.
How LVR works on a development loan
Two LVR concepts matter:
- Loan-to-cost (LTC). Loan amount as a percentage of total project cost (land + construction + soft costs). Australian development finance typically caps LTC at 75-80%, with the developer's equity making up the balance.
- Loan-to-development value (LDV) or loan-to-gross realisation (LGR). Loan amount as a percentage of the projected end value of the completed project, net of GST and selling costs.
The two ratios must both pass. A loan that satisfies LTC but breaches LDV will be re-sized down; vice versa. A QS report confirming the cost-to-complete figure and an independent valuation confirming the end value are both standard requirements at file submission.
What major banks will fund
Major banks in Australia write development finance, but inside a narrow envelope. Requirements differ by lender, product, borrower and transaction. Compare the actual terms and costs offered for your circumstances.
Where second-tier non-banks fit
Second-tier non-bank development lenders write a wider envelope than the majors: more flexibility on sponsor profile, more comfort with regional or specialised security.
Where private development finance is the natural home
Private development lenders fund the files that fall outside both bank and second-tier non-bank policy. The typical profile:
- Pre-DA land acquisition. The site is under contract or under option, DA application is in but not granted. Private lenders write site loans tied to the DA milestone, settle inside the option window, refinance to a construction facility once DA is granted.
- Bridge to construction. The developer has secured construction funding from a major bank but the construction facility doesn't draw down for 3-6 months; a private bridge funds the gap, sized against the construction facility commitment.
What to ask a development lender
- Who decides the file? Indicative terms are preliminary and are not credit approval or a commitment to lend. Final terms depend on credit assessment, valuation, due diligence, funding availability and documentation.
- How is the exit underwritten? A development loan is a refinance problem in 18 months. Sales completions, construction facility takeout, or residual stock refinance, the exit needs to be modelled at submission, with the LVR sized to the post-exit value.
- What are the milestones? DA grant, builder execution, presale thresholds, slab pour, lock-up, practical completion. Each milestone should be a covenant trigger; the absence of milestones is a warning sign about how the lender will manage the file.
How files run at Archer
Archer LandX is the development product, vacant land acquisition, DA hold, site acquisition with structured construction takeout, residual stock. The available loan amount depends on the security, valuation, existing debt, proposed use of funds and credit assessment. Indicative terms are preliminary and are not credit approval or a commitment to lend. Final terms depend on credit assessment, valuation, due diligence, funding availability and documentation.