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. Banks cap at 60–65% LDV on residential development; private lenders can push to 70%; mezzanine layers (second-ranking debt) sit above that.
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:
- Strong sponsor with a track record of comparable completed projects.
- Pre-sales coverage at 100% or more of debt — every completed unit pre-sold.
- Builder with a fixed-price contract and a top-end-of-market name.
- Metro location, established suburb, conventional product type.
- LDV ≤ 60%, LTC ≤ 75%, project size $5m–$30m sweet spot.
Inside that envelope, major banks price 6.5–8% per annum with establishment fees of 0.5–1%. Outside that envelope — which is most files — banks decline or stretch the timeline so long the developer loses the opportunity.
Where second-tier non-banks fit
Second-tier non-bank development lenders (Pepper, Liberty, Resimac, Bluestone, and the specialist development desks at Brighten, La Trobe, MA Money) write a wider envelope than the majors: lower pre-sale thresholds (often 60–80% debt cover), higher LDV (to 65%), more flexibility on sponsor profile, more comfort with regional or specialised security. Pricing sits 7.5–9.5% per annum on senior debt.
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. Banks won't fund pre-DA acquisition; second-tier non-banks are slow. Private lenders write site loans tied to the DA milestone — settle inside the option window, refinance to a construction facility once DA is granted.
- Lower pre-sale projects. The developer can't achieve major-bank pre-sale coverage but has a credible market position and conservative LDV. Private lenders write at 65–70% LDV with structured covenants on leasing or sales milestones.
- Short timeline files. The major bank approval process takes 8–12 weeks; the developer needs to settle in three. Private lenders that operate same-team underwriting can decide and settle inside that window.
- 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.
Private development pricing in 2026 sits 8.99–12.5% per annum depending on stage, LVR, sponsor strength, and exit profile. Mezzanine debt — the layer that sits above a senior development loan — prices 15–22% per annum. Both prices reflect the willingness to underwrite outside the standard model and the longer recovery window on a development asset.
What to ask a development lender
- Who decides the file? Some lenders quote indicative terms from a relationship team and then re-underwrite at credit committee. The right pattern is the same team underwriting indicative and formal — what indicative says is what settles.
- 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. Senior development debt to 70% LDV on metro residential, tenor 6–24 months, interest capitalised, exit on construction drawdown or sales. Indicative same-day, same team on indicative and formal, broker-channel only.