Construction Finance
How Much Can You Borrow For Construction?
5 min read- Finance Guide
- Updated 2026
Quick answer
Typical maximum LVR
80% of completed value
Borrowing power still depends on servicing, deposit or equity, and the construction proposal
- Interest charged on Funds drawn only
- Key loan basis Completed value
- Main capacity limits Income, debts, expenses
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1300 421 044
Detailed explanation
How much you can borrow for construction is not just a simple percentage of build cost. In Australia, lenders usually assess both the risk of the project and your ability to afford the debt. That means the maximum loan is shaped by serviceability, loan to value ratio, end valuation, contract price, contingency allowances, and whether your land already provides usable equity.
What borrowing capacity is based on
Construction loan limits are usually shaped by these core factors
- 01Usable income after lender shading
- 02Existing debts and monthly commitments
- 03Living expenses and dependants
- 04Deposit or land equity contribution
- 05Completed value and acceptable LVR
- 06Build contract, contingency and policy fit
Lenders usually want to see:
Enough income to pass serviceability- A realistic total project budget
- Appropriate builder, plans and approvals
- Enough equity or cash to cover the shortfall and costs
Deposit, equity and end value
Typical borrowing capacity settings for construction include:
-
Maximum borrowing is often capped by LVR against the completed value, not just the build cost
-
Land equity can often reduce the amount of cash deposit required
-
A lower end valuation can cut the approved loan even when the contract cost is higher
-
Higher LVR requests usually mean tighter lender policy and less room for error
-
Contingency funds and holding costs can affect the amount you need to contribute personally
Typical LVR Range
-
Conservative lending
Up to 70%
-
Common owner occupier range
Up to 80%
-
Higher leverage scenarios
Above 80%
How borrowing capacity is assessed
Lenders review
verified income and employment position- existing loans, cards and other commitments
- living expenses and household composition
- fixed price building contract and full costings
- land value and estimated completed value
- council approved plans and builder details
- buffers for overruns, delays and policy risks
Typical capacity limits
-
Servicing
Must pass
-
LVR
Often up to 80%
-
Interest during build
Drawn balance only
-
Extra funds required
Costs and buffer
Need Help with your Project?
Common problems
Borrowing capacity for construction can be reduced by valuation gaps, weak serviceability, rising costs, or a lender policy mismatch.
Completed value comes in lower than expected
If the end valuation is lower than the total land and build cost, the lender may reduce the maximum loan and require a larger contribution from you.
Possible solutions include:
Increase cash contribution or usable land equity- Reduce build scope or premium inclusions
- Check whether another lender values the project differently
- Restructure total debt to fit policy
Serviceability is lower than expected
Strong equity does not always mean strong borrowing power. Income shading, other debts, and assessed living expenses can materially reduce the approved amount.
Possible solutions include:
- Reduce unsecured debts and card limits
- Include all acceptable income correctly
- Adjust the build budget or total project cost
- Review whether another lender treats your income more favourably
Project costs run ahead of the approved budget
Even when the original loan is approved, post approval variations, site costs, and delayed timelines can create a gap the lender will not fully fund.
Possible solutions include:
- Allow a contingency buffer from the start
- Keep variations under tight control
- Retain cash reserves for overruns and holding costs
- Review refinance options once the build is complete
Steps To Get Finance
Step
01
Work out your total budget including land, build, fees and contingency.
Step
02
Review income, expenses, debts and available deposit or equity.
Step
03
Obtain an estimate of borrowing capacity before locking in the build.
Step
04
Prepare the building contract, plans, approvals and full cost breakdown.
Step
05
Submit the full application for valuation, servicing and policy review.
Step
06
Settle the loan and manage progress payments through to completion.
Speak with a Property Finance Specialist
Construction borrowing capacity can vary widely depending on income, equity, build cost, the projected end value, and the lender's policy settings.
A specialist can review your numbers, identify likely borrowing limits, and help you avoid a budget that falls outside lender policy.
Speak with a finance specialist about your construction borrowing capacity
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