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Development Finance
What Deposit Is Required For Development Finance?
7 min read- Finance Guide
- Updated 2026
Key facts
- Typical deposit or equity 20 - 35%
- Smaller projects 15 - 25%
- Bank funding range 65 - 75% of TDC
- Non bank funding range Up to 80% of TDC
- Land can count Often, if valued
1300 421 044
1300 421 044
The deposit required for development finance in Australia is usually better thought of as an equity contribution rather than a simple home loan style deposit. In many cases, lenders want the developer to contribute around 20% to 35% of the total development cost, although the exact amount depends on project size, location, experience, pre-sales, and whether the lender is a bank, non bank, or private funder.
Your
contribution does not always have to be all cash. Existing equity in the site, other
property, or additional security can sometimes satisfy part or all of the
deposit requirement, subject to lender policy and valuation.What affects the deposit required?
There is no single fixed deposit for every development loan. Lenders adjust the required contribution based on the risk, complexity, and exit strength of the project. Common factors include:
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Project size and number of dwellings
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Developer experience and track record
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Whether development approval is in place
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Construction contract strength and builder quality
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Pre-sales and market demand
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Location, end values, and exit strategy
The stronger these elements are, the easier it is to achieve a lower deposit requirement or a higher loan amount.
How lenders calculate your contribution
Development lenders usually assess deposit requirements against Total Development Cost (TDC) and Gross Realisation Value (GRV).
They usually review items such as:
Land value or contract price- Construction and civil costs
- Professional fees and authority costs
- Marketing, sales, and GST treatment
- Contingency and cost overrun buffer
- Capitalised interest and line fees
- Projected end values or GRV
- Expected margin and exit strategy
65-80%
Typical funding range of total development cost
20-35%
Typical equity contribution required
60-70%
Common loan to GRV range for many projects
Need Help with your Project?
When is a higher deposit usually required?
A lender may ask for more equity where the project carries extra risk or does not fit mainstream bank policy.
That often happens when the project has limited pre-sales, weaker feasibility, early stage planning risk, or an inexperienced development team.
Common examples include:
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Projects without final development approval
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First time developers or thin liquidity
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Larger apartment or mixed use developments
Can land count as the deposit?
Yes. For many development loans, equity in the site can count toward the required contribution.
Typical contribution structure
Developer equity or security
20-35%
Lender funded portion
65-80%
Common forms of contribution
- Cash contribution
- Equity in another property
- Value in the development site
What your deposit usually needs to cover
Your equity buffer often covers the gap between the lender facility and the full cost to complete the project.
That contribution may need to absorb items such as:
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Land settlement shortfall
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DA and consultant costs
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Contingency allowance
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Interest and holding costs
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GST, marketing, and selling costs
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Any lender retention or final gap
In practice, this means the required deposit is not just about buying the site. It is about showing the project has enough buffer to finish and exit safely.
How pre-sales can affect the deposit
Larger developments often need pre-sales, especially with bank funding
Strong pre-sales can reduce perceived risk and support a better loan to cost outcome
Smaller townhouse or duplex projects may achieve approval without pre-sales through some lenders
Common deposit problems developers face
Many borrowers are declined or asked for more equity because the proposed contribution does not line up with lender policy or the project risk.
Deposit too low
If the contribution is below lender limits, the deal may need more security, more cash, or a different lender.
Possible solutions include:
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Use equity from other property
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Add a joint venture partner or investor
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Consider a non bank or private lender
Limited experience
First time or lightly experienced developers are often asked to contribute more equity or bring in stronger support.
Solutions may include:
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Use an experienced project team
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Reduce project scale or stage the build
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Use lenders open to first time developers
Contribution not evidenced clearly
Even if you have the funds, the lender still needs to verify where the contribution comes from and how it will be injected.
Common missing items include:
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Bank statements and valuation evidence
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A clear feasibility with verified costs
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Evidence of where equity will come from
Feasibility too tight
Where margins are thin, lenders may lower the facility and push more cost back onto the borrower.
Solutions may include:
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Review density, product mix, or timing
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Tighten build costs or contingency assumptions
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Reassess end values against current market evidence
Steps to prepare the required deposit
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1
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2
Work out how much the lender is likely to fund
Compare loan to cost and loan to GRV limits to identify the shortfall
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3
Confirm your contribution source
Map whether the deposit will come from cash, site equity, or other security
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4
Strengthen the project
Improve approval odds with DA, builder quotes, and realistic end values
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5
Check pre-sale requirements
Understand whether executed contracts are needed before formal approval
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6
Submit for assessment
A specialist can position the deal to lenders that match your deposit profile
Speak with a Development Finance Specialist
Deposit requirements can vary significantly depending on the project size, location, approvals, and the developer's experience.
A specialist can review how much equity you have, what security is available, and which lenders may accept that contribution.
Speak with a finance specialist about your development deposit and funding structure.
Submit the short form below and a development finance specialist will review your project and discuss how much contribution may be required and which lenders could fit.
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