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Development Finance
What Is The Maximum LVR For Development Finance?
7 min read- Finance Guide
- Updated 2026
Key facts
- Typical bank GRV range ~65% GRV
- Stronger non bank range 70% to 75%
- Typical TDC range 70% to 80%
- Higher leverage Often mezzanine
- Best terms for Strong low risk deals
1300 421 044
1300 421 044
There is no single maximum LVR for development finance in Australia because lenders do not all use the same credit appetite, valuation method, or project filters. Instead, they generally assess the deal against two main yardsticks: the percentage of the gross realisable value after completion, and the percentage of the total development cost required to deliver the project. The lower outcome usually dictates the actual loan amount.
As a
broad guide, senior development debt often sits around 65 to 70 percent of GRV
and roughly 70 to 80 percent of total development cost, while stronger non bank
structures can sometimes stretch higher.What do lenders use to measure maximum LVR?
When people ask about the maximum LVR for development finance, they are usually referring to one of several lending limits. Different lenders may focus more heavily on different ratios, but most will test the project against a combination of the following:
-
Loan to Gross Realisable
Value (GRV)
-
Loan to Total
Development Cost (TDC)
-
Loan to current site
value or as is value
-
Net realisable value
after GST and selling costs
-
Pre sales coverage and
debt coverage tests
-
Exit strategy strength
and residual stock risk
That is why two projects with the same site value can receive very different lending outcomes.
Why the LVR cap changes from deal to deal
Maximum LVR is not just a pricing setting. It is a risk outcome. The stronger the project, the more comfortable a lender may be with higher leverage.
Lenders usually look closely at:
Developer track
record and delivery history- Planning approval
status and permit conditions
- Builder strength,
fixed price contracts and contingencies
- Presales, product
type and local demand depth
- Profit margin and
end value evidence
- Interest cover,
exit timing and refinance or sell down plan
- Market risk,
residual stock exposure and location quality
- Whether the deal
needs senior debt only or layered capital
65% GRV
A common senior debt benchmark for conservative development lending
70 to 75%
Sometimes achievable for stronger non bank deals or stretched senior structures
80% TDC
A common high end senior debt range before mezzanine is considered
Need Help Structuring a Higher LVR Deal?
Planning approval and LVR
Planning approval has a direct impact on how high a lender may be willing to go. Approved projects are easier to value, easier to assess and easier to forecast.
Where planning risk is already removed, a lender may consider a stronger LVR because the project is further advanced and the exit is clearer.
By contrast, lower or more cautious leverage is common for:
-
Sites awaiting
development approval
-
Projects with planning
conditions still to be satisfied
-
Sites in markets where
end value evidence is thin or inconsistent
Developer Equity and Maximum LVR
Higher LVR means lower borrower contribution. Even when a lender says it can fund a high percentage, the deal still has to show enough true equity, buffer and profit.
Typical senior debt structure
Developer Equity
20 to 30%+
Lender Finance
70 to 80%
Equity sources lenders may accept
- Cash
contribution
- Unencumbered or
partly paid development site equity
- Additional
property offered as security
How Higher LVR Development Finance Is Structured
Higher leverage in development finance is usually achieved by structure, not by a simple policy exception.
Depending on the project, the capital stack may include:
-
Senior development debt secured by first mortgage
-
Stretched senior debt from a specialist non bank lender
-
Mezzanine finance behind the senior lender
-
Preferred equity or joint venture capital
-
Capitalised interest and contingency allowances
-
Progressive drawdowns subject to quantity surveyor sign off
The higher the leverage, the more important it becomes to have a clean exit strategy, realistic end values and enough profit margin to absorb delays or cost overruns.
Pre Sales and High LVR
Presales reduce lender risk by demonstrating committed buyer demand for the completed product
For larger apartment or mixed use projects, stronger presales can support a more aggressive LVR outcome than an uncommitted project
Some smaller townhouse or boutique projects may obtain funding without presales, but the lender will usually want other strengths to compensate
What usually stops a lender from going to the maximum LVR?
Many developers ask for a high LVR, but the real issue is whether the project has enough quality to justify it.
Thin profit margin
If margin is too tight, there is less room for cost overruns, slower sales or valuation softening.
Ways to improve it include:
-
Tighten build
costs and contingency assumptions
-
Rework product
mix or staging
-
Support end
values with better comparable evidence
Limited development experience
First time developers are often capped at lower leverage unless the project is simple and the consultant team is strong.
Solutions may include:
-
Bring in an
experienced project manager or partner
-
Start with a
simpler, lower risk project
-
Target lenders
who consider first time developers case by case
Weak documentation or poor feasibility
Even a good site can get a low LVR result if the submission is not clear, realistic and well evidenced.
Common weaknesses include:
-
Unsupported end
values or rent assumptions
-
Missing QS,
builder or consultant information
-
No clear exit
plan or debt repayment timetable
Market and product risk
Volatile locations, specialised product types and heavy residual stock can all reduce the maximum leverage a lender will consider.
Lenders often respond by:
-
Lowering the
GRV or TDC cap
-
Requiring more
equity or more presales
-
Applying tighter
conditions precedent before first drawdown
How to improve your LVR outcome
-
1
-
2
Get planning and consultant work in order
Approved plans, QS input and a credible builder package can materially improve lender comfort
-
3
Strengthen the feasibility
Show margin, contingencies, debt costs and timing clearly so the project still works under pressure
-
4
Add presales or a stronger exit path
Committed buyers or a credible refinance exit can support a stronger leverage position
-
5
Match the deal to the right lender type
Some bank deals suit lower risk projects while specialist lenders may consider more complex or higher leverage structures
-
6
Use layered capital only where it makes sense
Mezzanine or preferred equity can lift leverage, but the extra cost must still leave enough profit in the project
Speak with a Development Finance Specialist
High LVR development finance is possible for some projects, but the right structure depends on far more than the raw site value.
A specialist can review your feasibility, approvals, valuation method and lender fit to see what leverage may actually be achievable.
Speak with a finance specialist about the maximum LVR for your project.
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