What construction finance costs developers in Australia

Non-bank construction debt is published from 9.99% a year (La Trobe), and guides put it at 8% to 11.95%, plus 1% to 3% establishment. Our arithmetic for six townhouses costing $3.2m over 18 months is $189,000 to $304,000 of finance cost, with peak debt near $2.2m. Banks price lower but want presales.

Developer finance is priced by risk, not by a rate card. A bank can lend at a few points above the cash rate if you bring presales and a big slice of equity, while a non-bank or private lender will fund the same site faster with fewer presales and charge several points more. Establishment fees, valuation and quantity surveyor costs and capitalised interest sit on top. This guide sets out what lenders publish, the bands guides report for each lender type, the gearing and presale limits, and the full finance bill on a six townhouse project.

What lenders publish for construction and development finance

Most developer finance is priced by phone, so few rates are public. The table sets out what three lenders show on their own pages on 30 October 2026. Figures are the lender's, indicative market data and not Ventas offers. Where a page gives no figure the table says Not disclosed. Innovate Funding is a private lender and its page covers bridging around a build, not the build loan itself, but it is the only private lender we found that publishes rates.

None of the four major banks publishes a development finance rate or presale hurdle that we could find. Bank figures in this guide come from a development feasibility publisher, Feasly, which says its numbers are indicative and should be checked against a current term sheet. Its pages were last updated on 7 August 2026. The Reserve Bank lifted the cash rate to 4.60% on 30 September 2026, up from 4.35%, so anything priced before then may have moved.

This guide is about business-purpose and developer construction finance. A loan to build your own home is consumer credit and is not covered here.

Rates by lender type and project size

The same publisher sets out what each class of lender charges and asks for. Read them as bands, not quotes. Banks are cheapest and slowest, and want the most presales and equity. Non-banks charge more, move in weeks and accept far fewer presales. Private lenders and mezzanine fill the gaps at a higher price.

Project size changes who is interested and how the file is tested.

Lenders also size to the lower of two tests. Loan to cost (LTC) compares the facility to total development cost. Loan to value (LVR) compares it to the expected end value. One guide says many lenders look for 20% to 35% of total development cost as equity, so your cash is usually the binding limit, and that lenders may discount end value by 10% to 20% when they test it.

Presales: what banks ask for and what changed in 2025 and 2026

Banks commonly want qualifying presales of 70%% to 100%% of the debt, and one guide puts the current norm at 100%% to 120%% cover. That habit traces to a 2017 APRA letter that described lenders asking for presales of at least 100%% of committed debt. On 13 February 2025 APRA wrote that this was industry practice and did not represent a minimum requirement or expectation of APRA, and that it had not set minimum presale requirements in its standards.

A proposal is now on the table. On 29 June 2026 APRA consulted on halving the qualifying presale threshold for the lower risk weight on residential development lending from 100%% to 50%% of total debt, with a proposed start of 1 April 2027. It is a consultation, not a rule, so bank policy has not changed because of it. Separately, in May 2024 CBA's Business Bank said it would count presale contracts secured through Coposit, up to 10%% of presales, towards its hurdle.

Without presales you are in non-bank territory, which costs more. Our guide to construction finance without presales covers that route, and the deposit for a development loan page covers equity.

Fees on top of the rate, and what 18 months costs

The rate is only part of the bill. Costs that sit on top:

• Establishment fee. La Trobe shows from 1.50%, Innovate 1% to 3%, and the guides 1% to 3% of the facility limit, usually capitalised at settlement.
• Line fee. Often nil on non-bank facilities, where interest runs on the drawn balance only. Not uncommon on bank facilities.
• Valuation, legal and QS. Innovate shows $4,000 to $7,000 for legals and valuation on a $1m bridge. A full quantity surveyor cost management engagement is quoted at 0.5% to 2% of construction value, though a lender's own QS reports are priced separately and the lenders above do not publish those fees. Lenders pass these costs to you.
• Exit and default. Exit fees run from nil to about 1%. Default interest is the contracted rate plus 4% to 6%.
• Drawdowns. Residential loans commonly pay out in five or six stages, commercial monthly on work in place. From claim to funds takes one to four weeks, so the builder needs cash flow.

Interest is usually capitalised, which means it is added to the loan and repaid at sale, so there are no repayments during the build. It also means interest is charged on interest, and the facility must be big enough to carry it. Interest accrues only on the drawn balance. Feasly's own example puts the average balance at 55% of the limit over a 15 month build. In our worked project it is about 46%.

The table below prices the finance for six townhouses with a $3.2m total development cost over 18 months (our arithmetic). We assumed the land is bought with your cash, the build is funded by a 70% senior facility drawn monthly, and the rates sit inside the published bands above.

Each extra month at peak debt costs about $19,600 at the middle rate, so a three month delay adds about $59,000 before any default rate or extension fee.

What makes a construction loan fundable

Appetite is real but selective. Construction was the largest industry for company insolvencies in 2025-26 at 3,472 companies, about 24.5%% of the 14,152 total (our arithmetic, from ASIC data reported by Accountants Daily). That is one reason lenders look hard at the builder, not just the margin. Banks will say no to a first time developer without presales and equity. Non-banks will often say yes, at a price, if the numbers hold.

What lenders look for:

• Equity. Cash or equity in other property, commonly 20%% to 35%% of cost.
• Margin. One guide cites a minimum return on cost of 15%% to 20%%, tested with a 10%% cost rise, a 10%% fall in sale prices and a six month delay.
• Approvals and plans. Planning approval, engineering and a fixed price building contract.
• The builder. A licensed builder with a track record, insurance and a payment schedule that matches the draws.
• Exit. Presales, or sale evidence for the end product, or a refinance plan.

Our construction cost per square metre guide sets out the build rates a quantity surveyor will test your budget against.

How the build is funded

A construction project is usually funded in layers. Senior debt comes from a bank, a non-bank or a private lender. Mezzanine debt or preferred equity fills the gap if senior debt plus your cash falls short. Private lending is typically business purpose and not consumer regulated, but that depends on the facts. ASIC says the credit legislation covers loans to natural persons for buying, renovating or improving residential property for investment, while loans to companies are not covered, so lenders will ask who the borrower is and why. Ventas is a finance broker, not a lender, so we do not quote rates here.

Illustrative only, subject to lender assessment. A six townhouse project in the middle case from the table above:

And how it is typically funded across lender types:

The facility limit would be set at $2,250,000 or so, and the expected sale price (our assumption: $4,000,000 excluding GST for six) gives an LVR of about 56% and a return on cost of about 25%, which clears the 15% to 20% guide. A bank would price lower but would want presales on most of the debt. A development finance or construction finance file for this deal starts with the site contract, approved plans, the builder's fixed price contract, a cost plan, your balance sheet and your project history. Tell us whether you can offer presales. Finance is subject to lender assessment and approval.

This is general information only and not financial, credit, or tax advice. Figures are indicative market data from the sources listed, not Ventas offers, and move with the market. Consider your own circumstances and speak to a professional. All finance is subject to lender assessment and approval.

This article is general information only and not financial, credit, or tax advice. Ventas Asset Lending is a finance broker, not a lender. Approvals are subject to lender assessment. Consider your own circumstances and speak to a qualified professional, including your accountant for any tax questions.