Finance question
How much deposit do I need for a development loan?
It depends on the lender type, but 15% to 40% of total project cost is the working range. Banks lend 60 to 70% of cost, so you put in 30 to 40%. Non-bank lenders go to 70 to 80%, a 20 to 30% deposit, and stretch senior debt reaches 80 to 85%. Land you already own counts at its valuation, subject to lender assessment.
Get your free rate quote
Tell us a few details and we will come back with your indicative rate. No obligation.
Thanks, we are on it
Your enquiry is in. Our team will be in touch shortly with your indicative rate and next steps.
The short answer
Your deposit is whatever the lender does not lend
A development lender sizes its loan as a share of total project cost, called loan to cost, and your deposit is the rest. In our townhouse development cost guide, senior bank construction debt runs 60 to 70% of total development cost, non-bank senior lenders fund 70 to 80%, and stretch senior debt reaches 80 to 85% (townhouse development cost guide). Flip those and the deposit is 30 to 40% at a bank, 20 to 30% non-bank and 15 to 20% on stretch senior. Where cash to complete is still short, mezzanine debt or preferred equity fills 10 to 20% of cost, but the guide sees it on projects above $2 to $3 million showing an 18 to 22% margin.
The deposit is not one number, because it changes at each stage. The land stage comes first. In the subdivision cost guide, banks lend around 50 to 65% of raw land value or cost for a subdivision-ready site, non-bank lenders 65 to 75% of cost, and private lenders 70 to 80% (subdivision cost guide). That makes buying the site a 20 to 50% outlay in cash or equity before any construction facility starts, and stamp duty and legals sit on top of the price, so keep cash for them.
What counts as deposit is wider than cash. Land you already own is credited at the lender's accepted valuation: on the townhouse guide's six-unit job, a 70% non-bank facility of about $4.3 million against $6.18 million of cost leaves roughly $1.9 million for the sponsor, most of it land. Equity in your home or another property can cover the rest, and cross-securing a second property often lifts what you can borrow. Ventas is a broker across 40+ lenders, and there is no upfront fee to you; the lender pays us on settlement.
Do you qualify?
What can stand as deposit on a development loan.
Land you own
Credited at the lender's accepted valuation.
Cash for the gap
Duty, legals and early fees are usually paid from your own funds.
Equity in other property
A home or investment property can stand behind the deposit.
A sound feasibility
A margin that holds when the lender tests costs and prices.
Why the deposit moves between lenders
Banks gear lowest
60 to 70% of cost, so the biggest deposit.
Non-banks gear higher
70 to 80% of cost, a 20 to 30% deposit.
Mezzanine fills gaps
10 to 20% of cost on stronger projects.
A worked example
A developer buys a 1,200 m2 Brisbane corner block for $700,000 to split into three lots. A non-bank lender at 65 to 75% of cost lends $455,000 to $525,000, so the deposit is $175,000 to $245,000, plus about $26,500 in duty and legals. At the 65% end that is $271,500: $100,000 of savings and $171,500 from equity in the developer's home. Illustrative only.
Common questions
Frequently asked questions
Can the land I already own be my deposit?
Yes. Land you hold is credited at the lender's accepted valuation, and on a typical small project it is most of the equity the lender asks for.
What is the smallest deposit possible on a development loan?
Stretch senior debt reaches 80 to 85% of cost, a 15 to 20% deposit, and mezzanine finance or preferred equity can fill 10 to 20% of cost on stronger projects. Both come at a higher price and are subject to lender assessment.
Is the deposit a share of the land price or of total cost?
Total cost once construction starts. Lenders size the facility against land, build, fees and finance together, so the deposit is the share they do not fund. At the land-only stage it is a share of the purchase price.
How much cash do I need on top of the deposit?
Plan for stamp duty and legals on the land, which came to $26,500 on a $700,000 block in the subdivision guide's Brisbane example. A quantity surveyor charges $500 to $1,500 for each drawdown inspection in the townhouse guide.