- Last Updated: 23 June 2026
Property Development Finance
Capital efficient funding structures from site acquisition to construction exit. We match sophisticated Australian developers with agile bank and non bank funding solutions.*
- Access funding for every stage of property development
- Get different types of property development finance to cover construction and more
- Cover both residential and commercial projects
- Finance that caters to developers of all sizes
Get Property Development Finance with Dark Horse Financial
1
Contact Our Team
Fill out our online form to apply for property development finance. We’ll get in touch with you fast to understand your situation and make a recommendation.
2
Submit Application
We’ll expertly handle your application from start to finish. Approval times depend on the lender and the type of property development finance.
3
Get Funded
Once approved, documentation is signed electronically, making settlement fast. Once settled, the funds will be disbursed to you. For some types of property development finance, funds may be released in stages.
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Optimising the Capital Stack for Australian Developments
Successful property development is about structuring the right mix of capital to maximise project profitability while managing risk throughout the development lifecycle.
The capital stack for a development project can consist of senior debt, mezzanine finance, and developer equity. Each layer serves a different purpose and directly affects project cash flow, leverage, and overall returns.
Senior debt generally forms the foundation of the funding and is often the lowest cost source of finance. It is commonly used to fund land acquisition, construction costs, and other major project expenses.
Mezzanine finance sits between senior debt and equity. It can help bridge funding gaps, reduce the amount of capital the developer needs to contribute, and increase leverage where project economics support a higher funding structure.
Developer equity forms the final layer and represents the capital invested by the developer and project stakeholders. While equity absorbs the highest level of risk, it also captures the majority of project profits once debt obligations have been repaid.
The way these funding layers are structured can have a significant impact on Internal Rate of Return (IRR). A well designed capital solution can reduce equity requirements, improve cash flow, and allow developers to undertake larger or multiple projects without unnecessarily tying up capital. For many developers, the goal is to create a funding structure that maximises returns while maintaining appropriate risk across the project.
What Projects Are Eligible for Development Loans in Australia?
If you’re wondering whether your project qualifies, the good news is that finance for property development accommodates a variety of initiatives, including:
- Residential Developments: Residential development loans cover townhouses, smaller apartment complexes, and other multi-dwelling residential properties.
- Commercial Projects: Retail spaces, offices, mixed-use developments and larger apartment developments.
- Land Subdivision Projects: Preparing plots for resale or development.
- Specialised Projects: Hotels, aged care facilities, and other niche developments.
Who Uses Commercial Property Development Loans?
This type of financing is utilised by a range of market participants, including:
- Experienced property developers launching multi stage residential or commercial projects
- Private investors and family offices involved in smaller scale developments
- Construction companies entering joint ventures with landowners
- Real estate development firms backed by institutional funding.
While each developer may bring a different level of experience and equity to the table, the common denominator is the need for tailored funding solutions that match the timing and risk profile of their project.
Leverage and Risk Management in Commercial Real Estate
For experienced developers, development finance is a strategic tool that allows capital to be deployed more efficiently across multiple projects while managing risk and preserving liquidity.
A well structured finance facility allows developers to control larger projects without committing all available capital to a single site. Rather than concentrating equity in one development, developers can allocate capital across multiple opportunities, improving portfolio diversification and increasing the potential for overall returns.
Preserving Capital for Future Opportunities
Property development is highly capital intensive, but tying up excessive equity in a single project can limit future growth. By incorporating the lender for senior debt and other funding solutions into the capital stack as needed, developers can preserve capital for site acquisitions, project contingencies, and new development opportunities as they arise.
Improving Capital Efficiency
The efficient use of leverage can improve returns on invested equity. When development finance is structured appropriately, developers can achieve project objectives while reducing the amount of capital required from investors and stakeholders. This allows capital to work harder across the broader development pipeline.
Diversifying Development Risk
Concentrating all available capital into a single project increases exposure to market fluctuations, construction delays, cost overruns, and changes in buyer demand. Access to external funding allows developers to spread capital across different projects, locations, and asset classes, reducing portfolio concentration risk.
Maintaining Liquidity Throughout the Project Lifecycle
Development projects often face unexpected costs, approval delays, or opportunities that require immediate capital. Maintaining liquidity throughout the development cycle gives developers greater flexibility to respond to changing market conditions without disrupting project delivery.
Accelerating Growth and Project Delivery
Developers with access to well structured funding can move quickly when opportunities emerge. Whether acquiring new sites, commencing construction, or expanding a project pipeline, access to capital can provide a competitive advantage in markets where timing is often critical to project success.
For many developers, the objective is not to maximise borrowing. It is to create a capital structure that balances risk, liquidity, and return while supporting long term growth across multiple developments.
Market Leading Property Development Finance Structures
Different stages of a development project require different funding solutions. Sophisticated developers often combine multiple facilities to optimise leverage, preserve equity, and maintain liquidity throughout the project lifecycle.
Construction Finance and Senior Debt
Senior debt is typically the foundation of a development finance solution and is commonly used to fund site acquisition, construction costs, and project delivery expenses.
Construction finance facilities are generally structured around progressive drawdowns, with funds released in stages as construction milestones are completed. An independent Quantity Surveyor (QS) monitors progress and certifies drawdown requests, helping ensure funding aligns with the project’s approved budget and construction schedule.
Interest is often capitalised throughout the build, reducing pressure on project cash flow until completion or project exit.
Common uses include:
- Residential developments
- Apartment projects
- Townhouse developments
- Commercial developments
- Mixed use projects
Mezzanine Finance and Second Mortgages
Mezzanine finance and second mortgage facilities sit behind senior debt within the capital solution. These facilities are commonly used when developers want to increase leverage beyond traditional senior debt limits without introducing additional equity partners.
By supplementing senior funding with mezzanine finance, developers can reduce equity contributions, improve capital efficiency, and potentially increase returns on invested capital where project feasibility supports higher leverage.
These facilities are often used to:
- Bridge funding gaps
- Increase overall LVRs
- Reduce equity requirements
- Support larger projects without diluting ownership
Non Bank Land and Subdivision Funding
Non bank lenders can provide funding for site acquisitions, land banking, and subdivision projects where traditional lenders may be constrained by policy requirements or lengthy approval processes.
This type of funding is often used by developers seeking to secure sites quickly, purchase development opportunities before Development Approval is finalised, or progress projects that fall outside conventional bank lending criteria.
Benefits can include:
- Faster approval timeframes
- Greater flexibility around project stage
- Funding before Development Approval
- Support for complex development scenarios
Residual Stock Facilities
Residual stock finance allows developers to unlock equity from completed but unsold apartments, townhouses, commercial suites, or other development stock.
Rather than waiting for all inventory to be sold, developers can use residual stock facilities to release capital tied up in completed assets and redeploy it into new acquisitions, future projects, or other growth opportunities.
For active developers, residual stock finance can improve liquidity, accelerate capital recycling, and support a more consistent project pipeline without relying solely on settlement proceeds.
Navigating Bank and Non Bank Development Funding
Property developers today have access to a broad range of funding sources, including major banks, non bank lenders, private lenders, and specialist development financiers. The right funding solution depends on the project’s objectives, timeline, capital structure, and funding requirements rather than simply the size of the development.
At Dark Horse Financial, we assess both bank and non bank options to identify the funding structure that best aligns with your project’s commercial goals.
Bank Funding
Banks remain an important source of development finance and are often well suited to projects that fit within established credit policies and risk frameworks.
Banks generally focus on:
- Experienced developers with proven project delivery history
- Strong pre sale coverage
- Lower leverage requirements
- Well established residential and commercial asset classes
- Detailed documentation and extensive due diligence
While bank pricing can be competitive, approval processes are often more structured and can take significantly longer than alternative funding sources. Banks may also impose stricter requirements around pre-sales, borrower experience, project size, and capital contributions.
Non Bank and Private Development Funding
Non bank lenders have become a significant part of the Australian development finance market and are increasingly used by experienced developers seeking greater flexibility and speed.
These lenders often provide:
- Faster credit assessment and approval timeframes
- Higher leverage opportunities
- More flexible pre sale requirements
- Funding for projects outside traditional bank policy
- Greater flexibility around project structure and exit strategies
- Funding solutions across land acquisition, construction, mezzanine finance, and residual stock facilities
For many developers, non bank funding is not a secondary option. It is a strategic choice that allows them to move quickly on acquisitions, optimise capital structures, and execute projects without being constrained by traditional banking policies.
Choosing the Right Funding Strategy
The decision between bank and non bank funding is about which funding structure best supports the project’s objectives.
Some developments are ideally suited to bank funding. Others benefit from the flexibility, speed, and leverage available through non bank lenders. Many sophisticated developers utilise a combination of funding sources across different projects depending on project stage, risk profile, and capital requirements.
The most effective approach is often to assess the full lending market and structure a funding solution around the development rather than attempting to fit the development into a single lender’s credit policy.
Key Phases of a Commercial Property Development — And How Financing Is Used
Understanding when and how financing is required is essential. Typically, the development process is broken down into the following key phases, each with distinct funding needs:
1. Site Acquisition
This is the first stage, where the developer purchases the land on which the development will take place. Depending on the nature of the site and its existing zoning, this phase might be financed with a traditional loan.
2. Planning and Approval
Before construction begins, the developer must obtain necessary planning permits and approvals from the relevant local council and authorities. Funding for this stage is often sourced through traditional loans.
3. Construction Phase
This is usually the most capital-intensive stage and is commonly financed with a construction loan. Funds are drawn down progressively in line with completed construction milestones. Interest during this period is often capitalised, meaning it is added to the loan rather than paid monthly.
4. Post-Construction and Refinancing
After completion, the developer may seek to refinance the project with a longer-term loan or transition to a residual stock loan if some units remain unsold. Alternatively, if the strategy is to retain and lease the property, a commercial investment loan may replace the original construction finance.
5. Exit and Return on Investment
The final stage involves either the sale of the property to realise profits or holding the asset to generate rental income. The choice between these options will influence the type of exit strategy required, which lenders will evaluate as part of the financing approval process.
The Core Documents Lenders Need for Property Development Finance
Every property development lender in Australia wants to see a set of documents that show the project has been thought through. These include:
Valuation
A formal valuation tells the lender the current land value. It also confirms location, zoning, access, and any risks tied to the land. Most lenders insist on using their panel valuers.
Feasibility Study
A feasibility study outlines the full financial picture. It includes expected build costs, soft costs, sales prices, funding costs, timelines, and projected profit. Lenders review the study to confirm the numbers are realistic and supported by current market conditions.
QS Report
A quantity surveyor report breaks down detailed construction costs. This gives the lender confidence that you are not guessing the build budget.
The strength of these documents says a lot about the project. Clear, consistent numbers backed by evidence make lenders more comfortable taking on the loan.
How Much Lenders Will Fund
Loan to value ratios depend on the lender and the project. Banks tend to be conservative. They may fund only 60 to 65 percent of total development costs. Non bank lenders often sit slightly higher. Private lenders vary widely because they each have their own risk appetite. A handful may go as high as 75 percent for the right developer with a strong feasibility and a proven track record.
Some lenders allow extra flexibility if you offer additional security. A second mortgage on another property can lift your overall lending position. This approach is common for developers who have enough equity but want to avoid a complete refinance on their primary residence or investment property.
How Funding Structures Work in Development Loans
Property development finance usually follows a staged approach. Funds release in drawdowns as construction moves forward. Most lenders structure the loan as interest only, with capitalised interest being common. This can help developers manage cash flow because repayments do not need to be made monthly during the build.
Developers often combine lending with pre sales. Some lenders require a percentage of pre sales to be achieved before releasing the first construction drawdown. Others do not ask for pre sales at all, especially in the private lending space.
Key Considerations for Securing Property Development Loans
Securing property development loans can be a complex process, and there are several factors to consider to increase your chances of success:
1. Experience and Track Record
Lenders are more likely to approve loans for developers with a proven track record of delivering successful projects. If you’re new to property development, consider partnering with an experienced developer or starting with smaller projects to build your portfolio.
2. Location and Market Demand
The location of your project plays a significant role in securing finance. Lenders prefer projects in high-demand areas with strong growth potential. Conduct thorough market research to ensure there’s demand for your development.
3. Feasibility and Profitability
Lenders will want to see that your project is feasible and has the potential to generate a profit. This includes detailed cost estimates, sales projections, and a clear exit strategy.
4. Loan-to-Value Ratio (LVR)
The LVR is the ratio of the loan amount to the value of the project. Most lenders will finance up to 60-80% of the project cost, meaning you’ll need to contribute the remaining 20-40% as equity.
5. Exit Strategy
Lenders will want to know how you plan to repay the loan. This could involve selling the properties, refinancing the loan, or generating rental income. Having a clear exit strategy is essential to securing finance.
Frequently Asked Questions
Loan-to-Cost (LTC): This metric represents the total facility limit as a percentage of the aggregate project costs—encompassing land settlement, hard construction outlays, soft professional fees, statutory contributions, and necessary project contingencies.
Loan-to-Value Ratio (LVR): Derived by dividing the debt amount by the asset valuation. In a development context, institutional and private lenders evaluate this against the present land value, the “as-if-complete” projection, or the total Gross Realisation Value (GRV), based on the specific funding structure and lender mandate.
Traditional Australian banks generally cap funding at 60–70% LVR and 70–80% LTC for commercial builds, typically requiring verified pre-sales and rigorous due diligence. In contrast, non-bank and private capital markets offer enhanced risk appetite, often providing high-leverage solutions up to 75% LVR or 80–85% LTC for sophisticated developers with robust project feasibility.