For a typical 6-unit townhouse development, plan on 20–35% of total development cost as your equity contribution. Not 20% of the land price — 20–35% of the whole project cost: land, build, soft costs, contingency, sales and finance costs. Where you land in that range depends on the lender type, your presales, and your track record.
Lenders don't think in deposits
A construction lender sizes the facility from the top down, not the deposit up. They'll cap the loan at a percentage of total development cost (LTC) — usually the binding number — and cross-check it against a percentage of gross realisable value (LTGRV) and the as-is land value (LVR). Whatever the caps produce, the gap between the facility and the total cost is your equity. That gap is the "deposit".
The ranges in the current market, in round terms:
- Major and regional banks: 60–65% LTC, with a presale hurdle often at or near 100% debt cover. Your equity: ~35–40% of cost.
- Non-bank lenders: 70–75% LTC, presales negotiable — often none required on smaller townhouse projects. Your equity: ~25–30% of cost.
- Senior plus mezzanine: combined leverage to 85–90% LTC on the right deal. Your equity: potentially 10–15% of cost, at a price.
A worked example
Six townhouses, Gold Coast infill site. Land $1.8M. Build contract $3.2M fixed-price. Soft costs, contingency, sales and finance costs around $1.0M. Total development cost: $6.0M. End value: six sales at $1.35M — GRV $8.1M.
A bank at 62.5% LTC lends $3.75M — you find $2.25M. A non-bank at 75% LTC lends $4.5M — you find $1.5M. Same project, same builder, same end value: the lender choice moves the equity cheque by $750k. That, more than the rate card, is why lender selection is the first decision, not the last.
What counts as equity
Cash is cleanest, but it isn't the only form credit committees accept:
- Land at valuation. If you bought the site for $1.8M and a DA approval has carried it to $2.3M, the lender's valuer recognises $2.3M — the $500k uplift is equity you created rather than saved.
- Equity in completed stock. Unsold units from a previous project, supported by a residual stock valuation.
- A site vended in at fair value by a related party, properly papered.
What doesn't count: sweat equity, projected profit, or the builder "leaving margin in the job" without a documented structure behind it.
How to sit at the low end of the range
Three things pull the equity requirement down: a fixed-price build contract with a verifiable builder, a feasibility that reconciles line by line, and evidence of completed projects. Each one removes doubt, and leverage is priced on doubt. A first-time developer with a clean file will still get funded — but closer to 30% than 20%, and the presale conversation gets harder.
Because this is commercial-purpose lending, it sits outside the consumer credit rules (NCCP) — which means terms are genuinely negotiable, lender to lender. The spread between the best and worst equity requirement for the same deal is routinely seven figures. Worth twenty minutes before you sign a land contract.