Construction loans are designed to fund property projects progressively rather than as one lump sum. They are commonly used for duplex, townhouse, apartment, subdivision, mixed-use, industrial and commercial developments where staged funding, project timing and exit strategy all matter.
At Formation Finance, we help structure construction loans for self-employed individuals, property investors, owner-builders and developers, covering the gap that traditional banks leave for borrowers and projects that don’t fit standard bank criteria.
A construction loan typically sits in the middle of the property development finance lifecycle, following the land loan stage and preceding residual stock finance at project completion.
| Key Features | Individual / Small Investor | Developer / Commercial |
|---|---|---|
| Loan amount | $300k – $1.5M | $1M – $50M+ (case-by-case) |
| Term | Up to 30 years (12-month build period) | Up to 36 months (build only) |
| Up to LVR | Up to 80% (of on-completion value) | Up to 70% GRV / 80% TDC |
| Interest rate from | From 7.5% p.a. (subject to security & profile) | From 9.99% p.a. (subject to deal & security) |
| Income docs | Full doc / Low doc / No doc options | Asset-backed, project feasibility based |
| Repayment | Interest-only during build, then P&I | Interest-only (capitalised interest available) |
| Application fee | 0.5% – 1.5% (of loan amount) | 1.5% – 2.5% (of loan amount) |
| Typical timeframe | Indicative 2–5 days • Settlement 3–6 weeks | Indicative 48 hours • Settlement 2–6 weeks |
All figures are indicative only and not an offer of finance. Availability, terms and timing are subject to valuation, security, lender approval, legal/settlement requirements and receipt of required documentation. For business and investment purposes only.
Building or renovating a home
House-and-land, knockdown rebuild, owner-builder or a major renovation. We’ll walk you through the drawdown schedule, deposit, and exactly what lenders want to see before they release each stage.
Financing a project
Spec builds, multi-dwelling sites, land subdivision and development finance, which bank and non-bank, structured around your build program and cash flow so funds are there when each stage needs them.
A bank offers you its own products. We compare programs across a network of lenders and bring you the ones that actually fit your project, your timeline, and your budget. One conversation, multiple options, no guesswork and we’re paid to get you to closing, not to sell you a single product.
Since 2021, mortgage brokers are legally required to act in your best interests. Banks aren’t bound by this. When we recommend a lender, the law requires it to be the right one for you, not the one that pays us the most.
Your application reaches a panel of lenders who know they’re competing for your business. That pressure is where sharper rates and better terms come from the leverage a single branch can’t offer.
Not every lender handles construction well. We know which ones value your project type, release funds quickly at each stage, and won’t leave you waiting for a drawdown mid-build.
Your project, budget, contract or plans, and where you’re up to. Five minutes, no obligation.
We match your build to lenders that suit it and bring you the options that genuinely fit with our reasoning.
We set up the loan so funds release cleanly at each stage and you only pay interest on what’s drawn.
We manage each progress payment with the lender through to completion, so the build never waits on money.
General guide only. Stage percentages vary from build to build — your actual drawdown schedule is set by your building contract and your lender.
Case Study 1: Melbourne Owner-Builder Home
Single dwelling on owned land, outer-eastern Melbourne, VIC Challenge: A trade-qualified owner-builder had no registered builder and no fixed-price HIA contract. Two banks declined outright. Solution: Structured a 65% LVR facility on as-if-complete value ($900K) with a specialist lender, supported by a quantity surveyor report, 20% cost contingency and completed owner-builder course; drawdowns matched to his trade schedule rather than standard bank milestones. Outcome: Indicative approval in 4 days, settled in 5 weeks. Interest-only from ~8.5% p.a. during the build.
Case Study 2: Melbourne Townhouse Development — Nil Presales
4 × townhouses, northern Melbourne, VIC (GRV ~$3.2M) Challenge: Developer couldn’t meet a major bank’s 60%+ presale debt-cover requirement and risked losing months waiting to hit targets. Solution: Placed with a non-bank lender at 70% GRV / 80% TDC ($2.4M cost) with nil presales, assessed on feasibility, a ~28% margin and a sale-on-completion exit. Outcome: On site ~4 months earlier than the presale route. From ~9.99% p.a., interest capitalised across the 18-month build.
Case Study 3: Self-Employed Investment Build
Single investment property build, VIC ($650K on completion) Challenge: A sole trader’s latest tax return — heavy with deductions — understated his real income, so full-doc serviceability failed. Solution: Low doc construction facility with income supported by 12 months BAS, business bank statements and an accountant’s letter, reaching 80% LVR. Outcome: Indicative approval in 3 days. From ~8.0% p.a., priced above full doc to reflect reduced verification.
Reviewed by Jackie Wang, Partner at Formation Finance
Jackie Wang holds a Master of Professional Accounting from the Royal Melbourne Institute of Technology (RMIT), and has over 10 years of experience in finance and lending, structuring tailored funding solutions for Australian developers and investors.
Last update: 14/07/2026
Yes, absolutely — duplex construction projects are commonly funded through both standard construction loans and low doc construction loans, depending on your needs and documentation.
If you’re a developer or investor building a duplex, non-bank lenders can offer more flexible terms and faster approvals than traditional banks. Whether it’s for subdivision, house-behind-house, or side-by-side dual occupancy, we can tailor construction loan solutions to match the scale and timeline of your project.
Approval times can range from a few days to a few weeks, depending on the complexity of your project and the documentation provided. Our streamlined process ensures faster decisions compared to traditional banks.
Not always. While some projects benefit from having pre-sales in place, especially for larger multi-unit developments, we assess each application individually. Our flexible approach means we may be able to offer funding without pre-sales, depending on the strength of the project and the developer’s experience.
Yes. For self-employed borrowers without recent tax returns, low doc construction loans accept income declarations supported by BAS, bank statements or accountant letters. No doc construction loans are available for asset-backed scenarios where the project feasibility, security and exit strategy carry the assessment without income verification. Both options price higher than full doc to reflect the additional risk.
Owner-builder construction loans are available but more restrictive than standard builder-led construction loans. Most lenders cap LVRs at 50–70% (vs 80%+ with a licensed builder), require detailed cost estimates and HBCF/HBWI insurance, and prefer borrowers with relevant construction or trade experience. Banks rarely approve owner-builder scenarios above small renovations.
For owner-occupier and small investor construction loans, minimum deposit is generally 20% (LVR up to 80%); some lenders accept 10% with lenders mortgage insurance. For developer construction loans, minimum equity contribution is typically 20–25% of total development cost on senior debt, dropping to 10–15% with mezzanine finance.
