The families of finance
Every construction project must mobilise resources sufficient to cover all its expenditure. Those resources can come from several sources, generally combined.
Equity
Equity is the operator's own or corporate contribution. It is the basis of all financing: no bank will fund a project without a significant contribution. In housing, banks generally require 20 to 30 % of the total cost. In development that ratio can fall to 10–15 % with a high level of pre-sales.
Classic bank credit
For private individuals, the classic mortgage is the dominant route, granted over 15 to 25 years. For professional clients outside development, authorities, social landlords, companies, specific loans exist: balance-sheet loans, European investment bank finance, and loans from the state deposit institution.
The development loan
The development loan is short-term finance, 12 to 36 months, structured specifically for property development operations. It covers the delivery phase of the project, from planning permission to handover and repayment from sales.
Typical conditions for a development loan
| Criterion | Condition |
|---|---|
| Minimum pre-sales | 40 to 50 % of turnover signed off-plan |
| Equity | 10 to 20 % of the total cost |
| Rate | A margin of 1.5 to 3.5 % over the interbank rate according to the bank |
The completion guarantee: in an off-plan sale of a building for residential use or for mixed professional and residential use, a seller who receives funds before completion must take out a financial guarantee of completion or of repayment (CCH, art. L261-10 and L261-10-1). For any other use, those articles do not impose it, and it is negotiated in the contract.
To go further: The development loan: how it works and its conditions
Public grants and subsidies
Public authorities offer a range of financial support for certain types of construction project. It can take the form of direct grants, subsidised loans, tax relief or guarantees.
| Social housing | Subsidised loans from the state deposit institution at 1 to 3 %, central and local grants, VAT at a reduced rate, 5.5 % or 10 % according to the financing and the location of the social housing (CGI, art. 278 sexies and 278 sexies-0 A, as in force in 2026). |
|---|---|
| Energy retrofit | The national retrofit grant, energy saving certificates and the zero-interest loan for private individuals; the housing agency's schemes for landlords. |
| Public buildings | State equipment grants and European funds for eligible projects. |
| Environmental labels | Beyond the RE2020 environmental regulation, which applies to the new buildings it covers (CCH, R172-1: housing whose permit application is lodged from 1 January 2022, save for certain contracts signed before 1 October 2021, offices and primary or secondary school buildings from 1 July 2022, and other buildings, including hotels, shops and health facilities, from 1 May 2026), the label required by the lender can open access to preferential finance. In urban zones and zones to be urbanised, the local urban plan can also allow the rules on bulk, height or footprint to be exceeded, by up to 30 %, for buildings showing exemplary energy or environmental performance (Code de l'urbanisme, L151-28, 3°). |
| Priority areas | Specific support for projects within urban renewal perimeters. |
To go further: Construction grants and subsidies
Property crowdfunding
Property crowdfunding has grown strongly since 2012. It lets developers raise funds from private investors through platforms authorised by the financial markets regulator.
The operator presents the project on the platform. Investors lend sums remunerated at 8 to 12 % a year over 12 to 36 months. The funds are repaid at the end of the operation, on sale.
| Advantage for the operator | A rapid supplement to equity without dilution or a new partner in the governance. |
|---|---|
| Advantage for the investor | An attractive yield, an accessible entry ticket, diversification across several projects. |
| Principal risk | Partial or total loss of capital if the operator defaults. |
| Condition of success | A solid development appraisal, advanced pre-sales, a demonstrated track record. |
To go further: Crowdfunding in property
Building a solid funding plan
The quality of the funding plan presented to financial partners directly governs the borrowing terms obtained. A good plan rests on four elements:
- A realistic appraisal: income and expenditure detailed and documented against market references.
- A precise calendar: pre-sales milestones, drawdown and repayment dates.
- A risk analysis: the principal risks identified and the mitigation planned.
- The operator's track record: references from similar operations delivered, and the accounts of the carrying entity.
ℹ The loan-to-value ratio: the banker's key indicator It measures the ratio between the loan sought and the total cost of the project. A ratio of 70 % means the bank funds 70 % and the operator brings 30 % in equity. In a context of higher rates, banks tend to require more conservative ratios than in a low-rate period.
See also: Return and investment in construction · Construction costs
Back to the main guide: Construction economics
The rates and financial conditions mentioned on this page are indicative and subject to market movement. Consult a broker or a specialist financial adviser for an analysis adapted to your situation.
The nature of the figures quoted
The percentages and amounts quoted on this page are orders of magnitude for framing, not measurements. They illustrate mechanisms and proportions, and they substitute neither for a tender exercise nor for an estimate prepared on drawings.
Articles liés
Sources: the BT construction cost indices published monthly by INSEE on its 2010 base, used to update the figures · construction cost statistics from SDES, the statistical service of the ministry responsible for construction · regulatory texts published in the Journal officiel and consolidated on Légifrance for the requirements cited.