SDA Lending in 2025: What Buyers and Agents Must Know

The Specialist Disability Accommodation (SDA) investment space has matured rapidly — and so have lender expectations. With fewer funders supporting new builds and rising scrutiny over valuations and location quality, understanding the current lending landscape is essential.

Here’s what every agent, developer, and investor needs to know to navigate SDA lending in 2025.

Buyer Requirements

To qualify for SDA finance in today’s market, buyers must be prepared with:

• Minimum 20% deposit Lenders no longer accept 10% deposits. No LMI is available for SDA lending.

• 10% liquidity buffer Buyers must show cash, redraw, or offset equal to 10% of the total loan amount post-settlement.

• Letter from SDA Provider This should confirm a participant pipeline or tenant demand in the chosen location.

• Risk Assessment Report Must be prepared by a licensed financial planner or accountant, showing:

  • Understanding of SDA-specific risks

  • Rental income expectations

  • Suitability of the buyer’s structure (SMSF, trust, individual)

• SMSF buyers must:

  • Purchase only completed and tenanted properties

  • Obtain independent financial advice confirming the investment is appropriate

Lending Requirements

Requirement	Details
Deposit	20% minimum (no LMI available)
Liquidity Buffer	10% of the loan amount retained post-settlement
Loan Cap per Property	$3.5 million (larger loans assessed case-by-case)
Borrower Exposure Limit	$10 million across all SDA properties
Interest Only Period	18 months mandatory for SDA construction loans
Max Active Construction Loans	Only one SDA construction loan allowed at a time

Location Requirements

Lenders now restrict SDA lending to high-demand areas only:

Fundable Locations

• Within 50km of Sydney GPO

• Within 25km of all other mainland capital cities:

  • Melbourne, Brisbane, Adelaide, Perth, Canberra, Darwin

• NSW key regional cities:

  • Parramatta, Penrith, Newcastle, Wollongong

Excluded Locations

• Properties 25km+ from towns under 10,000 population

• Oversupplied or high-risk postcodes, particularly in greenfield estates

Valuation & LVR Policy (What Most Get Wrong)

This is a major stumbling block for buyers and agents — here’s how it works:

Valuation Methods:

1. DCF (Discounted Cash Flow) or Capitalisation

   • Based on projected SDA rental income (e.g., $80K+ per tenant)

   • Common in developer pricing documents

2. Alternate Use Value

   • The property’s value if sold as a standard residential dwelling

   • Does not factor in SDA income

What Lenders Use:If a DCF valuation is presented, the loan is capped to the lower Alternate Use Value, not the high rental-based figure.

Location Type	Max LVR (Based on Alternate Use Value)
Metro / Non-Metro	100%
Regional	80%

Example:If DCF = $1.1M and Alternate Use = $900K → the lender assesses the loan on $900K, not $1.1M.

Additional Documentation Typically Required

• SDA Provider Letter – confirming demand or tenancy pipeline

• Risk Assessment Report – prepared by a licensed accountant or financial adviser

• Supply & Demand Data – suburb-specific research (may be requested)

• Sophisticated Investor Certificate – optional but often preferred for large or SMSF transactions

BPG Position

At Bridge, we’ve seen the full range of outcomes in SDA — from exceptional results to catastrophic settlement risk. We now only work with:

• Developers in finance-eligible, high-demand SDA locations

• SDA Providers with genuine tenancy pipelines

• Agents who commit to professional, transparent advice

We continue to work only with high-integrity partners and properties that genuinely improve outcomes for NDIS participants. If you're serious about building SDA the right way, let’s connect. We can assist with project selection in research backed areas.

Disclaimer: The information in this article is general in nature and is provided for educational and awareness purposes only. It does not constitute financial advice, credit advice, tax advice, legal advice, or a recommendation to invest in any specific product or structure. While every effort has been made to ensure accuracy at the time of writing, lending policies, eligibility criteria, and location restrictions are subject to change by lenders and regulatory bodies. Bridge Projects Group is not a licensed mortgage broker or financial adviser and does not provide credit or lending services. Readers should not rely solely on this information when making property or finance decisions. We strongly recommend seeking personalised advice from a licensed mortgage broker, financial planner, and legal professional before entering into any investment, particularly in the SDA space. Bridge Projects Group accepts no liability for decisions made based on this content.