Texas Construction Loans

Are you looking for the best construction loans in Texas? Learn the basics of a construction loan and be prepared for when it’s time to build your own home.

Build Your Dream Home with the Right Financing

Are you dreaming of building a custom home in the Lone Star State? Navigating the world of construction loans can seem daunting, but with the right information and lender, you can turn your dream into a reality. This guide will walk you through the ins and outs of securing the best construction loans in Texas, empowering you to make informed decisions and build the home you’ve always wanted.

Construction Loan Requirements in Texas

To qualify for the best construction loans in Texas, you’ll need to meet certain requirements:

Good Credit Score: A strong credit history is essential. Most lenders prefer a credit score of 680 or higher.
Down Payment: Be prepared to make a down payment, which can vary depending on the lender and loan program.
Debt-to-Income Ratio (DTI): Lenders will assess your DTI to ensure you can comfortably manage your monthly debt obligations, including your new mortgage payment.
Detailed Construction Plans: You'll need to provide comprehensive construction plans and specifications to the lender.
Builder Approval: The lender may require your builder to meet certain qualifications and experience criteria.

Don’t get lost in the complexities of construction financing. Contact Us now and speak to The Texas Mortgage Pros!

Other Loans Available in Texas

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Building your dream home in Texas should be exciting, not stressful. With our construction-to-permanent loans, you can lock in your rate, simplify the process, and save on closing costs. We make building your future easy.

Two Types of Construction Loans in Texas

When it comes to financing your new home construction in Texas, understanding the different loan options is crucial. There are two primary types of construction loans available:

01 | Construction-to-Permanent Loans:

One-Time Close Convenience: Often called "one-time close" or "single-close" loans, these combine the financing for land purchase and construction into a single loan with one closing. This streamlined approach simplifies the process and saves you time and money.
Simplified Qualification: You only need to qualify once for both the construction phase and the permanent mortgage, making the process smoother and reducing the risk of needing to re-qualify later.
Fixed Interest Rate: Lock in your interest rate upfront, providing stability and predictability throughout the construction process and beyond.
Reduced Closing Costs: With only one closing, you'll save on closing costs compared to a stand-alone construction loan.
Single Appraisal: Only one appraisal is required, further reducing costs and streamlining the process.

Construction-to-permanent loans have many benefits. They are a popular choice for many borrowers. These benefits include a simpler process, cost savings, interest rate security, and lower risk.

02 | Stand-Alone Construction Loans:

Two-Step Process: This traditional approach involves two separate loans: one for the construction phase and another for the permanent mortgage.
Two Closings: Be prepared for two separate closings, each with its own set of fees and closing costs.
Fluctuating Interest Rates: You typically cannot lock in your interest rate for the permanent mortgage upfront, leaving you exposed to potential interest rate increases during the construction period.

Pre-Qualify

Get Pre-Qualified Now

Ready to take the next step toward homeownership? Get prequalified and prepared to build your dream home in just a few minutes. Find out how much you can invest in your future.

Discover your qualification amount in 10 minutes or less with our easy, online pre-qualification process.

Get an instant estimate of how much you can qualify for, streamlining your home-buying journey.

Partner with our experienced, local loan experts who are dedicated to providing personalized and knowledgeable support.

Count on us to guide you smoothly through the process, ensuring your loan closes on time, every time.

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Build Your Dream Home with Confidence

Building a new home is an exciting endeavor. By understanding the different types of construction loans available, the requirements, and the advantages of a one-time close loan, you can make informed decisions and secure the best construction loans in Texas for your unique needs. Partner with an experienced lender who can guide you through the process and help you turn your dream home into a reality.

Your Guide to Construction Loans in Texas with the Pros!

Choosing the right lender is crucial when securing the best construction loans in Texas. Look for a lender with:

Experience with Construction Loans: Seek out a lender specializing in construction financing with a proven track record.
Competitive Interest Rates and Terms: Compare rates and terms from multiple lenders to find the best deal.
Excellent Customer Service: Choose a lender that is responsive, communicative, and dedicated to guiding you through the process.
Flexible Draw Schedules: Ensure the lender offers flexible draw schedules that align with your builder's needs.

Construction Loan Down Payment

The down payment for construction loans in Texas can vary, but here are some general guidelines:

Conventional Construction Loans: Typically require a down payment of 20% or more.
Government-Backed Loans (FHA, VA, USDA): May offer lower down payment options, sometimes as low as 3.5% for FHA loans and 0% for VA loans.
Land Equity: If you already own the land, you may be able to use your equity to meet the down payment requirement.

Construction Loan Draws and Inspections

During the construction phase, your lender will disburse funds to your builder in stages, known as “draws.” These draws are typically tied to specific milestones in the construction process. The lender will conduct inspections to verify the progress before each draw is released. This ensures that the funds are used appropriately and that the construction is proceeding according to plan.

Avoid Intervening Liens with a One-Time Close Construction Loan

An intervening lien can occur when a subcontractor or supplier isn’t paid for their work or materials and places a lien on your property. This can complicate matters and delay your project. With a one-time close construction loan, the risk of intervening liens is significantly reduced because the permanent financing is already in place, ensuring that funds are available to pay all parties involved.

Your Partner in New Construction Loans

At The Texas Mortgage Pros, we specialize in providing the best construction loans in Texas. Our team of experienced mortgage professionals is dedicated to helping you navigate the construction financing process with ease. Contact us today to learn more about how we can help you build the home of your dreams.