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Texas Construction Loans

Build or renovate your dream home with flexible construction loans: covering land, building costs, and permanent financing in one tailored package.

Build Your Dream Home in Texas with Confidence

Imagine stepping into a home that’s perfectly designed for you, built exactly where you want it, with every detail reflecting your vision. Building a new home in Texas is an exciting journey, and securing the right financing is a critical first step. At The Texas Mortgage Pros, we specialize in helping Texans like you navigate the complexities of construction loans, turning your blueprint into reality.

You have a dream of a custom-built home, and we have the financing solutions to help you achieve it. Construction loans are specifically designed to fund the process of building a new property from the ground up. This means the funds are typically disbursed in stages, or “draws,” as your builder completes different phases of construction, from laying the foundation to the final touches.

Construction Loan Requirements in Texas

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

  • Good Credit Score: Your strong credit history is a critical factor when applying for a mortgage, signaling to lenders your reliability in managing financial obligations. Aiming for a credit score of 680 or higher can significantly enhance your eligibility and open the door to more favorable interest rates and loan terms tailored to your needs.
  • Down Payment: The exact amount required will vary depending on the specific construction loan program and lender you choose, but you should generally be prepared to contribute at least 20% of your total project cost.
  • Debt-to-Income Ratio (DTI): Lenders review your Debt-to-Income (DTI) ratio to confirm you can comfortably handle your new mortgage payment alongside existing debts. Generally, you'll find lenders prefer your DTI to be below 45% to ensure financial manageability.
  • Detailed Construction Plans: You'll need to provide us with comprehensive construction plans and a detailed, realistic budget for the project. These crucial documents allow the lender to fully understand your vision and ensure a smooth loan approval process.
  • Builder Approval: Lenders typically require your builder to meet specific qualifications and experience standards to ensure the project's success. This means you will need to work with a licensed and insured contractor who is approved by the lender before construction can begin.

Contact our Construction Loan Specialists to discuss your loan options and take the first step toward turning your dream home into a reality!

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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. 

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Types of Construction Loans in Texas

Navigating the world of construction financing might seem complex, but you don’t have to figure it out alone. The Texas Mortgage Pros is here to guide you through the options and help you select the type of construction loan that best suits your project, timeline, and financial goals.

Construction-to-Permanent Loans:

  • One-Time Close Convenience: With a one-time close loan, you apply and close on your financing just once, before construction begins. The loan initially functions as a construction loan, funding the building process through scheduled draws. Once your home is complete, the loan automatically converts into a permanent mortgage – all under the same initial loan terms and often with an interest rate locked in upfront.
  • Simplified Qualification: You save time and money by avoiding a second closing and paying only one set of closing costs. You also gain peace of mind by securing your long-term interest rate before construction volatility.
  • Fixed Interest Rate: Secure your interest rate from the start, giving you financial stability and peace of mind throughout the entire construction period and long after your home is complete. With an upfront rate lock, you'll protect yourself from market fluctuations, ensuring predictability in your budget and confidence in your financial planning as you build your dream home.
  • Reduced Closing Costs: With only one closing through a construction-to-permanent loan, you'll significantly reduce your expenses by paying closing costs just once. This streamlined approach not only simplifies the financing process but also saves you thousands compared to traditional stand-alone construction loans, which typically require separate closings
  • Single Appraisal: You’ll only need a single appraisal for your construction-to-permanent loan, which significantly lowers your upfront expenses and simplifies the overall process. By eliminating the need for multiple appraisals, you'll save both valuable time and money, keeping your project moving smoothly and efficiently toward completion.

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.

Stand-Alone Construction Loans:

  • Two-Step Process: You obtain a short-term loan to cover the costs of construction. Once construction is compelete, thie loan is paid off, and you need to apply for and close on a separate long-term permanent mortgage.
  • Two Closings: This path involves two separate application and closing processes, meaning two sets of closing costs and the risk that market conditions or your financial profile could change, impacting your ability to qualify for the permanent loan.
  • 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.

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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.

  • Find Out Your Loan Qualification Quickly

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

  • Instant Qualification Results at Your Fingertips

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

  • Work with Award-Winning Loan Officers

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

  • Close Your Loan in 30 Days or Less

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

Whether you’re envisioning a custom-built home or planning to renovate an existing property, our construction loan options are designed to meet your unique needs. We offer flexible financing solutions that cover land purchase, construction costs, and even permanent mortgages, all tailored to your specific project.

Why Choose The 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: You don't have to navigate the complexities of construction financing alone, we handle the details for you. Trust a lender specializing in construction loans with a proven track record to guide your build with confidence.
  • Competitive Interest Rates and Terms: Get more than just a rate, get a financial advantage. We help you access some of the most competitive rates in Texas, personalized completely around your financial profile, so your mortgage is a powerful tool for achieving your homeownership goals.
  • Local Knowledge: Navigating construction financing requires local insight, and our deep understanding of the Texas market gives you a significant advantage. We use this expertise to analyze your project and connect you with personalized loan options, ensuring you have the right financing strategy for your unique Texas build with confidence.
  • Efficient Process: Keeping your construction project on schedule is paramount, and we make it a priority. Count on us for quick loan approvals and punctual closings, allowing your builder to stay on track and bring your dream home to life efficiently.
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Construction Loan Down Payment

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

  • Conventional Construction Loans: When financing your new construction, expect that you'll typically need a down payment of 20% or more. This amount can vary based on the specific loan program, but it's a standard requirement that helps you secure financing and build immediate equity in your custom home.
  • Government-Backed Loans (FHA, VA, USDA): Depending on your eligibility, lower down payment options are available for you. You could potentially build your home with as little as 3.5% down through FHA construction programs, or even achieve your dream with 0% down if you are a qualified veteran utilizing VA construction loan benefits. or using a USDA construction loan.
  • Land Equity: If you already own the land for your future home, you have a significant advantage! The equity you hold in your land can often be leveraged and applied directly toward the down payment requirements for your construction loan.

Construction Loan Draws and Inspections

You won’t hand your builder one lump sum; instead, your lender manages the funding through a structured process of “draws.” Think of these draws as phased payments released to your builder in stages as specific construction milestones are completed on your new home. Before any funds are disbursed for a given stage (like the foundation poured, framing completed, or roof on), your lender will coordinate an inspection. This crucial step verifies that the work aligns with your approved plans and budget.

This meticulous draw and inspection process is designed to protect your investment and the lender’s by ensuring funds are used appropriately and that your dream home is being built correctly, giving you confidence and transparency throughout the construction journey.

Protect Yourself from Unexpected Liens with a One-Time Close Construction Loan

A potential concern during construction is the risk of an intervening lien. This can occur if a subcontractor or supplier isn’t paid by the builder for the work or materials they’ve provided, leading them to place a legal claim, or lien, directly against your property. This unfortunate situation can cause significant headaches, complicating your project and leading to unwelcome delays. However, by choosing a one-time close construction loan, you gain a crucial layer of protection. Because your permanent mortgage financing is fully approved and secured from day one, it significantly reduces the risk of these intervening liens by ensuring that the necessary funds are available and accounted for to pay all parties involved appropriately upon the project’s completion, giving you greater peace of mind throughout the build.

Your Partner in New Construction Loans

At The Texas Mortgage Pros, we offer exceptional construction loan solutions designed specifically for Texas homeowners. Our team of dedicated mortgage specialists is committed to guiding you smoothly through every step of the construction financing journey. Reach out today and let us help you turn your dream home into a reality.

 

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The content provided within this website is presented for information purposes only. This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. Other restrictions may apply. 

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