Construction Loans in Texas

Building your own home is one of the most rewarding paths to homeownership — but it requires the right financing. Construction loans are designed to fund the cost of land, building materials, labor, and everything needed to turn your plans into a completed home.

I offer several types of construction financing, including construction-to-permanent loans and stand-alone construction loans, giving Texas buyers flexibility depending on their builder, budget, and long-term plans.

What Is a Construction Loan?

A construction loan is a short-term loan that finances the building of a new home. Unlike a traditional mortgage, which is based on the completed value of a property, construction loans distribute funds in “draws” as work is completed.

Once construction is finished, the loan either:

Converts into a long-term mortgage (One-Time Close)
Is refinanced into a permanent loan

I’ll help you determine the best approach based on your builder, credit, and long-term financial goals.

Types of Construction Loans Available

1. Construction-to-Permanent (One-Time Close)

One loan, one closing — reduces fees
Rate can be locked before construction begins
Converts automatically into a 15- or 30-year mortgage
Easier for budgeting and long-term planning

2. Stand-Alone Construction Loan

Short-term loan for building the home
Gives flexibility to refinance later into the best rate available
Ideal if you plan to shop lenders after construction

3. Lot + Construction Combination Loans

Finance the land purchase and the construction in one package
Helpful for buyers who haven’t bought the lot yet

4. Renovation & Build-On-Your-Lot Loans

Great for major remodels, additions, or rebuilding on existing land
Funds improvements based on “after-improved value”

Construction Loan Requirements

Construction financing requires a few more steps than a standard mortgage, but I will guide you through every one of them.

Credit Requirements

Generally 680+ credit score is recommended
Stronger credit improves rates and down payment options

Down Payment

Typically 5%–20% depending on the loan type
Land equity can count toward your down payment

Builder Approval

Builder must be licensed and approved by the lender
Owner-builder programs may be available case-by-case

Documentation Required

Architectural plans & specifications
Budget / cost breakdown
Builder contract
Proof of land ownership (or executed contract)

How Construction Loans Work

A construction loan releases funds in stages as work is completed:

Land purchase (if needed)
Site prep & foundation
Framing
Mechanical systems (HVAC, electrical, plumbing)
Interior finishes
Final inspection

Each draw is inspected by the lender or a third party to ensure the work is complete before releasing the next portion of funds.

Construction Loan Advantages

Build your dream home exactly the way you want it
Lock in rates early with one-time-close options
Use land equity toward down payment
Interest-only payments during construction
Finance the entire project under one loan

Construction Loan Considerations

More documentation required than standard mortgages
Must work with an approved builder
Interest-only payments during construction period
Appraisal based on “as-completed” value

I’ll guide you through every detail to ensure a smooth experience from blueprint to move-in.

Construction Loan vs. Buying an Existing Home

A construction loan may be better if you want to:

Customize every feature of your home
Choose your own land or build in a growing area
Take advantage of builder incentives or upgrades
Build a more energy-efficient home

Buying an existing home may be better if you want:

A faster move-in timeline
Lower upfront costs
Less involvement in the building process

Not sure which is right for you? I’ll walk you through both scenarios.

Ready to Start Your Construction Loan Pre-Approval?

Building a home is a major milestone — and choosing the right financing is just as important as choosing the right builder. I’ll help you understand your options, structure your budget, and guide you from the first draft to the final walkthrough.

Apply Online:
https://wayne-wallace.com/apply

Schedule a Call:
Schedule a 30-Minute Consultation

Let’s turn your plans into the home you’ve always dreamed of.