6 Best Construction Loans in Texas

The state of Texas is currently going through a population boom. According to U.S. housing data,Texas new housing authorizations represented 15.3% of all new housing in the United States. Texas recorded 265,955 new housing authorizations in 2021, with 179,620 or 67.5% of the units being single-family homes. 

As Americans continue to flock to Texas from other states, the valuation for the average single family home build in Texas was $236,092 according to recent data. Many people pulling up stakes for Texas are enjoying finding a piece of open land and building their dream home, rather than entering the pre-owned housing market for real estate. To finance these construction projects, Texans are turning to construction loan financing to buy the land and build the houses.

Everything is bigger in Texas, and many banks offer various options that allow homebuyers to build the home of their dreams. Many Texas banks have expertise funding specialized construction projects and can help you navigate the application, qualification, and funding process. 

If you’re a homebuyer or home builder looking for a construction loan specialist in Texas, we can quickly connect you with several options customized to your specific needs so that you can make the best decision for you.

Benefits of a new construction loan in Texas

As one of the largest states in the country, Texas is home to a booming construction industry. In order to keep up with the demand, construction loans are becoming more popular. If you work with a loan officer who has a great deal of experience in the loan process, you’ll find that making your custom home perfect through construction is possible. Here are some of the benefits of using a construction loan in Texas:

• Construction loans can be used for a variety of purposes, including building a new home, renovating an existing home, or even making additions or repairs to a property.

• Construction loans can be used for both residential and commercial projects.

• Construction loans can be either short-term or long-term, depending on the needs of the borrower.

• Construction loans can be either fixed-rate or variable-rate, depending on the market conditions at the time of borrowing.

• Construction loans in Texas typically have lower interest rates than other types of loans, such as home equity loans or personal loans.

• Construction loans can be used to finance the entire project, or just a portion of it.

• Construction loans can be used to finance the construction of a new home, as well as the purchase of the land.

• Construction loans can be used to finance the construction of a home on a leased lot.

• Construction loans can be used to finance the construction of a home on a vacant lot.

• Construction loans can be used to finance the construction of a home on a short-term basis, such as for a vacation home.

One of the biggest advantages of Texas construction loans is that they can be used to finance the purchase of a property, as well as the construction costs associated with that property. This can provide a significant financial advantage to buyers who might not otherwise be able to afford the total cost of the purchase and construction, especially larger homes in Texas.

If you are considering a construction project in Texas, be sure to talk to an experienced construction lender about the possibility of taking out a construction loan. Getting credit approval relies on a good credit score and your debt-to-income ratio. Finding a mortgage lender who has experience with construction loans is highly recommended. Your loan officer might have access to calculators to tell you more about your rate and expected mortgage payments. Thankfully, there are several loan programs for construction loans in Texas to make this process easier.

6 Best Construction Loan Lenders in Texas

1. American National Bank & Trust

American National Bank & Trust has a construction loan product that offers Texans a way to purchase land, build new construction or both. Some of important terms are:

• Up to 90% financing for construction loans
• Can work with low credit scores in certain circumstances
• Land loans are available as bridge loans for people who want to buy the land today and build in the future
• Single application, approval and closing process.

If you’re interested in learning more, you can reach them at 1-940-397-2300.

When you’re ready to connect with a loan officer, use our form to quickly match with construction loan programs based on your specific circumstances.

2. Randolph-Brooks Federal Credit Union (RBFCU)

RBFCU is a financial cooperative in Texas that has presence in Austin, Corpus Christi, Dallas-Fort Worth and San Antonio. They originally only worked with members of the military but there are now multiple ways to achieve eligibility.

The bank offers a one-time close construction loan that begins with a short-term, fixed-rate construction period and ultimately converts to a permanent fixed-rate mortgage upon completion of the construction. You will make interest-only payments on a schedule that follows stages of the home’s construction. They can finance up to 90% of the value of the home.

If you’re ready to apply with RBFCU, you’ll need the following information:

• The amount you would like to borrow
• The number of years you want to finance your loan (term length)
• Your current employment and income information
• Your phone number and email
• Information for joint borrowers you plan to include on the mortgage loan (including date of birth, address, income and employment, Social Security number and contact information; if applicable)
• An idea of the total amount you would like for your loan and monthly payments

When you’re ready to connect with a loan officer, use our form to quickly match with construction loan programs based on your specific circumstances.

3. Amegy Bank

Amegy Bank offers a one-time close construction loan that includes the permanent loan, construction loan and lot purchase in the same loan. They can also help you buy a lot if you’re not ready to deal.

Some of the terms for the Amegy Bank construction loan are:

• Available for new home construction or major remodeling projects.
• Low fixed rate during construction period.
• Low down payment options available.
• No maximum construction loan amount.
• Initial construction phase has one extension available.
• Construction disbursements to your builder are processed by Zions Bank.

When you’re ready to connect with a loan officer, use our form to quickly match with construction loan programs based on your specific circumstances.

4. Texas Regional Bank

A relatively new bank, Texas Regional Bank started in 2010 and has grown to 22 banking centers across the Rio Grande Valley and the Texas Hill Country. They offer a construction loan product but the details are sparse.

Here are some of the features:

• Lock in an interest rate at the beginning of the process.
• Single set of closing costs to cover the construction financing and the permanent mortgage.
• Single application process for the construction to permanent loan product.

If you want more details about their program, you can reach them at 1-800-580-6536.

When you’re ready to connect with a loan officer, use our form to quickly match with construction loan programs based on your specific circumstances.

5. Texas Bank

Texas Bank started in Tatum, Texas but has expanded to 11 locations in East Texas and the Dallas area. Once you’re ready to build your home, Texas Bank has a construction loan that allows you to build a primary residence or second home.

Some of the details provided by Texas Bank include:

• Payments are interest-only during construction phase
• Construction draws applied in stages based on work completed
• Local processing
• Personal service for the life of the loan

If you want to learn more about the Texas Bank construction loan, you can reach the bank at 1-844-319-6684.

6. American National Bank of Texas

The American National Bank of Texas (or ANBTX) has a construction loan product that offers flexibility for Texans looking to either buy land, build new construction or both. Some of important terms are:

• Up to 95% financing for construction loans
• Land loans with up to 85% financing in terms of 5, 15 or 30 years.
• One application, one approval and one closing process.

If you’re interested in learning more, you can reach them at 1-800-837-6584.

When you’re ready to connect with a loan officer, use our form to quickly match with construction loan programs based on your specific circumstances.

Does a Texas construction loan make sense for you?

Another factor to consider is the interest rate. Construction loans typically have higher interest rates than conventional mortgages, so you’ll need to factor that into your budget. The good news is that the interest is usually only charged during the construction phase, so once your home is completed, you can refinance into a conventional mortgage with a lower interest rate.

Another thing to keep in mind is that construction loans are usually short-term loans, so you’ll need to have a plan in place for how to pay off the loan once construction is complete. One option is to sell the home and pay off the loan with the proceeds. Another is to refinance into a conventional mortgage.

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