How Construction Loans Work in Texas

The three stages of a build loan

1. The land. Buy a lot outright, finance it with a lot loan, or use land you already own.
2. The build. An interim construction loan funds the project in draws. Each draw is released after work is completed and inspected.
3. The permanent mortgage. When the home is complete, a long-term mortgage pays off the construction loan. We can help you line that up from day one.

How much can you finance?

Financing is based on the lesser of loan-to-cost or loan-to-value. Loan-to-cost is the total project cost (lot plus construction). Loan-to-value is the appraised value of the finished home. On our Top Notch Build™ program, lot and construction financing goes up to 85%, and lot-only financing goes up to 75%.

What you will need

• A signed construction contract with the builder's cost breakdown
• Plans and specifications
• Builder information and references
• A survey and lot details (utilities, access, flood zone)
• Standard income, asset and credit documentation

Using land you already own

If you own your lot free and clear, or with a small balance, its value can count toward your equity in the project. That can reduce the cash you need to bring to closing.

Common mistakes to avoid

• Signing a builder contract before talking to a lender
• Underestimating site work: driveways, septic, wells, utility runs
• No contingency in the budget for overruns
• Not planning the permanent loan until the house is finished

See the full Top Notch Build™ program, or read how to finance land in Central Texas.

Program guidelines as of October 2026 and subject to change. Not all applicants will qualify.

Common questions

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