Construction Loans in Austin, Texas

A construction loan funds an eligible building project through staged draws. A one-time-close structure combines construction and permanent financing at the initial closing; a two-time-close structure uses separate construction and permanent financing. Qualification, down payment, land equity, payments, rate locks, draws, completion, and conversion terms vary by program.

How Construction Loans Work

Building a custom home requires specialized financing. Unlike a standard mortgage that funds a completed property, a construction loan releases funds in stages — called draws — as your builder completes milestones like the foundation, framing, roofing, and interior finishes.

Construction-period payments and the path to permanent financing depend on the signed loan terms. Confirm how payments are calculated, what completion conditions apply, and what information may be reverified.

Building in Austin

Austin and its surrounding communities offer outstanding options for custom home construction. From Hill Country acreage in Dripping Springs, Bee Cave, and Spicewood to established neighborhoods in Westlake, Lakeway, and Georgetown, there are build sites for every vision and budget. The region's custom home builders range from production builders to full-custom architects building one-of-a-kind homes.

Construction Loan Requirements

Down Payment and Land Equity

Down payment and land-equity treatment vary by loan type, lender, borrower, property, total project cost, appraised value, and current program. Confirm eligible land equity, required borrower funds, reserves, contingency, and cash to close for the specific scenario.

Credit Score

Credit requirements and pricing vary by lender, loan type, loan-to-value, borrower profile, project, and current program.

Builder Requirements

The lender reviews the builder and project package. Licensing, experience, insurance, financial information, references, contract, plans, specifications, and budget requirements vary by lender and program.

Plans and Specs

Complete architectural plans, specifications, and a detailed line-item budget are required before closing. The lender's appraiser will value the completed project based on these plans and comparable sales.

Construction Timeline

Construction period, extension options and costs, draw schedule, and payment calculation vary by lender, project, and program. Compare the loan timeline with the builder's written schedule.

The Build Process: What to Expect

Working with a construction lender is more involved than a standard purchase. Here's how the process works from land to keys.

1. Get pre-approved first. Before you sign a builder contract or make an offer on land, know your budget. Pre-approval also shows builders you're a serious buyer — not a tire-kicker.
2. Select your lot and builder. The lender approves both. Production builders (Lennar, David Weekley, Milestone Community Builders, Scott Felder) are pre-approved with most lenders. Custom builders submit credentials, project portfolio, and proof of insurance.
3. Lock in plans and budget. Complete architectural plans, specs, and a line-item budget go to the appraiser, who values the completed home. The appraisal is based on "as-completed" value — not current lot value — which protects your equity position from day one.
4. Construction closing. With a one-time close loan, you sign all documents — construction terms and permanent terms — at one table. Interest-only payments begin on drawn amounts immediately after closing.
5. Draw schedule. As your builder hits milestones (foundation, framing, mechanical rough-in, drywall, finishes, completion), the lender releases funds directly to the builder after inspections. Typical builds have 5-7 draws.
6. Completion and permanent financing. The lender verifies the program's completion, inspection, appraisal, title, documentation, and other conditions. Permanent-financing terms follow the signed loan documents.

Adam coordinates directly with your builder throughout the build — draw requests, appraisal scheduling, and any scope changes that require lender sign-off. You're not managing the bank relationship alone.