Can You Finance Building a Custom Home in Texas

If you're planning your dream home in the Lone Star State, one of the first questions you may ask is, can you finance building a home? The short answer is yes. With the right lender and plan, financing a custom home is not only possible but also a smart way to manage your investment over time.

In this guide, we explain the basics of home construction loans, the benefits of a construction to permanent loan in Central Texas, and how Spring Lake Custom helps homeowners navigate the financial journey. Whether you're comparing loan types or learning how to finance building a house in Texas, this article is designed to give you clarity and confidence.

Understanding Construction Loans

A construction loan is a short term loan that covers the cost of building a home. These loans are typically disbursed in stages as construction progresses, with funds released after key milestones like foundation work, framing, and roofing.

Key Features of Construction Loans:

• Short term (usually 6 to 18 months)
• Interest only payments during the construction phase
• Funds released in "draws" as each phase is completed
• Higher interest rates than traditional mortgages
• Close monitoring of the project by the lender
  
  

Unlike traditional home loans, construction loans are riskier for lenders, so they often come with stricter requirements and oversight. Borrowers usually need a solid credit history, a qualified builder, and a well defined construction plan.

Construction-to-Permanent Loans Explained

If you want a smoother financing process, a construction to permanent loan might be the best fit. Also known as a "one time close" loan, this option combines two steps into one.

How It Works:

1. You apply for a single loan before construction begins
2. The lender funds construction through draw payments
3. Once construction is complete, the loan automatically converts to a traditional mortgage
   

Benefits:

• One closing means fewer fees and less paperwork
• Lock in your mortgage rate early
• Simplified process for budgeting and payments
  

This option is especially popular for custom home financing in Texas, where timelines and build scope vary widely.

Down Payments, Rates, and Terms

When it comes to financing, understanding the details can save you time and money. Here’s what to expect:

Down Payments:

• Most lenders require 10 to 20 percent down
• The exact amount may vary based on your credit, lender, and loan type
• Land value can often be used as equity toward the down payment
  

Interest Rates:

• Typically higher than mortgage rates during construction
• Once converted, permanent loan rates depend on market conditions at closing
  

Loan Terms:

• Construction phase: 6 to 18 months
• Permanent phase: 15 to 30 year fixed or adjustable rate mortgage
  

For a better understanding of the financial scope, refer to our guide on How Much Does It Cost to Build a Custom Home.

Financing Tips for Central Texas Homeowners

Navigating financing options in Central Texas means working with lenders who understand the regional market and building trends. Here are a few essential tips:

• Get Pre Approved Early: Know your budget before you begin design
• Choose a Reputable Builder: Most lenders require a qualified builder like Spring Lake Custom
• Work with Local Lenders: They understand zoning, land values, and common construction timelines
• Stay Flexible: Build timelines can shift, so ensure your loan terms provide room for adjustments
• Track Draw Schedules Closely: Work with your builder to ensure smooth draw request timing
  
  

Following these tips will make it easier to stay on budget and avoid financing delays during construction.

How We Support You During the Financing Process

At Spring Lake Custom, we believe building a home should be exciting, not overwhelming. That is why we guide our clients through every stage of the financing journey.

What We Do:

• Builder Documentation: We provide all necessary certifications, plans, and cost estimates for your lender
• Timeline Coordination: We align construction milestones with your draw schedule
• Lender Communication: We coordinate directly with your loan officer to ensure smooth processing
  Client Support: Our team answers questions, clarifies budgets, and helps you prepare for each step
  
  

See what other homeowners say about our service on our Testimonials page, or reach out through our Contact Us form to get started with a consultation.

Conclusion

Yes, you can absolutely finance building a home in Texas. From standalone construction loans to convenient construction to permanent options, there are multiple paths to funding your custom dream home. The key is understanding your choices, preparing ahead, and partnering with a builder who knows the local market.

At Spring Lake Custom, we are here to simplify the process and help you build with confidence. If you are ready to take the next step, connect with us today.

‍