New Construction & Construction Loans

Whether you are building from the ground up or purchasing a completed new construction home, the financing structure matters. Construction is not a standard purchase — it has moving parts, staged timelines, and variables that require a lender who structures loans around the build process, not just the end result.

One-Time Close Construction Loans

The most common and efficient structure for building a home in Houston. You close once, the loan funds in phases during construction, and it converts to permanent financing once the home is complete. This reduces closing costs and limits transition risk.

Construction financing can be structured for:

• Lot purchase plus build
• Building on land you already own
• Owner-builder projects
• Custom home contracts with licensed builders

Underwriting is more detailed than a standard purchase. Lenders evaluate credit strength, liquidity and reserves, builder credibility, budget realism, timeline, and projected appraised value upon completion.

How Payments Work During Construction

During the build phase, borrowers typically make interest-only payments based on funds that have been disbursed. The builder submits draw requests at major milestones:

• Foundation
• Framing
• Mechanical systems (plumbing, electrical, HVAC)
• Interior completion
• Final stage

You are not paying interest on the full loan amount from day one — only on what has actually been funded.

Financing Completed New Builds

Many new construction transactions happen after the home is fully built — often called an end loan. The builder has completed the home, and you are financing it as a standard purchase with new construction considerations.

While the loan process resembles a traditional purchase, key differences include:

• Appraisal analysis relies heavily on recent new build comparables
• Builder incentives (rate buydowns, closing cost credits) must be structured correctly
• Rate strategy must align with projected completion timing
• Warranty documentation and certificate of occupancy timing must be confirmed

Lot Financing

If you are purchasing land before building, structure matters. Options include:

• A standalone lot loan
• Rolling the lot into a future construction loan
• Purchasing the lot in cash and refinancing into construction later

Loan-to-value, carry cost, and timeline must align with your build strategy.

Builder & Spec Financing

For builders constructing spec homes or small developments, we offer financing structured for the build-sell cycle. This includes construction draws, interest reserves, and exit strategies aligned with your sales timeline.

Build vs. Buy: Making the Decision

New construction is not automatically more expensive than resale when you factor in builder incentives, energy efficiency, warranty coverage, and lower near-term maintenance. The comparison should include:

• Total monthly cost including builder-subsidized rate buydowns
• Maintenance and repair costs over the first 5-10 years
• Energy efficiency savings (newer homes typically have better insulation and systems)
• Warranty coverage (most builders include structural and systems warranties)
• Customization value vs. renovation costs on resale homes

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