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Texas builds more new homes than any state in the country, and finding a lender who can genuinely finance a custom build here is still one of the hardest calls in mortgage shopping. The problem is not a shortage of advertisements. It is that “construction loans” on a Texas lender’s website usually means one of three very different things: a real single-close construction-to-permanent loan, a short-term bank note that forces a second closing later, or a referral to somebody else after they have held your file for three weeks.
I am Garrett Puckett, Founder and CEO of Security America Mortgage, the Texas VA specialist behind Texas VA Mortgage. Construction lending is our core national business, and Texas is where most of it happens. This page explains who actually lends on construction in this state, the Texas-specific rules that trip up out-of-state lenders, and the short list of questions that separates closers from advertisers in one phone call.
The Texas Construction Lender Landscape
Five kinds of lender advertise construction financing in Texas. They are not interchangeable, and the differences show up in your down payment, your number of closings, and whether you make payments while the house is still a slab.
Local and Regional Texas Banks
The traditional source, and still the right answer for some borrowers. Texas banks typically offer interim construction financing: a short-term note during the build, often at a floating rate, with 20 to 25 percent down and a second closing into permanent financing at completion.
Texas Credit Unions
Hit or miss by institution. A handful run genuine single-close programs for members; most offer nothing or mirror the bank model.
National Mortgage Lenders
The widest gap between advertising and capability lives here. Many quote "construction loans" and deliver a referral or a two-close structure once the file develops.
Specialist Construction-to-Permanent Lenders
Lenders whose core business is the single-close loan: one closing, financing locked before ground breaks, in-house builder qualification and draw administration.
Hard Money and Private Lenders
Real tools for spec builders and investors at 10 to 13 percent plus points.
One Texas-specific note: the VLB does not do construction. The Texas Veterans Land Board finances land purchases and existing-home purchases, and its home loan program cannot fund a build. Veterans holding a VLB land loan routinely pair it with a VA construction loan that pays the land note off at the construction closing, a sequence we run constantly.
Construction Loan Types We Offer in Texas
Four programs, one structure. Each is available as a single-close build with financing set before ground breaks, so the right program comes down to your credit, your cash, and your eligibility.
Conventional Construction Loans
The workhorse for borrowers with solid credit and cash: typically 10 to 20 percent down depending on the program and file, available as a true single close with the rate structure set before ground breaks. No income caps, no location restrictions, no funding fee, and the right answer for many second-home builds, higher loan amounts, and veterans in the specific situations covered below.
FHA One-Time Close Construction Loans
The low-down-payment path for non-veterans: 3.5 percent down on a single-close build, with FHA's flexible credit standards. Mortgage insurance applies as on any FHA loan. Full program details are on our FHA One-Time Close guide.
USDA One-Time Close Construction Loans
$0 down construction for eligible rural and outer-metro areas, subject to USDA income limits and property eligibility maps, which cover more of Texas than most borrowers expect: large stretches of the land counties where custom builds happen anyway. Ask us to run your site and income against the maps in one call.
VA Construction Loans
For eligible veterans and service members: $0 down, no mortgage insurance, and no payments during construction on a single-close build. If you are a veteran comparing lenders for this specific program, our dedicated guide to VA construction loan lenders covers that decision in full.
One-Time Close vs. Two-Time Close Construction Loans
Every construction loan in Texas is one of two structures, whatever the program behind it.
Two-Time Close
A short-term construction note now, a full refinance into permanent financing at completion. Two closings, two sets of costs, and requalification at the end at whatever rates and life circumstances exist then.
This is the default structure at most banks, because short-term paper suits their balance sheets, and some borrowers genuinely want to shop the permanent loan later. For most owner-occupants it is strictly worse, and it is often presented as if no alternative exists.
One-Time Close
One loan, one closing, one set of costs: the loan funds the build and converts automatically into the permanent mortgage, with financing locked before ground breaks. No requalifying after construction, no exposure if rates rise or your income changes mid-build.
| Feature | Two-Time Close | One-Time Close |
|---|---|---|
| Closings | Two | One |
| Closing costs | Two sets | One set |
| Requalifying at completion | Yes | No |
| Rate structure | Permanent rate set months later | Locked before ground breaks |
| Exposure if rates or income change mid-build | Yes | No |
We structure our conventional, FHA, USDA and VA construction lending as a one time close construction loan because, priced across the whole project, it wins for nearly every family building a home they intend to live in. Run your own budget with our construction loan calculator.
What Makes Texas Construction Lending Different
Four things separate a lender who closes Texas builds from one who learns on your file.
Homestead contract timing
Texas homestead law protects owners by requiring the construction contract to be properly executed before any work begins or materials are delivered, with both spouses signing when the owner is married. Get the sequence wrong and the builder's lien position, and the loan built on it, has a problem.
Foundations are an engineering event
Expansive clay soil across North, Central, and East Texas means engineered slab designs, soil testing, and foundation warranties are standard parts of a fundable Texas build budget.
Coastal wind requirements
Builds in the seacoast counties carry TWIA windstorm certification requirements, WPI-8 inspections during construction, and insurance costs that belong in the budget from day one.
Rural utilities and access
The land counties where Texas builds happen, from Parker County to Grimes to Medina, run on wells, septic systems, and county road access.
Model the whole budget before you commit. Foundation engineering, windstorm compliance, and well and septic costs all belong in the number. Our VA construction loan calculator and builders map are built around exactly these Texas line items.
Construction Loan Down Payment and Requirements in Texas
The program, not the negotiation, sets the number:
| Program | Down Payment | Key Requirements |
|---|---|---|
| Conventional | 10 to 20% | Credit commonly 680 plus; no income or location limits |
| FHA one-time close | 3.5% | The most flexible credit standards in construction lending; FHA mortgage insurance applies |
| USDA one-time close | $0 | Property must sit in USDA-eligible territory and household income within county limits |
| VA | $0 | Eligible veterans with full entitlement; our minimum score is 640; no mortgage insurance |
| Texas bank interim notes | 20 to 25% | Regardless of who you are, plus the second closing |
Every program adds the construction-side requirements:
Have your paperwork ready with our documents checklist, or get a written quote on your scenario.
The VA One Time Close: $0 Down for Texas Veterans
For eligible veterans and service members, no construction financing in Texas competes with the VA construction loan, and it is the program we are known for nationally.
Land purchase or land payoff plus the full construction budget in a single transaction that converts automatically to your permanent mortgage.
Against the 20 to 25 percent Texas banks require.
Construction period interest is handled inside the project structure, not billed to you monthly.
Since March 2025 the VA no longer issues Builder IDs. We vet your builder directly on licensing, insurance, experience, and budget, usually within days.
And the funding fee is waived for veterans receiving VA disability compensation.
VA One Time Close vs a Texas Bank Interim Note
| Feature | Typical Texas Bank Interim Note | VA One Time Close |
|---|---|---|
| Down payment | 20 to 25 percent | $0 with full entitlement |
| Closings | Two: construction note, then permanent loan | One |
| Payments during build | Monthly interest on drawn funds | None |
| Rate during construction | Often floating | Permanent structure locked before ground breaks |
| Builder qualification | Varies by bank | Vetted directly by us |
| Mortgage insurance | Depends on the permanent loan | None, ever |
The Texas math makes it sing: an acre in Weatherford, Springtown, Magnolia, or Marion plus a custom build regularly totals at or below used inventory in the nearest suburbs, on a home built to current code with an engineered foundation. Eligibility runs through your Certificate of Eligibility and our credit minimum is 640. See our VA loan facts and documents checklist to prepare, or browse best neighborhoods in Texas for land-county ideas.
When a Veteran Should Consider a Conventional Construction Loan Instead of VA
We are a VA specialist saying this in print: the VA construction loan is the strongest program on this page, and it is still not the answer for every veteran. Price the conventional side when:
The VA funding fee on subsequent use is 3.3 percent; a veteran with strong equity and no exemption sometimes nets out better conventional, and the only way to know is both quotes on the same day.
VA construction requires owner occupancy; conventional does not.
To use on a purchase elsewhere while this build runs.
On some jumbo-range builds with excellent credit, conventional pricing competes hard.
We write both, so the comparison costs you one call instead of a sales pitch. See our VA loan vs conventional loan guide for the full side-by-side, or call (888) 295-4055.
Owner-Builder and Self-Build Loans in Texas
Texas does not license residential builders at the state level, which makes "can I be my own general contractor" a bigger question here than anywhere. The honest lending answer: most programs, including the VA single-close, require a qualified builder rather than an owner acting as their own GC, because the lender is underwriting the builder's ability to finish the project as much as your ability to pay for it.
✓ Standard Programs, Including VA
Require a qualified builder under a fixed-price contract. The lender underwrites the builder's ability to finish as well as your ability to pay.
⚠ True Owner-Builder Loans
Exist through a small set of Texas banks and private lenders, typically demanding documented construction experience, 20 to 30 percent down, and tighter draw controls.
The workable middle path: a licensed builder contract with owner-performed line items negotiated in, which keeps the loan inside standard programs. We will tell you in one call which side of that line your plan falls on. Not sure how to find a qualified builder? Start with our builders map.
Land and Construction Together
The question behind "land and construction loans texas": can one loan buy the dirt and fund the build? With a true single-close, yes. The VA One Time Close purchases the land and finances construction in the same transaction, or pays off a land note you already carry, including a VLB land loan.
When the right tract shows up before the build plans do, Texas veterans use a two-step path:
Buy the Land With the VLB
Use the Texas Veterans Land Board land program, which requires 5 percent down, and hold the tract while plans come together.
Build With a VA Construction Loan
The VA One Time Close pays the land note off at the construction closing and funds the build in the same transaction.
Texas Construction Loan Rates
Two structures, two rate realities. Bank interim notes typically float during construction, prime plus a margin, repricing your budget with the market, then a second closing sets the permanent rate at whatever exists months later. Single-close programs lock the permanent structure before ground breaks, and on the VA version the construction period generates no borrower payments at all, which makes the "what is the construction rate" question disappear from your monthly budget entirely.
Rates for either structure move daily with the bond market, so any page quoting a number is quoting history. What to compare instead:
Priced across the whole project, the structure choice routinely outweighs a quarter point of rate. Run your own numbers with the VA construction loan calculator, or compare against a conventional path in our VA vs conventional guide.
The Questions That Expose a Pretender
Ask every Texas construction lender these, including us:
Answer all ten specifically. Numbers, structures, and names, not scripts.
Transfer you after question three, and the specialist who will call you back never carries good news.
Pricing a Texas build? Call (888) 295-4055. Same day answers on structure, builder qualification, and a written quote, whether your land sits in Parker County, the Hill Country, or a Cibolo builder community. Or get a quote online.
Texas Construction Loans: Common Questions
Many Texas community and regional banks offer interim two-close construction notes with roughly 20 to 25 percent down. Specialist lenders offer single-close alternatives at lower down payments; compare both structures the same day before committing to two closings.
A construction-to-permanent loan without government backing: typically 10 to 20 percent down, credit around 680 plus, no income or location limits, and available as a true single close.
Yes. The FHA one-time close finances land and build in one closing with 3.5 percent down and flexible credit standards, through specialist lenders rather than most banks.
Yes, in USDA-eligible areas, which include much of rural and outer-metro Texas: $0 down single-close construction, subject to income limits and property maps.
A construction note now and a separate permanent refinance at completion: two closings, two cost sets, and requalification at the end. Banks default to it; single-close structures exist across every major program and usually win for owner-occupants.
By program: 20 to 25 percent at banks, 10 to 20 percent conventional single-close, 3.5 percent FHA, $0 USDA in eligible areas, $0 VA for eligible veterans.
Commonly 680 plus at banks and for conventional; government single-close programs run more flexible, and our VA minimum is 640.
A few banks and private lenders allow it with documented experience and 20 to 30 percent down. Standard programs require a qualified builder, with owner-performed line items as the workable middle ground.
Yes, with a single-close structure: land purchase or land payoff plus the build in one transaction, across conventional, FHA, USDA and VA programs.
Construction phases price somewhat above standard purchase rates, floating at banks and locked on single-close programs. Structure and down payment usually matter more to total cost than the rate difference.
Same Day Answers on Structure, Builder Qualification, and a Written Quote
Whether your land sits in Parker County, the Hill Country, or a Cibolo builder community, one call tells you which structure fits and what it costs.
Start Application → (888) 295-4055 Texas VA Mortgage • NMLS #355253 • Same Business Day ResponseSecurity America Mortgage, Inc. NMLS #355253. Equal Housing Lender. Texas VA Mortgage is a DBA of Security America Mortgage, Inc. This article is for educational purposes only and is not a loan commitment or an offer to lend. Loan approval is subject to credit, income, appraisal, builder review, and program requirements. Rate structures, down payments, and program availability vary by lender and are described in general industry terms. Figures reflect 2026 program rules and are subject to change. Not affiliated with or endorsed by the U.S. Department of Veterans Affairs or the Texas Veterans Land Board.