Starting from scratch offers unparalleled control. Whether you’re constructing a custom home, multifamily unit, or commercial space, a ground-up construction loan in Texas provides the financing to bring your vision to life.
With Park Place Finance, you gain a trusted lending partner who understands the unique dynamics of Texas real estate markets.
Start your application with Park Place FinanceUnderstanding Texas construction loans
To start on your construction loan, you’ll first need to evaluate capital needs for a ground-up project. This involves creating a detailed budget that encompasses every phase, from land purchase to final finishes.
At Park Place Finance, our loans cover land acquisition, site work, and building costs. We use draw-based funding and interest-only payments during construction. These loans require 20–30% equity, staged disbursements, and flexible terms from 12 to 24 months.
Our Texas-based advisors guide you through every step for a smooth financing experience.
Why is Texas a top state for ground-up construction?
Texas is a builder’s dream. Cities like Austin, Dallas, and Houston consistently rank among the fastest-growing metros in the country.
This rapid expansion drives a continuous need for housing, office space, and infrastructure.
Why build in Texas?
- Affordable land in suburban and rural areas
- Pro-development regulations that ease permitting
- A booming economy supported by diverse industries
- High appreciation potential in popular growth corridors
For example, the Austin-Round Rock metro area has experienced strong population and job growth, prompting demand for new residential and mixed-use projects.
In the suburbs around Dallas-Fort Worth, builders benefit from rising home values and competitive rental markets.
With the right financing, investors and developers can capitalize on these opportunities.
What is a ground-up construction loan?
A ground up construction loan is a short-term loan designed to finance a property from the raw land stage through to full completion.
Unlike rehab or fix-and-flip loans, these loans are ideal for projects that start without any existing structures.
What these loans typically cover
- Land acquisition costs
- Architectural plans and permits
- Site prep and infrastructure
- Building materials and labor
Loan terms for ground-up construction
- Draw-based funding in stages
- Interest-only payments during construction
- Terms from 12 to 24 months
- Exit via property sale or long-term refinance
Some lenders offer construction-to-permanent loan options, which convert the short-term construction loan into a permanent mortgage upon project completion.
Requirements to secure a construction loan
At Park Place Finance, we look for clear evidence that your ground-up project—and you as the borrower—are ready to move forward. To qualify, you’ll need:
- Minimum credit score: 680+ (higher scores improve pricing)
- Equity contribution: 20%–30% down, based on land value and project size
- Detailed project plans: Approved architectural drawings, permits, and engineering reports
- Comprehensive budget: Line-item breakdown of hard costs, soft costs, and financing expenses
- Contingency reserves: 5%–10% of total project cost to cover unforeseen overruns
- Licensed contractor: Signed construction contract with a qualified, insured builder
- Exit strategy: Clear plan to refinance, sell, or convert to long-term financing
Meeting these criteria ensures smooth underwriting, reliable draw schedules, and faster closings—so you can break ground with confidence.
Advantages of working with a hard money lender
Traditional banks are often cautious when it comes to new construction loans due to regulatory requirements and associated risks.
Hard money lenders fill this gap by offering more flexible, asset-based lending options tailored to real estate investors and developers.
Benefits of using a hard money lender
- Faster closing timelines: Loans can fund in as little as 7–10 days
- Flexible credit criteria: Focus on the property and borrower experience
- Simplified documentation: Less paperwork than bank loans
- Local expertise: Lenders familiar with Texas zoning, regulations, and markets
Hard money lenders work closely with borrowers to structure draw schedules and help ensure smooth project execution.
This can be especially helpful for first-time developers or investors tackling their first new build.
How to navigate Texas zoning and development guidelines
Texas has development-friendly regulations, but requirements can vary significantly by city and county.
Successful ground-up projects depend on understanding local rules.
Key zoning considerations
- Minimum lot sizes and allowable density
- Height restrictions and building setbacks
- Drainage, utilities, and easement requirements
- Permitting timelines and impact fees
Examples for specific Texas cities
- Austin: Promotes urban infill and accessory dwelling units (ADUs) under its revised Land Development Code.
- Dallas: Offers expedited permitting for certain residential developments.
- San Antonio: Known for lower impact fees and a variety of lot sizes in developing suburbs.
Before acquiring land, it’s critical to verify zoning compatibility and infrastructure availability.
Many lenders, including private firms, require verified build plans before funding begins.
Pro tip: Engage a local civil engineer early to speed site-plan approval.
How draw schedules work for construction loans
Construction loans release funds in draws—installments tied to project milestones.
This ensures capital is available as work progresses, without front-loading the full loan amount.
Typical draw stages include:
- Land acquisition or payoff
- Foundation poured
- Framing completed
- Electrical, plumbing, and HVAC rough-ins
- Interior finishes
Borrowers submit draw requests with documentation such as invoices and inspection reports.
Turnaround time for fund disbursement can vary by lender, but quick processing is key to keeping the project on track.
Pro tip: Set realistic timelines for each stage and communicate proactively with your lender to avoid funding delays.
Exit strategies: What happens after completion?
At the end of construction, the borrower must refinance or sell the property to repay the loan.
Ground-up construction loans are not designed for long-term holding.
Exit options include:
- Selling the completed property to a homebuyer or investor
- Refinancing into a rental loan, such as a DSCR loan
- Rolling into a portfolio loan for multiple properties
Choosing your exit strategy in advance helps determine the most appropriate loan structure.
It also impacts the terms and underwriting requirements, such as expected appraised value or projected rental income.
How to choose the right loan partner in Texas
Not all lenders are created equal.
When selecting a lender for your Texas construction project, consider the following:
- Local knowledge of city-specific zoning and permitting
- Experience with draw schedules and contractor coordination
- Transparent loan terms with no hidden fees
- Support for your exit strategy through permanent financing options
Ask about funding timelines, draw approval procedures, and support throughout the build.
A responsive and experienced lender can help avoid costly delays and ensure the success of your project.
Build with Confidence in Texas with Park Place Finance
Ground-up construction loans unlock the potential to build custom homes, multifamily properties, or commercial spaces tailored to today’s demand.
Texas offers the land, economic momentum, and regulatory environment to support profitable new builds.
If you’re considering new construction in Austin, Dallas, Houston, or San Antonio, a ground-up construction loan in Texas from Park Place Finance offers a smart, scalable financing solution.
Start your application with Park Place Finance.
FAQ: Texas ground-up construction loans
What credit score is needed for a ground-up construction loan?
Park Place Finance accepts scores as low as 680, depending on the borrower’s experience and equity.
Can ground-up loans fund commercial construction?
Yes. These loans can support residential or small-to-medium commercial projects.
How much down payment is required?
Typically 20%–30%, depending on project size, land equity, and borrower history.
Do I need construction experience to qualify?
It helps, but some lenders will work with first-time builders if a licensed contractor is involved in the project.
What happens after the build is finished?
The loan must be paid off via a sale or refinance into a long-term mortgage.