New Construction Loan Requirements for Texas Builders

Quick answer

Texas new construction loan requirements focus on the plans, the budget, the project plan, the lot, the borrower profile, and the completion exit. Construction funds release in stage draws, with interest only payments during the build, on non-owner-occupied investment property, subject to underwriting, collateral review, title review, documentation, and approval.

A new construction loan funds a ground-up build on a non-owner-occupied Texas investment property. Because the project is plan-driven, the plans, budget, and exit carry the weight. Cedar Top reviews the lot, the plans, the project plan, the borrower profile, and the completion exit. For how hard money works overall, start with what hard money lending is, and for the full review picture, see hard money loan requirements in Texas.

Core requirements for a Texas new construction loan

We review the following on a construction deal:

Requirement	What we look at	Why it matters
Texas investment property	That the lot and project are investment real estate located in Texas	We lend on Texas investment property
Non-owner-occupied use	That the property is not a primary residence or homestead	We lend on non-owner-occupied property only
The lot and property	The lot, its location, and supporting value information	The lot and completed build carry the loan
Plans	The building plans for the project	The project is plan-driven
Construction budget	The budget for the build	The budget supports the project plan
Project plan and feasibility	The overall plan, sequence, and timeline	Feasibility drives a construction review
Borrower and builder experience	Experience and entity information, as applicable	Construction is execution-heavy
Exit strategy	A completion-and-sale or refinance plan	The exit is how the loan gets repaid
Title status	Title condition and a lender's title policy	Title issues can slow or stop a transaction
Insurance	Appropriate insurance for a construction project	Collateral is protected during the loan
Documentation	The supporting documents for the project and deal	Complete information keeps the review moving

Common uses for new construction financing

Builders and investors use new construction loans for projects such as:

A spec build intended for sale
A build-to-rent investment property
A custom build on investment property

Each is a ground-up build on non-owner-occupied property with a plan to complete and exit.

How construction draws work

Construction funds release in draws as build milestones are completed and inspected. You do not get the full build budget up front; you draw against completed stages. Draw fees start at $250, and payments are interest only on funds drawn. Leverage runs up to 70% loan to value and up to 90% loan to cost. For the mechanics, see how hard money loan draws work. Full terms are on the new construction page.

How much down payment does a new construction loan require?

There is no fixed down payment percentage; your equity contribution is set by two leverage caps. We can finance 100% of the construction budget, up to 90% loan to cost and within 70% loan to value on the completed project. Plan to bring at least the share of total project cost above 90%, plus the origination fee of 2% to 4%, the $995 document fee, closing costs, insurance, and reserves. Loan amounts run $50,000 to $1,000,000, rates start at 12%, and payments are interest only on funds drawn.

Exact leverage is set in the term sheet, subject to underwriting, collateral review, title review, documentation, and approval. Current figures are on the rates and terms page, and the new construction page shows a sample deal with a lot, a budget, and a completed value.

Property and lot requirements

The lot and the planned build are the collateral. Depending on the project, we look at:

The lot's location in Texas
Non-owner-occupied status
Access and utilities, where relevant
The plans for the build
A supported value for the completed project
Title status
Insurance

Exit strategy

A construction project needs a realistic way out. Common exits:

Selling the completed build
Refinancing the completed build after stabilization

We look at whether the exit fits the project, the property, and the timeline.

Documents we may ask for

Plans and specs, a line-item construction budget, permit status, proof of lot ownership or the purchase contract, entity documents and ID, a builder profile, insurance, a title company contact, and your exit plan.

Fuller list: our documents checklist.

What can slow down a new construction review

These do not always stop a project, but they can slow the review or require more documentation:

Incomplete plans or budget
An unrealistic timeline
Title or lot questions
Unsupported value assumptions
No clear exit strategy
A property outside Texas
Owner-occupied use
Incomplete borrower or entity information

Apply for a Texas new construction loan.

Send the lot, plans, budget, and timeline, or call 817-984-3129. Review is subject to underwriting, collateral review, title review, documentation, and approval.

Apply Now Get a Quote New Construction Loans

Frequently asked questions

What does Cedar Top review for a new construction loan?

We review the plans, the budget, the project plan, the lot, the borrower profile, and the completion exit.

Do I need plans and a budget?

Yes. Plans and a budget are central to a construction review. The project is plan-driven.

How do construction draws work?

Construction funds release in stage draws as build milestones are completed and inspected. Draw fees start at $250. See the draw process page for how it works.

What exit strategies fit new construction?

Selling the completed build or refinancing it. We look at whether the exit is realistic for the project, the property, and the timeline.

Does builder experience matter?

We review borrower and builder experience alongside the lot, the plans, and the project plan. It is one factor in the overall picture.

What documents should I prepare for a construction project?

Plans, a construction budget, permit status, entity documents, ID, proof of lot ownership or the purchase contract, and your exit plan. Not every project requires every document.

What can slow down a new construction review?

Incomplete plans or budget, an unrealistic timeline, title questions, or an unclear exit. These do not always stop a project, but they slow it down.

What are the qualifications for a new construction loan?

Complete plans and specs, a line-item construction budget, permit status, a Texas investment or non-homestead property, a Texas or Texas-registered entity in good standing, and a realistic completion exit. There is no minimum credit score; borrower and builder experience is reviewed alongside the project.

How much down payment do you need for a construction loan?

There is no fixed percentage. Leverage runs up to 90% loan to cost and up to 70% loan to value on the completed project, and we can finance 100% of the construction budget within those caps. Your cash covers the share of project cost the loan does not, plus the 2% to 4% origination fee, the $995 document fee, closing costs, insurance, and reserves.

This article is general education for real estate investors, not financial, legal, or tax advice. Non-owner-occupied investment property only. Terms, rates, and availability are subject to underwriting, collateral review, title review, documentation, and approval. This is not a commitment to lend. See our disclosures.