What are the requirements for a construction loan in Texas?

• Your income and credit: like a mortgage, often with more scrutiny, because the lender is financing something that does not exist yet.
• Your money in the deal: a down payment, and in many cases the value of land you already own can count. The lender explains how.
• Reserves: money set aside for payments and for surprises during the build.
• The builder: the lender reviews experience, insurance and the contract.
• The project on paper: plans, specifications, a line-item budget, a draw schedule and an appraisal of the finished home.

1. Income. If you are self-employed, expect to provide tax returns and business statements; the lender tells you exactly which ones and for how many years. What matters is how your income shows up on paper. Do not change how you earn or how you file without talking to me first.
2. Credit. The lender reviews your history and your debts. I will not give you a minimum score, because every program sets its own.
3. Down payment or land equity. If you already own the land, many lenders count its value toward your share. If not, it comes from cash. Ask how your lender calculates it.
4. Reserves. Money after closing to cover payments and changes or delays. Some lenders also want a contingency line inside the budget.
5. Land documents. The deed or purchase contract, a survey and the title commitment.

1. An approved builder. The lender reviews experience, references, insurance and sometimes financials. Some lenders keep a list of builders they already work with.
2. Plans and specifications. What will be built, and with which materials and finishes.
3. A detailed budget. Line by line: foundation, framing, roof, plumbing, electrical, finishes, site prep, utilities.
4. A signed construction contract. Price, dates, how changes are handled, and the warranty.
5. A draw schedule. Money is released as work progresses, after a lender inspection.
6. An as-completed appraisal. The appraiser estimates what the home will be worth when finished, from the plans and budget.
7. Insurance. Builder's risk coverage during construction, then homeowner's insurance at completion. If part of the site is in a FEMA high-risk flood area and the loan comes from a federally regulated or insured lender, flood insurance is required.
8. Permits. From the city if the land is inside city limits; from the county or TCEQ for items such as septic if it is outside.

Here's what happens next: if you want to bring this list to your lender already organized, let's talk for 30 minutes.

Some construction loans convert into a mortgage with a single closing; others close the construction loan first and a separate mortgage later. One closing means less paperwork and one set of closing costs; two can sometimes offer more flexibility. Your lender explains what they offer and what fits your situation. Ask about it in the first meeting, because it changes how many times you sit at a closing table and when your permanent terms get set.

If you do not have land yet, start with how land loans work in Texas and the steps in order for buying land and building.

With a construction loan, the money is not handed over on day one. It is released in stages. The builder completes a phase, the lender sends someone to check the progress, and then that phase gets paid. During construction, many loans charge interest only on the amount already drawn, not on the full loan; your lender confirms how yours works.

Here's what that means for you: during the build you may be paying for the place you live now plus interest on the construction loan. That is why reserves matter, and why you want to know from the start how long the contract says the build will take. A realistic timeline, with some room for weather and inspections, protects your budget as much as the contingency line does.

• Your most recent tax returns and business statements.
• Your bank statements.
• The deed to the land or the purchase contract, and the survey if you have one.
• A clear idea of what you want to build: size, bedrooms, a shop, a barn.
• The name of any builder you are considering, so you can ask whether the lender will approve them.
• A written list of your questions, so nothing goes unanswered.

Showing up organized does not just save time. It tells the lender you understand the project, and it gets you a clearer answer in the first meeting instead of the third.

• Choosing a builder before talking to the lender. If the lender will not approve the builder, you lose time. Ask what they require of a builder first.
• A budget with no contingency. Something always comes up during a build. Without a cushion, it comes out of your pocket.
• Making changes mid-build without paperwork. Every change goes in writing, with price and time. Otherwise the budget and the appraisal stop matching.
• Changing your finances during the build. People used to think approval was final. With construction, the lender may review again before the loan converts. Do not open new debt or change how you file without talking first.
• Not collecting lien releases. Ask the builder to provide releases from subcontractors and suppliers as they are paid. The lender and title company review them.

Picture the owner of a roofing company who already owns land in Collin County and wants to build his home. He came to the first meeting with tax returns, business statements, the deed to the land and a clear idea of what he wanted. The lender explained how they would count the land, what reserves they wanted and what they needed from a builder.

With that list, he chose a builder the lender would approve, asked for a line-item budget with a contingency and a contract with dates. This is an example, not a real client; every lender and every build is different.

On the moves Veronica Yeary guides in Dallas-Fort Worth, the lender's checklist gets built before the builder search starts, so nobody signs the same thing twice.

• Your lender's document list, in writing.
• How your land counts if you already own it.
• What they require of a builder, before you choose one.
• Flood risk: FEMA's official map for your site.
• Septic and permits: the city, the county or TCEQ's authorized agent.
• Your business income: read what to sort out when you own a business and why to talk to the lender first.
• At completion: once you live there, file your homestead with the county appraisal district.

This is not loan advice: your lender confirms your situation.

What documents do I need for a construction loan?

For you: income documents, credit, a down payment or land equity, reserves and the land paperwork. For the project: an approved builder, plans, a line-item budget, a signed contract, a draw schedule, an as-completed appraisal, insurance and permits.

Can I use my land as the down payment?

In many cases, yes. If you already own the land, many lenders count its value toward your share. Your lender explains how they calculate it.

Can I get a construction loan if I am self-employed?

Yes, there are options. The lender looks at how your income shows up on your tax returns and business statements. Do not change how you earn or how you file without talking to me first.

How does the builder get paid?

In stages, called draws. The lender releases money as work is completed and inspected. When the home is done, the loan converts to a mortgage or a new one closes.

Do I need flood insurance to build?

If part of the site is in a FEMA high-risk flood area and your loan comes from a federally regulated or insured lender, it is required. Check FEMA's official map before you buy land or finalize plans.

Before you choose a builder, let's organize what your lender will ask for and in what order. Thirty minutes, no commitment.

Let's talk for 30 minutes about your situation, not houses: veronicayeary.com/en/book

Call or text 469-441-8890 · veronica@veronicayeary.com