Construction Loans Texas

What You Need To Know About Building In Texas

There are plenty of reputable construction loan lenders in Texas, but for your application to get approved, you need to have building plans.

• Most Construction Loans in Texas offer interest only payments.
• Importantly, you are required to pay back 100% of the loan amount, when the loan terms end.

To pay back the loan in full, you need to have a clearly defined exit strategy. Either you need to sell the development for a healthy profit, or you need to refinance the property based on the revised value of the building once it is completed.

In addition, there other important factors that a lender will consider when assessing a loan application, including:

FICO Score: Typically, there will be a minimum FICO score that the borrower needs to meet in order for the loan to be granted. At the current moment in time, the minimum FICO is 650.

Cost of Project: A reputable lender should be willing to cover a substantial portion of the project cost. This ratio is called Loan To Cost, and it is a quick way to assess how much capital you can access to complete the building project. At this moment in time, New Silver offers up to 90% Loan To Cost (LTC).

Best Construction Loan Lenders In Texas

Texas Real Estate Market Analysis

Over the last 12 months, home prices in Texas have decreased by 1.8%, with an average home value of $300,090. This is 49,000 less than the average home value in the US, which is currently $349,770.

• The Median sale to list ratio is 0.994.
• The percent of sales over list price is 25.3%.
• The percent of sales under list price is 53.0%

Rapid Population Growth: Texas is fastest-growing state in the United States, with a rapidly increasing population. According to research from the United States Census Bureau “from 2000 to 2022, the state gained 9,085,073 residents, more than any other state and almost 3 million more than Florida, the next largest-gaining state.” Exceptional population growth leads to a higher demand for housing and real estate investment opportunities. It’s safe to assume that the increasing population will continue to drive demand for many years to come.

Texas Offers Relatively Affordable Housing: Texas generally offers more affordable housing options compared to many other states in the US, particularly in smaller cities and rural areas. This affordability can be appealing for first-time homebuyers and real estate investors hoping to break into

Plenty Of Job Opportunities: Texas has a strong job market, with low unemployment rates in many areas. This draws people from other states and countries, leading to increased demand for rental housing and home ownership.

No State Income Tax: Texas does not impose a state income tax, which can be a significant financial advantage for residents and businesses, potentially increasing the disposable income of individuals and making it an attractive place to live and work.

Residential Sales Have Slowed Down: In 2022, there were 416,225 residential sales in TX. As of November 2023, there have only been 244,780 residential sales. This represents a steep drop in the number of homes sold in the last year. A challenging economic environment combined with historically high interest rates have ultimately led to decreased home buying activity in the Lone Star State.

 

Data Sourced From – Zillow.com | Attom Data | Census.gov