By Smartfunds Capital18 Mar, 2025
New Construction Loans in Texas: What Hard Money Lenders Look For
New construction financing in Texas represents one of the highest-opportunity — and highest-complexity — segments of real estate investing. Whether you're building single-family spec homes in Houston, a small multifamily in Dallas, or infill townhomes in Austin, a construction hard money loan provides the capital to get from dirt to certificate of occupancy.
How Construction Hard Money Loans Work
Unlike a traditional mortgage, construction loans disburse funds in draws tied to construction milestones — foundation, framing, rough MEP, drywall, finishes, and completion. Smartfunds Capital conducts inspections at each draw stage to verify progress before releasing funds. This protects both the borrower and the lender by ensuring capital tracks actual construction activity.
Land and Lot Loans
Construction financing often begins with land acquisition. Smartfunds Capital can provide lot loans for entitled, shovel-ready land in Texas, typically at 50–60% LTV. Having an entitled lot with approved plans significantly accelerates the construction loan process and demonstrates to the lender that the project has been properly planned.
What We Evaluate for Construction Loans
Comparable sales (comps) supporting the projected finished value. Detailed construction budget from a licensed general contractor. Approved building permits or permit-ready plans. Borrower experience: have you completed similar projects? Project timeline and draw schedule. Equity contribution — most construction hard money loans require 20–30% of total project cost from the borrower.
Texas Construction Markets We Fund
Smartfunds Capital actively funds new construction projects in Houston (particularly Heights, EaDo, and near-town neighborhoods), Dallas (Uptown, Oak Lawn, Bishop Arts District), San Antonio (King William, Southtown, near UTSA), and Austin (East Austin, Mueller, Zilker area). Infill urban construction and suburban subdivision development are both funded.
Summary
Construction hard money loans are complex — but the right lender makes the process manageable. Smartfunds Capital has funded ground-up construction projects across Texas and understands the specific challenges of the Texas permitting environment, contractor landscape, and market timing. Talk to our construction lending team to structure the right loan for your project.
