Residential Construction Loans

Residential Construction Loans in Frisco & North Dallas

A residential construction loan is a short-term, interest-only mortgage used to fund the building of a custom primary residence. Unlike a standard mortgage, funds are disbursed in stages called "draws" to cover the cost of materials, permits, and labor as the house is built. At First Lonestar Bank, we specialize in "Construction-to-Permanent" financing, which allows you to secure your lot, build your home, and roll the costs into a long-term mortgage with a single closing.

How Do Residential Construction Loans Work?

Because you are building a home that doesn't yet exist, the loan behaves more like a line of credit than a traditional lump-sum mortgage:

• Interest-Only Payments: During the building phase (usually 6–12 months), you only pay interest on the money that has been spent.
• The Draw System: As your builder completes specific milestones—like pouring the foundation or finishing the roof—the bank releases funds to pay the invoices after a quick inspection.

Qualification & 2026 Loan Limits

Building in high-demand areas like Frisco, Prosper, or McKinney requires a lender who stays current with the market. For 2026, we've updated our programs to match the latest standards:

• 2026 Loan Limits: The baseline conforming limit for 2026 is $832,750. For luxury builds that exceed this amount, we offer specialized Jumbo Construction options.
• Down Payment: Most projects require a 20% to 25% down payment based on the total value of the land and the build. If you already own your lot, the equity you have in that land can often count toward your down payment requirement.
• Credit Standards: Because construction projects are complex, we typically look for a credit score of 680 or higher.
• Builder Approval: We partner with you by vetting your builder to ensure they are licensed, insured, and have a solid track record of finishing homes in North Texas on time.

The First Lonestar Difference

We aren't just a bank; we are your neighbors in Frisco. We know that building a home is a personal journey, which is why we "bend over backwards" to make financing the easiest part of your project. From coordinating inspections to managing draws, our local team is here to ensure your builder has what they need to keep your project moving forward.

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Construction Loan Frequently Asked Questions (FAQs)

Can I include the land price in my construction loan?

Yes. If you haven't bought your lot yet, we can combine the land purchase and construction costs into a single loan and a single closing.

Can I be my own contractor in Texas?

In Texas, for a primary residence (homestead), you generally cannot act as your own general contractor for a bank-funded construction loan. We require a registered, third-party builder to ensure the project meets all safety and appraisal standards.

What happens if construction takes longer than 12 months?

We know North Texas weather can be unpredictable. While most projects wrap up in 6 to 12 months, we offer flexible extension options for qualifying builds to ensure you stay covered until move-in day.

The Fine Print

This is not a commitment to lend; you must submit additional information for review and approval. Rates, Annual Percentage Rates (APRs), and terms are subject to change without notice. Certain restrictions apply to all programs. See your FLB Mortgage Loan Officer for complete program guidelines, loan application, applicable fees and annual percentage rates (APRs) for all loan programs. Full underwritten approval is required, and all loan approvals are subject to credit, income, and asset reviews and approvals. Bank NMLS#1215182