A First-Time Buyer’s Guide to Getting a Construction Loan
Building your dream home from the ground up is an exciting journey—but it’s also one that requires the right financial foundation. For first time buyers, getting a construction loan can feel overwhelming. But with the right lender and a clear understanding of the process, you can move forward with confidence.
WHAT IS A CONSTRUCTION LOAN?
A construction loan is a short-term loan that covers the cost of building a home. Unlike a traditional mortgage, which is used to buy an existing home, construction loans are paid out in stages as the work on your home progresses. These payments, known as “draws,” go directly to the builder or contractor after being approved by the bank and the homeowner.
Steps to Getting a Construction Loan
Start with a Budget
Before applying, determine how much you can afford. Creating a detailed budget upfront will help you stay on track and avoid financial surprises later.
Choose the Right Builder
Lenders require a licensed, experienced builder and will ask for plans, timelines, and cost estimates. Choose someone with a solid reputation and experience building your type of home.
Get Pre-Qualified by a Mortgage Company
The homebuyer must get pre-qualified by a mortgage company. This pre-qualification shows the builder and the bank that the buyer is financially capable of securing a permanent mortgage once the home is completed.
Submit a Construction Loan Application to the Bank
After pre-qualification, a construction loan application is submitted to the bank with the required information on the construction project such as: the builder’s contract, home plans, cost breakdowns, and insurance details.
Loan Approval and Draw Schedule
Once approved, the bank sets up the loan and funds construction in stages. Inspections are done before each payment to keep the project on track.
Construction Is Completed
Once your home is finished and passes final inspection—confirming – it meets building codes and is ready to occupy—the construction loan ends. At that point, the mortgage company pays off the construction loan balance, and your permanent mortgage begins. You’ll start making monthly payments based on the terms set during approval. From this stage forward, your home transitions from a project under construction to your officially completed residence.
Bank of South Texas
WHY CHOOSE BANK OF SOUTH TEXAS?
Bank of South Texas has earned a reputation as a preferred lender for construction loans across South Texas. Known for their trusted friendly, fast, and efficient service, they understand the local market and work closely with both buyers, builders, and mortgage companies to make the loan process smooth from start to finish. Their team is well known among builders and mortgage professionals, which means you’re working with a lender that has strong, established relationships in the industry.
Whether you’re building in a new community or on your own land, they’ll guide you through every step of the way. First-time buyers often have a lot of questions—and that’s okay. The experienced loan officers at Bank of South Texas are ready to answer them all and help you make informed decisions about your construction loan.
READY TO BUILD?
If you’re dreaming of a brand-new home tailored to your needs, don’t let the loan process hold you back. With the right guidance and support, building your first home is completely within reach. Contact Bank of South Texas today to learn more about their construction loan options, and start building the home you’ve always wanted.
Contact Bank of South Texas today
Visit www.bankofsouthtexas.com
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