Construction Loans

Houston builds. The metro adds tens of thousands of housing units and millions of square feet of commercial space annually, fueled by domestic migration, international population inflows, and the perpetual growth of the Texas Medical Center, Energy Corridor, and Port of Houston ecosystems. At Hard Money Lenders of Houston, our construction loans fund the builders, developers, and investor-builders who are creating that inventory.

Our construction program covers the full build spectrum: spec single-family homes in active suburban markets, custom homes on Inner Loop infill lots, townhome developments in emerging urban corridors, and commercial ground-up construction for retail, office, and industrial users. We lend up to 80–85% of total project cost — land plus construction plus soft costs — structured with milestone-based draws that keep capital flowing without bureaucratic delays.

Houston's construction market has specific characteristics that our program is built around. The city's Beaumont clay soil requires engineered foundations on virtually every project — slab-on-grade without piers is inadequate on most Houston sites. Our construction underwriting treats foundation engineering as a required line item, not an optional upgrade. Harvey and Beryl taught the construction market that flood zone elevation requirements for new construction are non-negotiable: all new residential construction in FEMA-designated AE zones must be elevated to BFE + 1 foot minimum, and many Houston MUD districts and the City of Houston itself require BFE + 2 feet. Our construction loans account for the elevation premium in the hard cost budget.

Houston's absence of traditional zoning creates construction opportunities that wouldn't exist in other cities. A developer can build a townhome project immediately adjacent to a commercial strip without the use restriction conflicts that would arise in a conventionally zoned city. But the absence of zoning also means that deed restrictions become the governing document — and those restrictions, often filed in the 1940s–1960s, may or may not permit the intended density. We review deed restrictions before construction loan commitment.

Draw schedules are managed digitally, with inspections within 24–48 hours of request and fund disbursement within 48 hours of approval. Contractors stay paid, projects stay on schedule.

Construction loans from Hard Money Lenders of Houston serve every category of active builder and developer in the metro.

Spec single-family construction in active suburban markets — Cypress, Katy, Fulshear, Pearland, League City, and the Highway 249 and I-45 north corridors — is our highest-volume construction product. Builders acquire finished lots, construct market-demand homes in the $280,000–$550,000 range, and sell to retail buyers through MLS or builder sales programs. Our construction loans fund land acquisition plus construction in a single instrument, with draws by milestone and conversion to bridge or permanent financing upon sale.

Urban infill townhome construction is one of Houston's fastest-growing development niches. The absence of zoning means that well-located lots in the Heights, Montrose, EaDo, and Midtown can support 3–5 townhome units where a single-family home previously stood. These projects generate $500,000–$1.2M per unit revenue in premium locations and benefit from walkability premiums that suburban construction can't match. Our loans fund the land acquisition and full construction budget.

Custom home construction on Inner Loop teardown lots serves buyers who want a specific lot and a custom design rather than a production builder's floor plan. Our construction loans fund the acquisition-plus-build process for builders working with committed end buyers, eliminating the need for the buyer to arrange construction financing directly.

Post-Harvey elevated reconstruction is an ongoing construction need throughout Harris County. Property owners in flood-affected neighborhoods who received Harvey buyout proceeds and are reinvesting in elevated replacement construction on compliant lots are a consistent borrower profile. We understand the elevation certificate and FEMA compliance requirements these projects must meet.

Commercial ground-up construction — retail pads, medical office buildings, light industrial flex, and small multifamily — is fundable through our commercial construction program for experienced developers with pre-committed tenants or pre-sales. We evaluate commercial construction based on project economics, builder credentials, and exit certainty.

Foundation and soil engineering is the non-negotiable starting point for any Houston construction project. Beaumont clay's expansive properties require engineered foundation designs on virtually every site — Post-Tension or waffle-pod slab designs, pier-and-beam on filled sites, or deep pilings for larger commercial structures. We require a geotechnical report before finalizing construction loan amounts on any project, because the foundation design determines a significant portion of the hard cost budget.

Flood zone elevation requirements add measurable cost to new construction in AE zones. Raising finish floor elevation by 2–3 feet above grade requires additional fill, taller foundation walls, and sometimes modified floor plans. On a 2,500 SF single-family home, this adds $15,000–$40,000 to construction cost. We require elevation certificate compliance documentation as part of the construction draw process, because Houston lenders and buyers will demand it at exit.

Permit processing timelines vary dramatically across Houston's 88 incorporated municipalities. The City of Houston permitting department processes residential permits in 2–4 weeks for standard projects. Suburban municipalities vary from 1 week to 3 months. Custom projects in historic preservation overlay districts or with variances can take 4–6 months. We build realistic permit timelines into construction loan terms rather than setting up maturity deadlines that can't be met if permitting runs long.

Contractor availability and material cost volatility have been persistent challenges since Hurricane Harvey in 2017 and remained a factor after Hurricane Beryl in 2024. Quality framing crews, foundation contractors, and MEP subcontractors book 4–8 weeks out in an active construction market. We advise investors to have contractor relationships locked before loan closing, and our draw system's speed is designed to keep contractors prioritizing our borrowers' projects.

Hard Money Lenders of Houston evaluates construction loan applications based on project economics, builder capability, and market exit. We review plans and specifications, builder credentials, construction budget with detailed line items, and exit strategy — sale or permanent financing upon completion.

Our draw management process: submit draw request digitally with photos and contractor invoices; inspector dispatched within 24 hours; funds wired within 48 hours of inspection approval. Most residential projects use 5–7 draws. Commercial projects may have more, based on project milestones.

We build interest reserves into construction loan proceeds to cover carrying costs during construction, reducing out-of-pocket requirements for the build period. Contingency reserves of 5–10% of hard costs are required on all projects to address the inevitable cost surprises that arise when ground is broken in Houston.

Hard Money Lenders of Houston funds construction across the entire metropolitan area. Residential construction is most active in Cypress, Katy, Fulshear, Pearland, League City, Spring, and the Conroe/Woodlands corridor. Urban infill construction is concentrated in the Heights, Montrose, Midtown, EaDo, and Oak Forest/Garden Oaks. Commercial construction follows employment growth centers: Medical Center, Energy Corridor, Port of Houston logistics, and major suburban retail and office corridors.