Construction Loans in Hays County: Building in the Hill Country, Explained Plainly

Construction-to-Permanent, in Plain English

A construction loan sounds complicated, so let me strip it down.

When you build a home, you need two things: money to pay the builder while the house goes up, and a normal mortgage once it's finished. A construction-to-permanent loan handles both in one package. During the build, the loan pays your builder in stages as work is completed. When the home is finished, the loan converts into a regular mortgage — the kind you'd have if you'd bought an existing house.

The version most of my clients use is the one-time close: a single loan, a single closing, a single set of closing costs, covering both the construction phase and the permanent mortgage. The alternative — a standalone construction loan followed by a separate permanent mortgage, with two closings and two sets of costs — still makes sense in some situations, and we'll compare both. But for most custom builds, one closing beats two.

During construction, you typically make interest-only payments, and only on the money actually drawn so far — not the full loan amount. Your payments start small when the slab is poured and grow as the house does.

Why the Hill Country Is a Construction Market

I live in Dripping Springs, so I watch this market from inside it. The Texas Hill Country — Dripping Springs, Wimberley, Boerne, and the corridors around them — is one of the strongest custom-build markets in the state, and for a simple reason: the thing people move here for is land. Acreage, views, room for a shop and a garden and whatever else you've been putting off. You can't buy that off a production builder's shelf, so people build.

Boerne and the western Hill Country are growing the same way. These are high-value builds on unique lots, which makes them high-trust transactions: you're committing to a large number for a house that exists only on paper. That's exactly the kind of file where you want one experienced person accountable from the first conversation to the final draw — not a rotating call center queue.

What You Need Before You Apply

A construction loan underwrites three things: you, your builder, and the project. Come to the table with:

• The land. Owned already or part of the deal — land you own can often contribute equity toward the project.
• A builder. Lenders review and approve the builder — experience, references, financials. A strong builder makes your loan easier; an unproven one makes it harder.
• Plans and specs. The drawings and specifications for what you're building.
• A detailed budget and contract. The cost breakdown the appraisal and the draw schedule will be built on.
• A contingency cushion. Builds run over — materials, weather, change orders. We plan for it on paper before it happens in the field, so an overage is an inconvenience instead of a crisis.

The appraisal is based on the completed value of the home — what the finished house on that lot will be worth, based on your plans and budget.

How Draws Work

Construction funds are released in draws — scheduled disbursements tied to completed stages of work. Foundation, framing, mechanicals, finish-out: at each stage, an inspection confirms the work is done, and the lender releases the money for it. Your builder gets paid for work actually completed, which protects everyone — including you. I'll walk you and your builder through the draw schedule before closing so there are no surprises about how and when money moves.

The Questions I'll Help You Answer First

• Does the total project — land, build cost, contingency — fit the completed value the market supports? (Building more house than the land justifies is the classic Hill Country mistake.)
• Is the budget real? A thin budget that triggers change orders costs more than an honest one.
• One-time close or two? We'll run both structures against your situation.
• What's the monthly picture — during the build and after conversion? It's not the cost of the home, it's the cost of the home on a monthly basis. That's doubly true when you're carrying rent or an existing mortgage during construction, and we'll map that carrying period honestly.

Building a custom home is the largest act of trust most families ever put on paper. My job is to make the financing the most boring part of it. Strategy always wins.

All examples referenced here are for illustrative purposes only and do not represent a commitment to lend or an offer of specific terms, rates, or fees. Construction loan structures, builder approval standards, draw schedules, and qualification requirements vary by lender and are subject to individual qualification and project review. Contact me for details specific to your build.