There’s nothing quite like designing and building your own home—custom features, hand-picked finishes, and the chance to start fresh with something that fits your family just right. But before you can get to the fun part of picking paint colors or planning your kitchen layout, there's one crucial step: financing the construction.
If you're planning to build a new home in Houston, Texas, you may already be wondering: Where do I even start with a construction loan?
That’s where Clear Lending comes in. As a trusted name among New Home Construction Lenders in Houston, Texas, they help make the process clear, affordable, and tailored to you. Whether you’re building in the suburbs, the city, or on rural land outside Houston, their team is there to guide you every step of the way.
In this guide, we’ll walk you through everything you need to know—from how construction loans work, to what sets Clear Lending apart from other lenders in Houston. We’ll also break down the important terms, timelines, and tips that can help you get into your dream home faster, without financial surprises.
What Is a New Home Construction Loan?
Let’s break it down in plain English.
A new home construction loan is a short-term loan that provides the funds needed to build your home from the ground up. Unlike a traditional mortgage (which helps you buy a finished home), a construction loan pays your builder in stages as the work progresses.
Think of it as a way to “pay-as-you-go” while your house is being built.
How Does It Work?
Here’s a simple breakdown:
You apply and get approved for a construction loan with a lender like Clear Lending.
The loan is divided into draws (payments), each released at key stages of construction—foundation, framing, roofing, etc.
You pay interest only on the portion of the loan that’s been disbursed so far.
Once the home is finished, you can convert it into a traditional mortgage (also known as a construction-to-permanent loan).
Why Choose a Construction Loan in Houston, TX?
Houston is one of the fastest-growing cities in the U.S., and with that growth comes opportunity—and challenges. Finding the perfect home in the right neighborhood can be tough. Inventory is tight, and prices are climbing.
That’s why many families are choosing to build instead of buy.
With so many new communities and lots available in Greater Houston, building from scratch gives you the freedom to:
- Pick your location
- Design your layout
- Customize your finishes
- Maximize long-term value
But all of this hinges on choosing the right lender who understands the Houston market—and that’s where Clear Lending stands out.
Meet Clear Lending: Your Houston Construction Loan Partner
Clear Lending isn’t just any lender—they’re based in Houston, so they understand the local market, zoning rules, builder relationships, and real estate trends inside and out.
They specialize in helping buyers who want to build, especially if you’re not sure where to start. Their team takes the time to explain every step and offers flexible programs that fit a variety of financial situations.
Why Borrowers Love Clear Lending:
✅ Personalized loan options
✅ Guidance through every stage of construction
✅ Competitive interest rates
✅ Easy pre-approval process
✅ Experience working with builders across Houston
Whether you’re building your forever home or an investment property, they offer the support you need without the stress.
Types of Construction Loans Available
Not all construction loans are created equal. At Clear Lending, they’ll help you pick the one that fits your unique situation. Here are the most common options:
1. Construction-to-Permanent Loan (One-Time Close)
This is one of the most popular options for home builders in Houston.
- You apply once and lock in your rate early
- During construction, you pay interest-only
- Once the home is complete, it automatically converts into a traditional mortgage
- Saves money on closing costs and paperwork
2. Construction-Only Loan
This type of loan only covers the construction period.
- You pay interest-only during building
- Once construction ends, you’ll need a separate mortgage to pay off the loan
- Ideal if you plan to shop around for mortgage rates later
3. Owner-Builder Loan
If you're managing the construction yourself instead of hiring a licensed builder, this is the way to go.
- More control over the building process
- Typically requires strong credit and construction experience
4. Renovation or Expansion Loans
Not building from scratch but still want to make major changes? These loans are perfect for:
- Large home additions
- Full-scale renovations
- Converting a fixer-upper into your dream home
What Do You Need to Qualify for a Construction Loan?
Construction loans are a little different from traditional mortgages. Because there's more risk involved for lenders, the approval process can be a bit more detailed. Here’s what lenders (like Clear Lending) typically look for:
✅ Good Credit Score
Most construction loans require a credit score of 620 or higher. A better score = better terms.
✅ Stable Income
You’ll need to show consistent income and employment to prove you can make payments during and after construction.
✅ Down Payment
Construction loans usually require a larger down payment—often 10–20%. But Clear Lending may have programs that offer lower down payments depending on your situation.
✅ Construction Plans
This includes:
- A detailed construction budget
- Timeline
- Blueprints
- Licensed builder information
Don’t worry—Clear Lending will help guide you through gathering all these.
Benefits of Getting a Construction Loan with Clear Lending
Let’s face it—building a home is a big deal. You want to work with a lender who won’t leave you guessing. Here’s how Clear Lending makes life easier:
One-on-One Guidance
They assign a dedicated loan officer to walk you through every stage of the loan.
Custom Loan Packages
No cookie-cutter loans. Whether you’re a first-time builder or a seasoned real estate investor, they tailor solutions to your goals.
Houston Expertise
They know the best neighborhoods, builders, and common pitfalls—so you avoid delays and get moving faster.
Transparent Process
No hidden fees or confusing terms. You’ll always know what to expect and what’s coming next.
The Construction Loan Process (Step-by-Step)
Still wondering how it all works? Here’s a simplified timeline from start to finish:
Step 1: Get Pre-Qualified
Start with a free consultation and pre-approval to see how much you can borrow.
Step 2: Find Your Land & Builder
Already have a lot? Great. Still looking? Clear Lending can connect you with trusted local builders and realtors.
Step 3: Submit Your Plans
This includes your construction schedule, builder contract, and blueprints.
Step 4: Loan Approval
Once approved, your funds are ready to go—disbursed in draws during construction.
Step 5: Construction Begins
As each phase is completed, your builder gets paid. You pay interest-only on the amount used so far.
Step 6: Move-In & Convert to Mortgage
Once your dream home is complete, the loan converts to a long-term mortgage with regular payments.
Special Features of Clear Lending’s Construction Loan Program
Clear Lending goes above and beyond with its Construction-to-Permanent Loan Program, making the building process smoother, more predictable, and much more convenient for homeowners in Houston.
Here’s what makes this program stand out:
One-Time Closing Convenience
With this program, you only close once. That means fewer fees, less paperwork, and a whole lot less stress. You don’t have to apply for a separate mortgage after your home is finished—it automatically converts to a traditional home loan. This is what’s called a “one-time close” construction loan.
Whether your construction takes 9 months or 12 months, you’re covered under the same loan terms. It's a simple, efficient setup that saves time and money.
Minimum Loan Amount Starts at $250,000
This program is ideal for borrowers who are building full custom homes or high-value properties in Houston and nearby areas. The minimum loan starts at $250,000, which makes it a perfect fit for new builds in today’s competitive housing market
Interest-Only Payments During Construction
While your home is being built, you don’t have to worry about making full mortgage payments. Instead, you'll make interest-only payments on the funds that have been used so far—plus your property taxes and insurance. This helps you keep monthly costs manageable during the build.
Builder’s Risk Insurance Required
Until your home is finished and ready for move-in, you’ll need a builder’s risk insurance policy. This specialized insurance protects the property during the construction phase—from damage, theft, or unexpected events. Once the home is complete and inspected, you can switch to a standard homeowner’s insurance policy.
Loan Modification After Completion
Once your house is built and ready to go, the original construction loan is modified into a permanent mortgage. Your payment changes from covering just interest, taxes, and insurance, to a full monthly payment that includes:
- Principal (paying down your loan balance)
- Interest
- Taxes
- Insurance
This ensures a smooth transition from building to owning—no surprises, no second closing, no additional approvals.
Mortgage Insurance Activation
If your down payment is less than 20%, mortgage insurance will be added to your modified monthly payment. This is standard for most loans with low down payments and helps protect the lender in case of default. If your loan has an escrow waiver, this process won’t impact you.
Finance Soft Costs, Too
This program doesn’t just cover construction materials and labor. You can also finance soft costs—like architectural drawings, engineering reports, and permit fees. These expenses can add up quickly, so having them bundled into the loan is a major benefit.
Keep in mind: loan closing costs cannot be financed—those must be paid out of pocket at the time of closing.
Full Third-Party Builder Contracts Required
To ensure quality and accountability, this program requires that you work with a licensed, third-party builder under a formal contract. Owner-builders or informal agreements won’t qualify. This helps protect both you and the lender by ensuring the work is done professionally and according to local regulations.
Ready to Build Your Dream Home in Houston?
If you’re dreaming about building a home in Houston, it’s time to turn that dream into a plan. Partnering with a trusted construction loan lender like Clear Lending gives you the tools, guidance, and peace of mind you need to make it happen.
With personalized service, local expertise, and loan options to fit every situation, Clear Lending is here to help you every step of the way—from dirt lot to dream home.