The quick read: The best construction lender in Texas is the lender type whose published rules fit your project, not a name on a list. Texas community and regional banks work inside federal supervisory limits of 80 percent loan-to-value on commercial and multifamily construction; credit unions face a business-loan cap tied to net worth; HUD's Section 221(d)(4) insures up-to-40-year apartment construction loans; SBA 504 funds an operating business's own building up to $5.5 million; and debt funds and private construction lenders can price projects that regulated lenders will not hold.
The Texas numbers are large. The Census Bureau's 2025 annual state building-permit file counts 60,505 housing units authorized in Texas buildings of five or more units, plus 140,579 single-family units. The FDIC's BankFind institutions data returned 347 active FDIC-insured institutions with a Texas state code in its September 18, 2026 index. Each of those banks sets its own construction appetite. This guide ranks lender types, not lenders: what each type's public rules say, which Texas projects it fits, and what to ask before you sign a term sheet.
How do you get lenders competing for a Texas construction loan?
You get Texas construction lenders competing by putting one complete project file in front of several lender types at once, so a bank, a credit union, an agency lender and a private construction lender each price the same budget, schedule and exit, instead of hearing about your deal one at a time over several weeks of calls.
That is the job a commercial mortgage brokerage does. YieldStack, the publisher of this page, is a commercial mortgage brokerage, not a lender. One submission is matched against 20,000+ loan programs, the intake is a 5-minute submit, and the target is a median offer in under an hour, from an institutional lender. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing. Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
If you have a Texas construction project with a budget and a site, submit your Texas construction deal and see which lender types want it. For the state's broader financing market, the Texas market hub covers the metros.
Which lender types finance construction in Texas, and what do their public rules say?
Six lender types are worth comparing for a Texas construction project, and they are told apart by the public rules that bind them: banks by federal supervisory loan-to-value limits, credit unions by a statutory business-loan cap, HUD and SBA by program rules, and non-bank funds by their own credit policies, which you only see in a term sheet.
| Lender type | Texas project it fits | Public rule that shapes the loan (source, date) | What to ask before you sign |
|---|---|---|---|
| Texas community and regional banks | Commercial, multifamily and 1- to 4-family construction within supervisory limits | Supervisory LTV limit of 80% for commercial, multifamily and other nonresidential construction, 85% for 1- to 4-family residential construction, 75% for land development, 65% for raw land (12 CFR part 34, subpart D, appendix A, 2025 edition) | Is the loan recourse? What index does it float over? How close is the bank to its construction concentration threshold? |
| Credit unions | Member projects that fit within the credit union's business-loan cap | Net member business loans capped at the lesser of 1.75 times actual net worth or 1.75 times the statutory minimum net worth (12 CFR 723.8, 2025 edition) | Does the credit union need you as a member first? Does it sell participations to other credit unions? |
| HUD Section 221(d)(4), through a HUD-approved MAP lender | New construction or substantial rehab of rental housing with 5 or more units | Long-term mortgages up to 40 years; no income limits; FY2024 volume 105 projects, 17,434 units, $2.5 billion nationally (HUD, Descriptions of Multifamily Programs) | How long will pre-application and firm commitment take on your timeline? |
| SBA 504, through a Certified Development Company and a senior lender | An operating business building its own facility | Maximum 504 loan $5.5 million; long-term, fixed-rate financing; no passive or speculative activities (SBA 504 loans page) | Does your business meet SBA size standards, and will the senior lender fund construction? |
| Debt funds and private construction lenders | Projects a bank, credit union or agency program will not hold | No public rule; the fund's credit policy sets leverage, pricing and recourse | What is the all-in cost including fees, and what happens if the project runs late? |
| Life-company forward commitment | A permanent loan committed before construction and funded at completion | No public rule; terms come only from the lender's own commitment letter | Is the forward rate locked, and what completion and lease-up tests must you pass? |
| Brokerage (YieldStack, publisher of this page) | Any of the above, compared on one file | YieldStack is a commercial mortgage brokerage, not a lender. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing. | Which of the 20,000+ loan programs match your project? |
The first four rows are regulated or program lenders whose limits are published. The debt-fund and life-company rows publish no comparable rule, so their terms exist only in writing from the lender, and that is where a side-by-side comparison earns its keep.
What does Texas construction activity look like in the 2025 permit data?
Texas authorized 60,505 housing units in five-plus-unit buildings in 2025, up from 59,110 in 2024 but below the 74,141 authorized in 2023, according to the Census Bureau's annual state building-permit files. Single-family authorizations fell to 140,579 units in 2025 from 158,121 in 2024 in the same files.
The same 2025 file counts 463,972 units in five-plus-unit buildings nationally, which puts Texas at roughly 13 percent of the country's multifamily permits by our arithmetic on the Census figures. The Census Bureau's 2025 annual metro-area file shows where those Texas units sit:
Dallas-Fort Worth-Arlington: 24,607 units in 5+ unit buildings, 39,790 single-family units (2025)
Houston-Pasadena-The Woodlands: 16,385 units in 5+ unit buildings, 46,219 single-family units (2025)
Austin-Round Rock-San Marcos: 11,749 units in 5+ unit buildings, 14,810 single-family units (2025)
San Antonio-New Braunfels: 1,846 units in 5+ unit buildings, 8,651 single-family units (2025)
Permits are a count of authorized construction, not of loans. They show where Texas construction is concentrated, which is useful context when a lender asks about competing new supply near your site. For metro-level detail on apartment construction financing, see the city guides for Houston, Dallas-Fort Worth and San Antonio; this page stays at the state level and compares lender types.
Why would a Texas bank pass on a construction loan it otherwise likes?
A Texas bank can pass on a well-underwritten construction loan because federal concentration guidance can flag a bank for further supervisory analysis when its construction, land development and other land loans reach 100 percent or more of total risk-based capital, so a bank near that line may decline or shrink a loan that fits every other test.
The 2006 interagency guidance, published by the OCC as Bulletin 2006-46 on December 6, 2006, sets that 100 percent construction screen and a second screen for total commercial real estate loans at 300 percent or more of total risk-based capital, where the commercial real estate portfolio has also grown 50 percent or more over the prior 36 months. The screens are not hard caps; the guidance says an institution meeting them may be identified for further supervisory analysis. A bank's position against them is not visible from the outside, so ask the lender directly.
The supervisory loan-to-value table matters too. The interagency real estate lending guidelines in 12 CFR part 34 set an 80 percent limit for commercial, multifamily and other nonresidential construction and 85 percent for 1- to 4-family residential construction. For a loan that funds several phases of one project, the guidelines say the limit is the one for the final phase funded, and that loan disbursements should not exceed actual development or construction outlays. The guidelines also define value, for a loan to purchase an existing property, as the lesser of the actual acquisition cost or the estimate of value.
Those guidelines are addressed to insured depository institutions. They do not bind a non-bank debt fund, which sets its own limits, so ask any non-bank lender what its written credit policy allows.
When does a credit union make sense for a Texas construction project?
A credit union makes sense for a Texas construction project when you are, or can become, a member, and the project is small enough to fit inside a lender whose member business lending is capped by statute at the lesser of 1.75 times its actual net worth or 1.75 times the minimum net worth the Federal Credit Union Act requires.
That cap, set out in 12 CFR 723.8, ties a credit union's total business lending to its net worth. The same rule excludes some loans from the cap, including loans that a federal or state agency fully insures or guarantees, and certain non-member participation interests. A credit union close to its cap may have no room for your deal, however strong it is.
Ask early whether membership is required, whether the credit union holds construction loans or sells participations, and who administers draws.
When do HUD 221(d)(4) or SBA 504 fit better than a bank construction loan?
HUD's Section 221(d)(4) and the SBA 504 program fit better than a bank construction loan when the project matches their narrow purpose: 221(d)(4) insures loans for new construction or substantial rehabilitation of rental housing with five or more units, and SBA 504 finances an operating business's own facility, not a speculative or passive investment.
HUD describes Section 221(d)(4) as a program that insures lenders against loss on mortgage defaults and allows long-term mortgages of up to 40 years that can be financed with Ginnie Mae mortgage-backed securities. HUD says there are no income limits, projects may be designed for the elderly or handicapped, and the program is eligible for Multifamily Accelerated Processing, in which a MAP-approved lender submits exhibits that HUD reviews before inviting a firm commitment application. HUD reports that in FY2024 the program insured mortgages for 105 projects with 17,434 units, totaling $2.5 billion.
SBA's 504 program provides long-term, fixed-rate financing for major fixed assets, and SBA says a 504 loan can be used for the purchase, construction or renovation of buildings or land. Certified Development Companies originate the 504 loan in collaboration with a senior lender, the maximum 504 loan amount is $5.5 million, and loans cannot be made to businesses engaged in nonprofit, passive or speculative activities. A Texas developer building to lease to others does not fit that purpose; an operating business building its own plant or office is the target.
Where do debt funds and private construction lenders fit in Texas?
Debt funds and private construction lenders are the non-bank option for a Texas project that a bank, credit union or agency program will not hold, and because no public rule sets their leverage, pricing or recourse, the only way to compare them is side by side on written term sheets from each lender.
We have not cited a leverage or rate range for this lender type because no public primary source states one for Texas, and a number without a source would be a guess. What you can compare is the structure. Ask each one:
- What is the all-in cost, including origination and exit fees, not only the coupon?
- Is the loan recourse, and what completion guaranty is required?
- How are draws inspected and funded, and how long does a draw take?
- What extension options exist if the project runs late, and what do they cost?
- Is the interest reserve sized for a realistic schedule?
How do today's rates feed into a Texas construction loan's cost?
A floating-rate construction loan resets off an index, so the index level on the day you close sets your starting cost: the bank prime rate was 7.00 percent as of September 21, 2026 and the Secured Overnight Financing Rate was 3.87 percent as of September 23, 2026, according to Federal Reserve Economic Data.
The Federal Open Market Committee raised the target range for the federal funds rate by a quarter point to 3.75 to 4.00 percent on September 16, 2026. If a term sheet floats over prime or SOFR, a move in that index moves your interest cost on every dollar drawn, and a higher index means a larger interest reserve to carry the same draw schedule. Ask which index your loan floats over, whether there is a floor, and whether a rate cap is required.
How should you compare Texas construction lenders on one project?
Compare Texas construction lenders on one project by holding the file constant and changing only the lender: the same budget, schedule, equity and exit go to every lender type, and you compare leverage, recourse, all-in cost, draw process and extension terms side by side rather than chasing the lowest quoted coupon.
Run five tests on every offer:
- Leverage against cost and value: does the lender size on cost, on value, or on the lower of the two?
- Recourse and guaranties: what does the sponsor sign personally?
- All-in cost: coupon, fees, reserve funding and extension fees together.
- Draw mechanics: inspector, retainage, and time from draw request to funding.
- Exit: whether the permanent takeout is committed or assumed.
The bottom line
There is no single best construction lender in Texas, only the lender type whose rules match your project. Banks work inside supervisory loan-to-value limits and concentration screens, credit unions inside a net-worth cap, HUD 221(d)(4) and SBA 504 inside program purposes, and debt funds on their own terms. Put one complete file in front of several types and compare the written terms.