Financing Your Custom Home Build in Austin: Construction Loans Explained

Building a luxury custom home in Austin is one of the most rewarding investments you can make — but financing it requires a different approach than a standard home purchase. At Rivendale Homes, we work with clients from the very beginning, not just when the plans are finalized. We can help you find the right lot, set a realistic budget, and design a home that aligns with your goals — all before construction starts.

One of the smartest steps you can take before shopping for a property is to get pre-approved for a construction loan. Here’s how the process works and what to expect when financing your custom home.

Step 1: Get Pre-Approved for Your Construction Loan

Before you start touring lots or sketching floor plans, it’s critical to understand your budget. A pre-approval from a lender who specializes in construction financing will tell you exactly how much you can borrow. This not only helps you shop for land with confidence, but also ensures that your design stays aligned with your financing limits from the start.

At Rivendale Homes, we connect our clients with trusted local lenders who know the custom-building process inside and out. By starting with a pre-approval, you can avoid the common mistake of buying a lot that eats up too much of your budget, leaving less room for the home itself.

Step 2: Secure the Lot

Once you know your budget, you can confidently purchase a lot. Whether you’ve already found the perfect property or need help sourcing a teardown or infill lot in Austin, Rivendale Homes can assist in evaluating options that fit your vision and financial plan.

Step 3: Define the Budget and Contract Type

With the lot secured, we work with you and our team of architects and interior designers to create a custom home design and establish a budget. Depending on your preferences and the home you’d like to build, we can build under a fixed-price contract or a cost-plus. We’ll help you choose the structure that makes the most sense for your project.

Step 4: Apply for the Construction Loan

A construction loan is not like a standard mortgage — it’s a short-term loan (usually 12–18 months) that funds the build itself. The lender will want to see:

·       Your construction plans and specifications

·       The signed construction contract

·       An appraisal based on the “as-completed” value of the home

·       Verification of your credit, income, and ownership of the lot

Rivendale Homes provides all the necessary documentation to make the process smooth.

Step 5: Draws Are Disbursed as Construction Progresses

Construction loans use a draw schedule — meaning the funds are released in phases as the project hits milestones such as:

·       Site prep and foundation

·       Framing

·       Mechanical rough-ins

·       Drywall and interiors

·       Final finishes

We coordinate directly with the lender to request draws, schedule inspections, and ensure your project stays funded and on track. You only pay interest on the portion of the loan that’s been drawn, not the full loan amount.

Step 6: Convert to a Permanent Mortgage

Once your custom home is complete, the construction loan is converted into a permanent mortgage. This is when you can lock in your long-term interest rate. Many lenders offer a rate float-down option — allowing you to take advantage of lower rates if the market improves during your build. This can save you thousands over the life of the loan.

Rivendale Homes: Your Partner in Financing and Building

At Rivendale Homes, we believe building your dream home shouldn’t feel overwhelming. We help clients navigate every step — from finding the right lot and setting the budget upfront, to finalizing plans, securing financing, and managing the build. By combining smart planning with transparent communication, we make sure your home is delivered on time, on budget, and exactly as you envisioned.

Thinking of building a luxury custom home in Austin?

Talk to Rivendale Homes today about your budget, financing options, and next steps. We’ll connect you with trusted lenders and start designing a home that’s as unique as you are.