Texas rewards builders who understand which government owns the permit and which appraisal district owns the tax bill — not sponsors who import a Florida or Illinois pro forma and swap the city name. A teardown in Preston Hollow, a cottage pod in Celina, and a Westlake scrape share the same 8.99%–13.5% construction coupon on qualified investor files. They do not share the same MUD assessment, school-district comp fence, hail deductible, or January 1 reassessment shock.
This guide is for investors and builders financing ground-up, non-owner-occupied spec and build-to-rent homes across DFW (Dallas–Fort Worth) and Austin. It explains how Jaken Finance Group structures new-construction capital here, where metro economics diverge from the volume flip bands on fix and flip loans Texas, and why luxury specs and small entitled pods need a different desk than a clean $195,000 ranch. Generic draw mechanics live on how construction loans work and ground-up loans with no experience. This is educational information, not legal or tax advice.
National luxury leverage: luxury new construction loans · DFW spoke: luxury new construction Dallas–Fort Worth · Austin spoke: luxury new construction Austin · Small pods: community build construction loans · Apply: Newbuild.
Why build spec in DFW and Austin in 2026
Texas remains a top-three state for housing permits. The U.S. Census Bureau new residential construction series consistently ranks Dallas–Fort Worth–Arlington and Austin–Round Rock among the highest-volume MSAs for single-family authorizations. That volume cuts two ways for a private construction desk.
Volume is the commodity lane. National platforms price clean 1970s–1990s ranches in Garland, Pflugerville, and Mansfield at maximum LTC because the asset is simple, comps are thick, and the hold is six months. Jaken Finance Group funds those files too — see hard money lenders Texas — but that is not where a capital partner sends you to differentiate.
Complexity is the margin lane. Luxury scrape in Highland Park, compatibility-constrained infill in Tarrytown, and an eight-cottage entitled pod in Prosper fail the national SFR template for different local reasons: ISD comp fences, McMansion FAR caps, MUD bond carry, Collin CAD reassessment, and hail/wind deductibles on high-finish roofs. The sponsor who models those lines before land close earns the relationship. The sponsor who discovers them at the first draw eats the spread.
No state income tax on rental profit helps hold exits — see DSCR loans Texas — but property tax does not. Texas effective rates often land 1.8%–2.4% of market value across county, city, school, college, and special districts. Model tax at post-close assessed value, not the distressed seller’s protested bill.
How ground-up spec financing works in Texas
| Parameter | Jaken Finance Group setting | Texas note |
|---|---|---|
| Construction / bridge rate | 8.99%–13.5% interest-only on drawn balance | Priced to sponsor, leverage, and file |
| Term | 12–18 months IO (extensions available) | Luxury spec often 14–18 months plus marketing |
| LTC — general investor | Up to 90% LTC | Cost-heavy suburban spec |
| LTC — qualified files | Up to 100% LTC on qualified files | Standard infill, not luxury O-O spec |
| LTC — spec / BTR builder | 70%–80% LTC | Repeat builders with draw discipline |
| LTC — first-timer | 65%–75% of cost | Pair with no-experience program |
| LTC — luxury ground-up | Up to 100% LTC up to $2.5M on qualified files | Owner-occupant resale exit — see luxury pages |
| As-completed cap | Up to 75% LTARV | Fund the lower of LTC and LTARV |
| Contingency | 10%–15% of hard-cost budget | Hail season and change orders argue for high end |
| Draws | 5–7 on a $500K+ vertical | 48–72 hours after third-party inspection |
| Front-load cap | ≤20% before foundation inspection | Same nationwide |
| Close speed | 10–14 business days | Construction files with plans in hand |
| DSCR takeout | 5.75%–10.5% at 1.0+ DSCR, 70%–75% LTV | BTR and duplex exits — not most luxury specs |
Two rules bind most Texas files before anyone argues about rate. First, 75% LTARV caps the advance on land-heavy deals — a $425,000 Preston Hollow lot plus $820,000 vertical does not automatically support a $1M+ loan just because LTC math allows it. Second, interest accrues on the drawn balance, so a disciplined draw schedule is carry management, not paperwork.
Texas tax, MUD, and PID — the carry nobody puts in the pro forma
January 1 reassessment (Collin, Dallas, Denton, Travis)
Texas Property Tax Code treats January 1 as the appraisal date. A spec home under roof but not CO’d on January 1 may still move from land-only taxation toward improved value when the appraisal district discovers the vertical — Collin Central Appraisal District’s reappraisal plan explicitly includes new construction discovery via permits, COs, and field inspection.
Investor implication: Year-one taxes on a completed spec listed in Q4 can jump in year two when land + structure hit the roll. For a $1.1M as-completed home in Collin County at ~2.1% combined rate, annual tax near $23,000 is realistic — not the $4,000 land-only bill the seller forwarded. Underwrite the finished asset.
Developers in MUD/WCID subdivisions may file a Section 23.20 waiver that splits tax parcels until an end-user owns on January 1 — see Collin CAD’s MUD bulletin. Builders may receive two tax bills (county/school consolidated plus MUD collector). Retail buyers’ lenders care. Your carry model should too.
MUD and PID assessments
Municipal Utility Districts (MUDs) and Public Improvement Districts (PIDs) repay infrastructure bonds through assessments on the property tax bill. Exurban north DFW — Celina, Prosper, Forney, parts of McKinney and Melissa — commonly carries $1,500–$4,500+ annual MUD/PID on top of city and ISD rates. That is permanent PITIA on a hold exit and a buyer objection on a listed spec (“Why is your tax bill $18K when my Plano ranch pays $11K?”).
Underwriting rule: Pull the current tax certificate and the MUD rate order before land close. Do not assume the listing agent’s “estimated taxes” includes bond debt.
Hail and wind (DFW) versus flood (Houston)
This cluster focuses DFW and Austin. Still: DFW hail corridors drive roof-forward reserves and 1%–2% wind/hail deductibles on high-value roofs — a $45,000 hail hit on a standing-seam spec is a sponsor reserve problem, not a lender surprise. Austin Hill Country exurban builds add septic, well, and wildfire-zone insurance scrutiny. Houston flood is a different playbook — see bridge loans Texas for Harris County diligence, not this page.
Jurisdiction and permits — Dallas is not Plano is not Austin
Texas has no statewide building department. The permitting authority is whichever city or county the parcel sits in. A “Dallas” mailing address can be Dallas, Garland, Irving, or unincorporated Dallas County. Confirm from the deed and GIS before you underwrite “DFW.”
City of Dallas
The Planning & Development Department routes residential new construction through DallasNow (live May 2025). City briefing data reported in 2025 showed residential permit median waits falling from roughly 68 days to about 8 days after department consolidation — a real improvement, but practitioners still budget 4–8 weeks for first-pass plan review when corrections, zoning, and utility coordination are in play. Budget 12–14 months from permit to CO on a custom infill vertical, not a production-builder tract timeline.
Teardowns inside Dallas need a demolition permit and utility disconnect sequence before vertical permits issue — dead carry between demo and foundation is real dollars at 10%–11% IO on land basis.
Collin County suburbs (Plano, Frisco, McKinney, Allen)
Collar municipalities typically review a new single-family plan set in 3–6 weeks on a clean submission — faster than Dallas infill, slower than the broker who says “two weeks guaranteed.” The trade is impact fees, MUD assessments, and production-builder competition on the next street. Your spec must beat the tract alternative on finish, lot, or school narrative — the same logic as Naperville versus Plainfield.
City of Austin
Austin adds Residential Design and Compatibility Standards (Subchapter F / “McMansion” rules) on many central lots: commonly the greater of 0.40 FAR or 2,300 sf gross floor area on standard single-dwelling lots 5,750 sf+ inside the boundary — with side setback planes, building coverage limits, and exemptions for porches and garages that still require a licensed designer to calculate. HOME Phase 1 moved duplex and two-/three-unit projects to §25-2-773 with higher FAR — a different file than a Westlake luxury scrape.
Austin Water wastewater capacity can gate draws the way Naperville DPU gates collar specs. Confirm service availability before you lock land in ETJ and Hill Country pods — see Austin ETJ water capacity financing.
| Jurisdiction | Typical new-SFR plan review | Texas-specific friction |
|---|---|---|
| City of Dallas | 4–8 weeks practical; city cites faster medians post-DallasNow | Teardown sequence, oak/wires, infill zoning |
| Plano / Frisco / McKinney | 3–6 weeks on clean sets | MUD/PID, ISD comp import errors |
| Fort Worth | 3–5 weeks typical suburban | Tarrant tax vs Dallas County mix-ups |
| City of Austin | 4–8 weeks + compatibility calc | Subchapter F FAR, water capacity letter |
| ETJ (Manor, Kyle, Buda) | Varies by city extraterritorial agreement | CCN water, not Austin Water |
Cost to build per square foot — DFW and Austin bands
Carry ranges, not one national $/sf figure:
| Market / product | Vertical $/sf (hard, 2026 working range) | What moves the number |
|---|---|---|
| DFW production spec (Frisco tract competitor) | $155–$210/sf | Volume trades, standard finish |
| DFW custom infill (Preston Hollow, Lakewood) | $240–$340/sf | Structural complexity, long spans |
| DFW luxury scrape (Southlake, Westlake) | $280–$400/sf | Millwork, glass, roof, pool |
| Austin central scrape (Tarrytown, Rosedale) | $260–$380/sf | Compatibility envelope, tight lot |
| Austin Westlake / Lake Travis custom | $300–$450/sf | Slope, view engineering, septic vs city |
| Hill Country BTR cottage (entitled pod) | $165–$220/sf | Repeatable plan, less custom |
Add 8%–12% soft cost (architect, structural, surveys, insurance) and 10%–15% contingency on hard vertical. Change orders on marble and glass are how luxury specs land on mid-construction refinance.
Submarkets — do not cross the ISD line
| Submarket | Permit authority | Investor thesis | Comp fence |
|---|---|---|---|
| Preston Hollow / Bluffview | City of Dallas | Scrape 1960s ranch → custom $1.4M–$2.5M | Dallas ISD / private school buyer pool |
| Southlake / Westlake | Southlake or Westlake + Tarrant | Carroll ISD move-up vs production Frisco | Carroll ISD only — not Coppell solds |
| Frisco / Prosper | Collin cities | Must beat DR Horton / Highland on finish | Denton vs Collin PIN changes tax |
| East Dallas / Lakewood | City of Dallas | Infill teardown vs gut — see DFW teardown guide | Flood and oak overlay diligence |
| Westlake / Rollingwood | Austin + Eanes ISD | Luxury O-O spec $1.3M–$3M+ | Eanes comps — not East Austin flips |
| Tarrytown / Rosedale | City of Austin | Compatibility-limited FAR — duplex may beat spec | Subchapter F buildable envelope |
| Celina / Melissa pods | Collin + MUD | 4–12 door BTR or for-sale cottage | Product comps, not estate solds |
Importing a Frisco production sold to value a Southlake custom is a $100K–$250K ARV error. Importing East Austin flip comps onto Westlake is disqualifying. Half-mile is not enough if you crossed an ISD or compatibility boundary.
Worked example — Frisco-adjacent Collin spec, sell-out exit
Repeat builder buys a teardown lot in a Collin County city (not Dallas proper), plans a 3,200 sf custom spec targeting move-up buyers competing with new tract product one mile south.
Costs
| Line item | Amount |
|---|---|
| Lot acquisition (existing 1980s SFR) | $285,000 |
| Demolition and site prep | $22,000 |
| Vertical hard (3,200 sf × ~$215/sf) | $688,000 |
| Pool, hardscape, landscape | $78,000 |
| Soft costs, plans, engineering | $54,000 |
| Permits, fees, MUD transfer diligence | $11,000 |
| Contingency (~12% of hard) | $92,000 |
| Total project cost | $1,230,000 |
Financing. As-completed appraised value $1,095,000 — builder imported Frisco tract $1.18M solds; appraiser cut for smaller lot and traffic side. 75% LTARV = $821,250. 85% LTC = $1,045,500. Facility funds $821,250 — LTARV binds. Sponsor equity ~$408,750 plus interest reserve.
At 10.75% IO on average drawn balance ~$520,000 over 14 months, interest carry ~$65,000. Marketing 90 days adds ~$14,000 IO on a $780,000 average outstanding post-CO.
Exit. List at $1,095,000. Sell at $1,065,000 net of 8% sale costs → $979,800. Thin file — margin lives in buying the lot $40K better or building 200 sf smaller inside the ISD comp set. That is Texas spec underwriting: the spread is in land and comps, not the coupon.
Worked example — Austin Tarrytown scrape, luxury exit
Operator buys a 6,200 sf lot inside Austin city limits, Subchapter F applies, plans a 2,750 sf high-finish spec after demo (envelope capped by compatibility, not wishful 4,000 sf plans).
Costs
| Line item | Amount |
|---|---|
| Land / teardown acquisition | $395,000 |
| Demo | $19,000 |
| Vertical (2,750 sf × ~$295/sf) | $811,250 |
| Soft + compatibility consultant | $38,000 |
| Austin Water tap / impact | $14,500 |
| Contingency (~13%) | $108,000 |
| Total project cost | $1,385,750 |
Financing. Supported as-completed $1,520,000 on Tarrytown solds. 75% LTARV = $1,140,000. 82% LTC = $1,136,315. Facility ~$1,136,000 — both rails nearly tie. Luxury spec at 82% LTC — not 100%.
Interest reserve 16 months build + 90 days marketing at 11% on rising balance: budget $95,000–$110,000 IO. DSCR exit unlikely at this basis — see luxury new construction Austin for listed bridge if DOM slips.
Exit strategies — sell-out, BTR, and small pods
Sell-out suits luxury and move-up spec where finished value clears cost and the buyer pool is owner-occupants with jumbo end loans. Plan 60–120 DOM above $900K in DFW and Austin — luxury bridge if the listing goes slow.
DSCR takeout suits rental-grade vertical and build-to-rent — see build-to-rent DSCR loans and spec home BTR financing. Austin and DFW suburban 3/2 BTR at $385K–$475K as-completed can clear 1.0–1.15 DSCR at 70%–75% LTV when tax is modeled at full assessment.
Community pods (4–20 doors) on entitled pads — community build DFW — mix sell-out and hold with lot-release discipline. Not subdivision A&D on raw acreage.
Common mistakes — Texas construction files
| Mistake | Consequence | Mitigation |
|---|---|---|
| Underwriting “Texas” tax from seller’s bill | Carry miss after reassessment | Model post-close CAD value + MUD |
| Ignoring MUD/PID on exurban lot | $2K–$4K/yr surprise | Tax cert + rate order before LOI |
| Carroll ISD comp on a Coppell spec | ARV overstated $100K+ | ISD + county PIN fence |
| 100% LTC ask on $1.3M O-O spec without reserves | Decline or restructure | Full package: comps, contingency, IO reserve |
| Austin plans at 3,800 sf without FAR calc | Redesign delay | Compatibility calc before land close |
| One permit timeline for “DFW” | Interest reserve blown | City-specific calendar |
| Front-loading finish before foundation | Draw rejection | Milestone discipline |
How Jaken Finance Group structures Texas construction draws
Files close in 10–14 business days when plans, budget, GC agreement, title, and exit are in the package. Draws release 48–72 hours after third-party inspection across 5–7 milestones — land/acquisition, foundation, framing/dry-in, MEP rough, drywall/exterior, finish/CO. We hold site-work draws until demolition is complete and utilities are sequenced on teardown files.
Leverage matches sponsor and product: up to 100% LTC on qualified files on standard and luxury investor ground-up up to $2.5M; 70%–80% on repeat spec/BTR builders; always the lower of LTC and 75% LTARV. Contingency 10%–15% stays in the budget until punch list.
State context: commercial lending Texas for 5+ unit vertical · Texas market report Q1 2026 · jumbo hard money for $1M+ notes · Not sure which product? What kind of loan do you need.
Official resources
| Resource | Link |
|---|---|
| U.S. Census — new residential construction | https://www.census.gov/construction/nrc/index.html |
| City of Dallas — DallasNow permitting | https://dallascityhall.com/departments/sustainabledevelopment/Pages/DallasNow.aspx |
| Collin CAD — MUD/WCID 23.20 waiver bulletin | https://collincad.org/waiver-of-special-appraisal-for-municipal-utility-districts-mud-or-water-control-improvement-districts-assessments-wcid/ |
| Austin Development Services — residential | https://www.austintexas.gov/development-services |
| Austin Land Development Code — compatibility (Subchapter F) | https://www.austintexas.gov/codes |
| Texas Comptroller — property tax basics | https://comptroller.texas.gov/taxes/property-tax/ |
Verify fees and timelines against primary sources before you underwrite — MUD rates, CAD schedules, and Austin code chapters update on council cycles.
Rates, terms and conditions offered only to qualified borrowers and are subject to change at any time without notice. Closing times are in business days and commence upon receipt of appraisal payment and satisfaction of borrower conditions. All loans are subject to full underwriting for loan approvals. Jaken Finance Group only finances non-owner occupied investment properties.
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