Dallas Construction Loans: Ground-Up Development Financing [2026 Guide]

Dallas-Fort Worth ranks as the number one metro in the United States for corporate headquarters relocations and commercial real estate investment. With a regional population now exceeding 8.7 million and more than 886,000 new residents since 2020, the demand for ground-up construction financing has never been stronger. Whether you are building a data center campus in Ellis County, a mixed-use development in Deep Ellum, or a master-planned community in Celina, securing the right Dallas construction loan is the foundation of every successful project.

This guide breaks down everything developers, investors, and business owners need to know about construction lending in the Dallas-Fort Worth market for 2026.

What Are Dallas Construction Loans and How Do They Work?

A Dallas construction loan is a short-term financing product designed to fund the ground-up development of commercial, residential, or mixed-use properties in the Dallas-Fort Worth metroplex. Unlike traditional commercial mortgages that provide a lump sum at closing, construction loans disburse funds in scheduled draws as the project reaches specific milestones such as site preparation, foundation, framing, and completion.

Most construction loans in the DFW market carry terms of 12 to 36 months with interest-only payments during the build period. Loan-to-cost (LTC) ratios typically range from 65% to 80%, meaning developers need 20% to 35% in equity or down payment. Once the project is complete, borrowers either refinance into a permanent loan (a process called a "construction-to-perm" conversion) or sell the property to repay the construction debt.

The Dallas market offers particular advantages for construction borrowers. Texas has no state income tax, construction costs run 10% to 15% below coastal markets, and the permitting environment is generally more developer-friendly than cities like New York or Los Angeles. These factors combine to create stronger project economics that lenders find attractive when underwriting new construction deals.

For projects requiring both vertical construction (the building itself) and horizontal construction (site work, roads, and utilities), lenders will typically evaluate the total project cost and may structure the loan to cover both phases.

What Types of Construction Projects Are Lenders Funding in Dallas Right Now?

The DFW construction lending market is active across virtually every property type, but several sectors are drawing outsized lender interest in 2026.

Data Center Development stands out as the highest-growth segment. Dallas hosts 175 data center facilities from 50 operators, and the pipeline is expanding rapidly. Provident Data Centers and PowerHouse are co-developing a 768-acre hyperscale campus in Ellis County with 1.8 gigawatts of capacity across 24 buildings, with the first building energized in May 2026. Crow Holdings announced a 245-megawatt campus on an urban infill site in central Dallas. DataBank is building a 480-megawatt campus in Red Oak with phase one operational by Q2 2026. Stream Data Centers is investing $300 million in a 48-megawatt facility in Wilmer. These projects require specialized construction financing with higher loan amounts and longer timelines than typical commercial builds.

Industrial and Warehouse Construction continues to drive lending volume. The DFW region recorded 22.3 million square feet of industrial absorption over the past 12 months, the highest figure in the country. Far north Fort Worth holds the largest industrial construction pipeline in the nation, anchored by Hillwood's 27,000-acre AllianceTexas development with 7.7 million square feet underway across 20 projects. Trammell Crow Company broke ground on Passport Park West, a 2.7-million-square-foot development spanning 180 acres at DFW International Airport.

Master-Planned Communities are surging in the northern suburbs. Celina, now America's fastest-growing city, is delivering luxury homes at 15% to 30% below Frisco and Prosper pricing. The Bonham EDC announced plans for the 400-acre Powder Creek Ranch development. Construction lenders are actively funding horizontal development (roads, utilities, and lot preparation) as well as vertical homebuilding in these communities.

Corporate Campus Development reflects the steady corporate migration to North Texas. AT&T is building a new 54-acre global headquarters campus in Plano at the former EDS site, consolidating operations from Dallas, Plano, and Irving. Since 2018, DFW has attracted 100 new corporate headquarters, making it the top relocation destination in the country. Each of these relocations generates construction loan demand for office buildouts, campuses, and supporting retail and hospitality projects.

Retail Construction is also robust, with approximately 7.3 million square feet under construction in the DFW region, one of the largest pipelines since 2017.

How Much Does Commercial Construction Cost Per Square Foot in Dallas?

Understanding construction costs is essential for structuring the right loan. Dallas offers a cost advantage over most major metros, but prices vary significantly by project type and quality level.

The average commercial construction cost in Dallas ranges from $190 to $340 per square foot, depending on project type, complexity, and design specifications. Here is a breakdown by property category:

• Class A Warehouses and Industrial: $140 to $230 per square foot
• Standard Office Buildings: $190 to $320 per square foot
• Retail Construction: $220 to $360 per square foot
• Medical Facilities: $270 to $430 per square foot
• Single-Story Commercial (DFW): $310 to $450 per square foot

Several cost factors are shaping the 2026 market. Updated energy codes (IECC 2021) have added approximately 1% to 3% to baseline costs due to requirements for high-performance HVAC and insulation systems. Skilled labor shortages continue to create upward pressure on wages, though materials costs have largely stabilized after the volatility of 2022 and 2023. Developers should budget for moderate cost growth in Class A developments where finish standards continue to rise.

When applying for a construction loan, your lender will require a detailed cost breakdown from your general contractor. This budget forms the basis for the draw schedule and directly impacts the loan-to-cost ratio that determines how much financing you can secure.

What Interest Rates and Terms Should You Expect for Dallas Construction Loans?

Construction loan rates in the Dallas market for 2026 reflect both national interest rate trends and the strong local fundamentals that make DFW an attractive lending market.

Current rate ranges by loan type:

• Bank Construction Loans: 7.0% to 8.5% for well-qualified borrowers with strong track records and 25% to 35% equity. Terms of 12 to 24 months with one or two extension options. Banks remain the most common source and offer the most competitive rates.
• Multifamily Construction Loans: Starting from 6.0% in the DFW market, reflecting strong rental demand. The region has approximately 28,000 units under construction, and lenders view the multifamily sector favorably despite recent delivery slowdowns.
• SBA Construction Loans: SBA 504 loans combine a bank loan (50%), a Certified Development Company loan (40%), and borrower equity (10%), making them powerful for owner-occupied projects. SBA 7(a) loans provide flexible financing for smaller commercial builds up to $5 million.
• Bridge-to-Construction Loans: 8.5% to 11.0% for developers who need to close quickly on land or start construction before permanent financing is arranged. These loans offer speed and flexibility but at a higher cost. Learn more about bridge loan options.
• Hard Money Construction Loans: 10.0% to 13.0% for borrowers with less experience, lower credit scores, or non-stabilized projects. Higher rates reflect higher risk tolerance from these lenders.

Most construction loans in Dallas are structured as interest-only during the build period, with interest calculated only on the amount drawn rather than the full loan commitment. This feature significantly reduces your carrying costs during construction.

Use our commercial mortgage calculator to model different rate and term scenarios for your Dallas construction project.

What Are the Key Dallas Submarkets for New Construction?

Dallas-Fort Worth is a sprawling metro, and construction activity varies dramatically by submarket. Understanding where development is concentrated helps borrowers identify opportunities and helps lenders assess market risk.

Downtown Dallas and Deep Ellum remain magnets for mixed-use, office, and hospitality construction. The Loop Dallas, a proposed 30-mile urban trail and park system, is expected to catalyze billions in new development along its path. Deep Ellum continues to attract boutique hotel and restaurant projects, while the Design District draws creative office and gallery developments.

Frisco and The $5 Billion Mile anchor the northern growth corridor. Frisco's population has grown from 33,000 in 2000 to over 230,000 today, and major developments continue to transform the area. The PGA of America headquarters, Universal Studios theme park (opening 2026), and ongoing mixed-use projects keep construction lenders busy in this submarket.

Celina, Prosper, and Allen represent the next frontier of North Texas growth. Celina added 15,980 new residents in the most recent count, making it the fastest-growing city in America by percentage. Its Downtown Center, including a two-story library and community spaces, is on track for a fall 2026 unveiling. Prosper benefits from tollway extensions pushing north, while Allen continues to develop around its events center and corporate campus base.

Midlothian and Ellis County are emerging as a data center and industrial hub. The Provident-PowerHouse hyperscale campus sits in this submarket, and proximity to major transportation corridors makes it attractive for logistics development.

Far North Fort Worth and AllianceTexas dominate industrial construction. Hillwood's AllianceTexas holds the nation's largest industrial construction pipeline, and the surrounding area benefits from the BNSF intermodal facility and proximity to DFW Airport.

Plano and Legacy West continue to attract corporate campus construction. AT&T's planned 54-acre headquarters campus will anchor the next wave of development in this mature but still-evolving submarket.

What Do Lenders Look for When Underwriting a Dallas Construction Loan?

Securing construction financing in Dallas requires thorough preparation. Lenders evaluate several key factors when deciding whether to fund a ground-up project.

Developer Experience is often the most important factor. Lenders want to see a track record of completed projects similar in scope and type to the proposed development. First-time developers may need to partner with an experienced co-developer or bring additional equity to compensate for the experience gap.

Equity and Loan-to-Cost Ratio determines how much skin you have in the game. Most Dallas construction lenders require 20% to 35% equity, though the exact requirement depends on the project type, borrower strength, and market conditions. Stronger borrowers with proven track records may qualify for higher LTC ratios.

Pre-Leasing or Pre-Sales significantly strengthen your application. A multifamily project with 30% pre-leasing commitments or a build-to-suit industrial facility with a signed tenant will receive more favorable terms than a fully speculative project. In Dallas's strong leasing market, many lenders are still willing to fund spec projects, but pre-leasing reduces your rate and increases your leverage.

Construction Budget and Timeline must be detailed and realistic. Lenders will require a full cost breakdown from your general contractor, a construction timeline with milestone dates, and a contingency reserve (typically 5% to 10% of hard costs). In the current Dallas market, labor availability and material lead times should be factored into your timeline.

Exit Strategy tells the lender how you plan to repay the loan. The three primary exits are: refinance into a permanent loan upon stabilization, sell the completed project, or convert to a long-term owner-occupied mortgage. Each strategy has different requirements, and lenders will evaluate the feasibility of your chosen exit based on current market conditions.

Market Feasibility requires demonstrating that the Dallas submarket can absorb your project. A market study or feasibility analysis showing comparable rents, sale prices, vacancy rates, and competitive supply in your target area strengthens your application considerably.

How Does the Dallas Construction Loan Process Work From Application to Closing?

The construction loan process in Dallas follows a structured path from initial application to the first draw of funds. Here is what to expect at each stage.

Step 1: Pre-Qualification and Lender Selection (Weeks 1 to 2) - Begin by gathering your project plans, cost estimates, and financial documents. Work with a lending advisor who understands the DFW market to identify the right lender for your project type and size. Different lenders specialize in different property types, and matching your project to the right capital source saves time and improves your terms.

Step 2: Formal Application and Underwriting (Weeks 3 to 6) - Submit your complete loan package, including architectural plans, general contractor bids, a pro forma financial analysis, personal and entity financial statements, and your development resume. The lender will order an appraisal, environmental report, and title work during this phase.

Step 3: Loan Approval and Commitment (Weeks 7 to 8) - Once underwriting is complete, the lender issues a commitment letter outlining the approved loan amount, rate, terms, and conditions. Review this carefully with your attorney before accepting.

Step 4: Closing and Initial Draw (Weeks 9 to 10) - At closing, you will sign the loan documents, fund your equity contribution, and record the construction deed of trust. Most lenders will fund the land acquisition or first draw (typically for site work and permits) within a few days of closing.

Step 5: Construction Period and Draw Management (Months 3 to 24) - During construction, you will submit draw requests (usually monthly) accompanied by an inspection report, lien waivers from subcontractors, and updated budget tracking. The lender's inspector verifies that work has been completed before releasing funds.

Step 6: Project Completion and Loan Conversion or Payoff - Upon completion, you will obtain your certificate of occupancy, begin lease-up or sales, and either refinance into permanent financing or pay off the construction loan from sale proceeds.

What Opportunities Does the Dallas Data Center Boom Create for Construction Borrowers?

The explosion of data center development across the DFW region represents one of the most significant construction lending opportunities in the country. Dallas now hosts 175 data center facilities, and the pipeline of announced projects totals billions of dollars in new construction.

The scale of these projects is remarkable. The Provident-PowerHouse hyperscale campus in Ellis County spans 768 acres with 24 buildings planned across three phases and 1.8 gigawatts of power capacity. DataBank's Red Oak campus encompasses eight facilities totaling 3.4 million square feet with 480 megawatts of capacity. Crow Holdings is developing a 245-megawatt campus on an urban infill site in central Dallas.

For construction borrowers, the data center boom creates opportunities beyond the data centers themselves. Every major data center campus generates demand for supporting infrastructure: power substations, fiber networks, access roads, water treatment facilities, and employee amenities. The surrounding areas benefit from increased demand for workforce housing, retail, and hospitality development.

Data center construction financing differs from typical commercial construction loans. Projects tend to be larger ($50 million to $500 million or more), timelines are longer (18 to 30 months), and the technical requirements are more specialized. Lenders with data center experience evaluate power availability, network connectivity, cooling capacity, and the creditworthiness of the anchor tenants (often hyperscale operators like AWS, Microsoft, or Google) as primary underwriting factors.

Developers looking to participate in the data center ecosystem should focus on the emerging hubs in Ellis County (Red Oak, Midlothian), Wilmer, and central Dallas infill sites where power and fiber infrastructure are being expanded.

Why Is North Texas Suburban Growth Driving Construction Loan Demand?

The northward expansion of the Dallas-Fort Worth metroplex represents one of the largest sustained development waves in American history. Cities like Celina, Prosper, and Princeton are transforming from agricultural communities into major suburban centers, and construction lending is fueling this transformation.

Celina tells the story clearly. The city added 15,980 residents in the most recent count, and its population growth rate makes it the fastest-growing city in America. What was mainly corn and cotton farmland just a decade ago now features master-planned communities with luxury homes, top-rated school districts, and commercial corridors under active development. Celina's Downtown Center, featuring a two-story library and community spaces, is scheduled for a fall 2026 unveiling.

Prosper benefits from the North Texas Tollway Authority's planned extensions, which will improve connectivity and drive further development. Allen continues to evolve around its events center and growing corporate base. Even smaller communities like Princeton (which added 9,838 residents) are attracting developer attention as land costs push builders further from the urban core.

The numbers support the trend. North Texas now has a population of 8,718,500, representing growth of more than 886,000 since the 2020 Census. Fort Worth added 32,191 new residents, Dallas added 29,510, and McKinney added 11,310.

For construction lenders, the suburban growth story is compelling because it generates demand across multiple property types simultaneously. A new master-planned community needs horizontal infrastructure (roads, water, sewer), vertical residential construction, retail centers, medical offices, schools, and recreational facilities. Each of these represents a construction loan opportunity.

Developers pursuing suburban projects should work with lenders who understand the phased nature of master-planned community development and can structure loans that align with the absorption timeline of each phase.

Frequently Asked Questions About Dallas Construction Loans

What is the minimum down payment for a construction loan in Dallas?

Most Dallas construction lenders require 20% to 35% equity, depending on the project type and borrower qualifications. Owner-occupied projects using SBA financing may qualify for as little as 10% equity through the SBA 504 program, which combines a bank loan (50%), a CDC loan (40%), and borrower equity (10%). Speculative development projects typically require the highest equity contributions, often 30% to 35%.

How long does it take to close a construction loan in Dallas?

The typical timeline from application to closing is 8 to 12 weeks for bank construction loans. Bridge lenders and hard money lenders can close in as few as 2 to 4 weeks for borrowers with strong qualifications and complete documentation. The most common delays are caused by appraisal timelines, environmental reports, and incomplete borrower documentation. Working with an experienced lending advisor can help streamline the process.

Can I get a construction loan for a project in Frisco, Celina, or other DFW suburbs?

Yes. Construction lenders serving the Dallas market typically cover the entire DFW metroplex, including Frisco, Allen, Celina, Prosper, Midlothian, McKinney, Plano, and other suburbs. In fact, many lenders are particularly active in the fast-growing northern suburbs where new construction activity is highest. The key underwriting factors remain the same regardless of submarket: borrower experience, project feasibility, and equity contribution.

Do I need to own the land before applying for a construction loan?

Not necessarily. Many construction loans include a land acquisition component that funds the purchase of the development site along with the construction costs. If you already own the land free and clear, that equity can often count toward your down payment requirement. Some developers use a bridge loan to acquire land quickly, then refinance into a construction loan once plans and permits are in place.

What happens if my construction project goes over budget in Dallas?

Most lenders require a contingency reserve of 5% to 10% of hard costs to cover unexpected expenses. If costs exceed the contingency, you will typically need to fund the overage from your own capital, as lenders rarely increase the loan amount mid-construction. This is why detailed upfront budgeting with your general contractor is essential. In the current Dallas market, building in adequate contingency for labor costs and material lead times is particularly important.

Are construction loan rates higher than traditional mortgage rates in Dallas?

Yes. Construction loans carry higher rates than permanent mortgages because they involve more risk for the lender. The property does not exist yet as collateral, and construction projects face timeline, budget, and completion risks that stabilized properties do not. Current Dallas construction loan rates range from 6.0% for well-qualified multifamily projects to 13.0% for hard money construction financing. The interest-only payment structure during the build period helps offset the higher rate by keeping monthly payments lower than they would be with a fully amortizing loan.

Ready to Finance Your Dallas Construction Project?

The Dallas-Fort Worth market offers some of the strongest construction lending fundamentals in the country: robust population growth, corporate migration, diverse economic drivers, and construction costs below coastal averages. Whether you are developing a data center campus, building a master-planned community in North Texas, or constructing a mixed-use project in the urban core, the right financing structure can make or break your project.

At Clear House Lending, we work with developers and investors across the DFW metroplex to structure construction loans that match your project timeline, budget, and exit strategy. Our team understands the Dallas market and has relationships with lenders who are actively deploying capital for ground-up development.

Contact our team today to discuss your Dallas construction project and get a customized financing proposal.