San Antonio wrapped up 2025 with $11.5 billion in construction starts and is projected to reach $12.6 billion in 2026, making the Alamo City one of the strongest development markets in Texas. With a population of over 1.5 million residents, a $55 billion annual military economic contribution from Joint Base San Antonio, and transformative projects like the $1.3 billion Spurs arena and the Hemisfair mixed-use redevelopment reshaping downtown, the demand for ground-up construction financing has never been higher. Whether you are building multifamily units near Brooks, an industrial facility along the I-35 corridor, or a retail center on the booming Far Westside, this guide covers everything you need to know about securing a construction loan in San Antonio.
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Why Is San Antonio One of the Best Markets for Construction Lending in 2026?
San Antonio's construction market benefits from a rare combination of population growth, military-driven economic stability, and major infrastructure investment. The city added nearly 22,000 new residents in the most recent annual reporting period, ranking it among the top 10 fastest-growing large cities in the country. That growth is not slowing down. Forecasts from the Texas Demographic Center project continued expansion driven by the South Texas Medical Center, the tech sector overflow from Austin along the I-35 corridor, and the sustained presence of Joint Base San Antonio.
JBSA is the largest military economic contributor in the state of Texas, supporting approximately 212,000 jobs across the metro area and pumping more than $55 billion into the Texas economy. That military spending creates a floor of demand for housing, retail, medical office, and commercial space that insulates San Antonio from the boom-and-bust cycles that affect other Sun Belt metros.
On the commercial development front, the numbers tell a compelling story. The Hemisfair district is undergoing a $340 million, 20-year redevelopment that will deliver 525 residential units, a 200-room hotel, 65,000 square feet of retail space, and three new public parks. The proposed Spurs arena at the former Institute of Texan Cultures represents a $3 to $4.5 billion catalytic project with construction potentially beginning in spring 2026. Port San Antonio is transforming its 1,900-acre campus into a world-class aerospace, cybersecurity, and defense hub, with the Innovation Tower estimated to begin construction in 2026.
All of this activity creates strong demand for vertical construction and horizontal construction financing across the metro.
How Do San Antonio Construction Loans Work?
A construction loan provides short-term capital to cover the costs of building a new structure from the ground up. Unlike a traditional commercial mortgage, construction loans are disbursed in stages called "draws" that correspond to completed phases of the project. You only pay interest on the funds that have been drawn, not on the full loan amount.
Most San Antonio construction loans carry terms of 12 to 24 months for the building phase. Once the project reaches completion and receives its certificate of occupancy, borrowers either refinance into a permanent loan or pay off the construction debt through a property sale. Some lenders offer a single-close construction-to-permanent option that rolls both phases into one loan with a single closing, saving on duplicate closing costs and rate risk.
The draw schedule for a typical San Antonio project includes an initial advance for site preparation, followed by draws at foundation, framing, mechanical rough-in, drywall, and final completion. Lenders send third-party inspectors to verify completed work before releasing each draw. San Antonio's relatively streamlined permitting process compared to other major Texas metros gives developers a slight edge on project timelines, though commercial plan review still typically takes 2 to 4 weeks.
What Types of Construction Loans Are Available in San Antonio?
San Antonio borrowers can choose from several construction financing structures depending on project type, developer experience, and timeline requirements.
Conventional Construction Loans are offered by local and regional banks including Jefferson Bank, Frost Bank, Broadway Bank, and RBFCU. These carry competitive rates starting around 6% to 8% and typically require 20% to 25% equity. They work best for experienced developers with strong financial statements and established banking relationships in the San Antonio market.
SBA 504 Construction Loans provide longer terms and lower down payments for owner-occupied commercial properties. Borrowers can finance up to 90% of project costs through the combination of a bank loan (50%), a Certified Development Company loan (40%), and borrower equity (10%). This structure is particularly attractive for San Antonio businesses building medical offices near the South Texas Medical Center or owner-occupied industrial space along the I-35 corridor.
Hard Money and Private Construction Loans are available from regional private lenders and national bridge lenders. Rates range from 9% to 12%, but approval is faster and credit requirements are more flexible. These work well for developers who need to move quickly on land acquisitions in competitive submarkets like Stone Oak or the Far Westside, or for borrowers with credit challenges who still have strong projects.
Bridge-to-Construction Financing combines a bridge loan for land acquisition with a construction line, allowing developers to secure a site while finalizing architectural plans and permits. This structure is increasingly popular in San Antonio's fast-moving suburban corridors where desirable parcels are being absorbed quickly by national homebuilders.
What Are Current San Antonio Construction Loan Rates and Terms?
Construction loan rates in San Antonio vary by loan type, borrower profile, and property category. As of early 2026, San Antonio commercial mortgage rates start as low as 5.18% for stabilized properties, while construction financing carries a premium due to the inherent risk of the building phase.
Most conventional lenders require a maximum loan-to-cost (LTC) ratio of 75% to 80% and a loan-to-completed-value (LTCV) of 70%. Borrowers should expect to bring 20% to 30% of total project costs as equity, depending on their track record and the project's risk profile.
Credit requirements start at a 620 FICO score for most programs, though borrowers with scores above 700 will access significantly better rates and terms. Lenders also evaluate the borrower's liquidity, net worth, and construction experience during underwriting. San Antonio's relatively lower land costs compared to Austin and Dallas mean that total project budgets can be more favorable, potentially reducing the absolute dollar amount of equity required.
Use our commercial mortgage calculator to estimate your monthly interest payments during the construction phase and compare financing scenarios for your San Antonio project.
Where Are the Hottest Construction Zones Across Greater San Antonio?
San Antonio's construction activity spans from the historic downtown core to rapidly expanding suburban corridors, with each submarket presenting distinct opportunities and considerations for developers.
Downtown and Hemisfair are experiencing a generational transformation. The Hemisfair mixed-use redevelopment is delivering parks, residential, hotel, and retail space across multiple phases. The 17-story Monarch San Antonio hotel by Zachry Hospitality is expected to open in early 2026 as part of the Curio Collection by Hilton. The iconic 31-story Tower Life Building is being converted from vacant office space into 243 residential apartments with street-level restaurants and retail along the Riverwalk. The proposed Spurs arena would anchor the southeast corner of downtown with a $3 to $4.5 billion mixed-use district. Developers in this zone must navigate the Historic and Design Review Commission (HDRC) process, which requires a Certificate of Appropriateness for all exterior modifications within locally designated historic districts.
Brooks has surpassed $1.79 billion in completed development on the former Brooks Air Force Base, with an additional $328.6 million driving the next phase of growth. A 450-unit residential neighborhood is under construction on the former officers' housing area, and the first for-sale single-family homes near Green Line Park are now available. Two new apartment communities are in development alongside four existing ones. Brooks represents one of the most compelling infill development stories in the entire state, with walkable mixed-use planning and strong city support.
Port San Antonio is redeveloping its 1,900-acre campus on the city's southwest side into a hub for aerospace, cybersecurity, and defense companies. The Innovation Tower will be Port SA's first major vertical development, with construction estimated to begin in 2026 and completion targeted for 2028. Infrastructure upgrades to Billy Mitchell Boulevard, General Hudnell Drive, and General McMullen Drive are scheduled to begin in spring 2026, improving traffic flow and walkability. The defense campus, child development center, vertiport, and retail components will create sustained demand for construction financing over the next decade.
The I-35 Corridor between San Antonio and Austin continues to be one of the fastest-growing corridors in the country. The area added 2,925 multifamily units in 2025, with 910 units in San Antonio submarkets including New Braunfels (622 units) and Selma (288 units). Master-planned communities are booming along this corridor. Mayfair in New Braunfels is a 1,900-acre community with builders including David Weekley Homes, Perry Homes, and Toll Brothers, and a $37 million Costco opening in 2026. Koontz Corp. sold the first parcel within its 188-acre Frontera Logistics Supersite for a 93,000-square-foot industrial warehouse, with construction beginning in early 2026.
Far Westside and Alamo Ranch continue their rapid expansion. Construction on Alamo Commons, a new retail center at 11323 Alamo Ranch Parkway near Loop 1604, kicked off in September 2025 with completion targeted for September 2026. Weatherwood, a 425-acre master-planned community in nearby Medina County, broke ground with plans for 1,300 homes starting in the high $300,000s. A $94 million project will widen Alamo Ranch Parkway from four to eight lanes with construction beginning in 2027, signaling the infrastructure investment that typically precedes the next wave of commercial development.
Stone Oak and the North Side remain among the most desirable and active construction submarkets. Stone Oak Mercantile, a new retail development featuring Chick-fil-A, Black Rock Coffee, and Crust Pizza Co., is nearing completion. Median home prices in Stone Oak hover around $350,000, with new construction by Toll Brothers and Ashton Woods. The submarket's strong demographics and household incomes make it attractive for medical office, retail, and multifamily construction financing.
What Do You Need to Qualify for a San Antonio Construction Loan?
Lenders evaluating San Antonio construction loan applications focus on four primary areas: the borrower, the project, the market, and the exit strategy.
Borrower Qualifications: Most programs require a minimum 620 credit score, though 680 or higher is preferred for the best terms. Lenders want to see liquidity equal to at least 10% of the loan amount and a net worth that meets or exceeds the loan size. Previous construction experience matters, especially for projects above $2 million. First-time developers may need to partner with an experienced general contractor or bring a co-guarantor with a proven track record.
Project Requirements: A complete set of architectural plans and specifications, a detailed construction budget with line-item breakdowns, a signed general contractor agreement, and all necessary permits must be in place before closing. Lenders will order an appraisal to determine the as-completed value and may require an environmental Phase I report, particularly for commercial projects on previously developed land such as former military sites at Brooks or Port San Antonio.
Market Analysis: The lender's underwriting team will evaluate comparable sales, absorption rates, and demand drivers in the project's submarket. San Antonio's steady population growth, military economic base, and diversified economy generally support favorable underwriting conclusions. However, the multifamily sector saw an 80% drop in apartment starts in 2024, with only 1,874 units breaking ground compared to 9,526 in 2023, so lenders may scrutinize apartment proposals more carefully as the market recalibrates.
Exit Strategy: Borrowers must demonstrate a clear plan for repaying the construction loan. For-sale projects need a credible marketing plan with pre-sale activity or comparable sales data. Hold projects require a refinance commitment or term sheet from a permanent lender. San Antonio's balanced market conditions in 2026 favor developers who can show realistic absorption timelines.
What Special Considerations Apply to San Antonio Historic District Construction?
San Antonio has one of the most robust historic preservation frameworks in Texas, and developers building in or near locally designated historic districts must factor these requirements into their project timelines and budgets.
All exterior modifications to properties within locally designated historic districts or individually designated landmarks require a Certificate of Appropriateness (COA) from the Office of Historic Preservation (OHP). Some COA applications can be approved administratively by OHP staff, while more significant projects require review by the Historic and Design Review Commission (HDRC). The HDRC meets regularly and evaluates new construction based on compatibility with the surrounding historic context, including scale, massing, materials, and setbacks.
Importantly, historic designation regulates the appearance of a property rather than its use. Zoning uses allowed for historic properties are not affected by district or landmark designation. This means developers can pursue adaptive reuse or new construction within historic districts for commercial, residential, or mixed-use purposes, as long as the exterior design meets the Historic Design Guidelines.
For developers, the key is engaging with the OHP early in the design process. Projects that incorporate the Design Guidelines from the start typically move through the review process more efficiently. Budget an additional 4 to 8 weeks for HDRC review beyond standard permitting timelines, and ensure your construction loan term accounts for this added schedule buffer.
The Tower Life Building conversion downtown exemplifies how historic preservation and modern development can coexist profitably. The 31-story landmark is being transformed into 243 apartments with ground-floor retail while maintaining its iconic exterior, demonstrating that historic projects can achieve strong returns with the right financing structure.
How Does the Draw Process Work for San Antonio Construction Projects?
The draw process is where construction loans differ most from other types of financing. Understanding this process helps you manage cash flow and avoid costly delays.
After closing, you submit a draw request to your lender each time a construction milestone is completed. The request includes invoices from your general contractor and subcontractors, lien waivers from all parties who provided labor or materials, and updated progress photos documenting completed work. The lender dispatches a third-party inspector to verify the work on-site before releasing funds.
Most San Antonio lenders process draws within 5 to 10 business days. Delays in draw processing can ripple through your entire project timeline, so choosing a lender with a reputation for fast, reliable draw administration is critical. Local banks like Jefferson Bank, Frost Bank, and Broadway Bank tend to outperform national lenders on draw turnaround times because their inspectors are based in the San Antonio area and understand local construction practices.
San Antonio's climate introduces specific construction scheduling considerations. Summer temperatures regularly exceed 100 degrees, which can affect concrete curing and limit outdoor work hours. While the city does not face the same hurricane risk as coastal Texas metros, severe thunderstorms and flash flooding during spring and fall can cause weather-related delays. Build these seasonal factors into your project timeline and ensure your construction loan term includes adequate buffer for weather-related contingencies.
What Are the Biggest Mistakes Developers Make with San Antonio Construction Loans?
Even experienced developers encounter pitfalls when financing ground-up projects in the San Antonio market. Here are the most common mistakes and how to avoid them.
Underestimating soft costs: Permit fees, architectural and engineering costs, environmental reports, impact fees, and legal fees can add 15% to 25% to your total project budget. San Antonio's permitting process is generally faster than Austin or Houston, but plan review fees and utility connection charges still add up, especially for larger commercial projects.
Ignoring historic district requirements: Developers who purchase sites in or near historic districts without understanding the Certificate of Appropriateness process risk costly redesigns and schedule delays. The HDRC review is not optional, and projects that do not comply can face stop-work orders.
Choosing rate over relationship: The lowest interest rate means nothing if your lender takes three weeks to process draws or lacks experience with your project type. Construction lending is a relationship-driven business, and a lender who understands San Antonio's submarkets will add value beyond just capital.
Skipping the contingency reserve: Most lenders require a 5% to 10% contingency in the construction budget. In San Antonio's market, where material price fluctuations, labor shortages, and summer heat can impact project timelines, a healthy contingency is essential.
Failing to lock the exit: Developers who wait until construction is nearly complete to line up permanent financing risk being caught in an unfavorable rate environment. Start conversations with takeout lenders early in the construction phase to ensure a smooth transition.
How Should You Choose the Right Construction Lender in San Antonio?
Selecting the right lender can make or break your project. Here are the factors that matter most for San Antonio construction loans.
Local market knowledge: A lender with deep San Antonio experience understands submarket dynamics, local appraisers, inspectors, and contractors. They can identify potential issues before they become problems and make faster underwriting decisions because they already know the market. San Antonio's unique characteristics, from military base proximity to historic district regulations, reward lenders who have financed projects in these specific environments before.
Draw process efficiency: Ask prospective lenders about their average draw processing time, how many San Antonio-area inspectors they use, and whether they allow electronic draw submissions. The best lenders process draws in under 7 business days.
Flexibility on structure: Look for lenders who can accommodate interest reserves, delayed equity contributions, or phased funding structures. For larger San Antonio projects with 18 to 24 month build timelines, an interest reserve can represent significant cash flow savings during the construction phase when the property generates no income.
Track record with your project type: A lender who has financed multiple projects in San Antonio will underwrite yours faster and with fewer surprises than one entering the market for the first time. Ask for references from recent San Antonio borrowers with similar project profiles.
Understanding of local incentive programs: San Antonio offers various economic incentive programs through the city's Economic Development Department, including tax abatements, fee waivers, and infrastructure support for qualifying projects. A knowledgeable lender can help you factor these incentives into your project pro forma and overall financing structure.
Ready to explore your San Antonio construction loan options? Contact our team to discuss your project with a commercial lending specialist who knows the San Antonio market.
Frequently Asked Questions About San Antonio Construction Loans
What credit score do I need for a San Antonio construction loan? Most San Antonio construction lenders require a minimum 620 FICO score. However, borrowers with scores above 680 will qualify for significantly better interest rates and loan terms. Hard money and private lenders may work with lower scores but charge higher rates to compensate for the additional risk.
How long does it take to close a construction loan in San Antonio? Conventional construction loans typically take 45 to 60 days to close from application to funding. Hard money construction loans can close in as little as 10 to 15 business days. The timeline depends on how quickly you can provide required documentation, including plans, permits, contractor agreements, and environmental reports.
Can I get a construction loan for land I do not own yet in San Antonio? Yes. Many lenders offer acquisition-and-construction loans that finance both the land purchase and the building costs in a single transaction. If you already own the land free and clear, your equity in the land can count toward the down payment requirement, reducing the cash you need to bring to closing. This is particularly relevant for developers assembling parcels along the I-35 corridor or in emerging submarkets like Brooks.
What are the historic district requirements for new construction in San Antonio? Properties within locally designated historic districts require a Certificate of Appropriateness from the Office of Historic Preservation before any exterior work can begin. The Historic and Design Review Commission reviews significant projects based on the city's Historic Design Guidelines, evaluating scale, massing, materials, and compatibility with the surrounding historic context. Budget an additional 4 to 8 weeks for this review process.
How does San Antonio's military presence affect construction loan demand? Joint Base San Antonio contributes over $55 billion to the Texas economy and supports approximately 212,000 jobs in the metro area. This military economic base creates consistent demand for housing, retail, medical office, and commercial space, particularly in areas adjacent to JBSA-Lackland, JBSA-Fort Sam Houston, and JBSA-Randolph. Lenders view military-adjacent markets favorably due to the stability and predictability of defense-related demand.
Do San Antonio construction loans require personal guarantees? Most construction loans for projects under $10 million require full personal guarantees from the principal borrowers. Larger projects with experienced sponsors may qualify for partial guarantees or non-recourse structures, particularly through CMBS or agency lending programs. Non-recourse construction loans are less common but available for well-qualified borrowers with strong track records and significant equity contributions.
San Antonio's construction market is entering 2026 from a position of strength. With $12.6 billion in projected construction starts, transformative downtown projects, expanding suburban corridors, and one of the most stable economic foundations of any major U.S. city thanks to its military presence, the opportunities for ground-up development span every property type and submarket. The multifamily sector is recalibrating after a surge in deliveries, which means tighter conditions and stronger rent growth are expected beginning in 2026, creating a favorable window for new projects that will deliver in 2027 and 2028.
Whether you are developing a mixed-use project downtown near Hemisfair, building workforce housing near Brooks, constructing an industrial facility along the I-35 corridor, or developing retail space in the booming Far Westside, the right construction loan is the foundation of a successful project. Securing pre-approval before you finalize your site selection gives you a competitive edge in a market where desirable parcels, particularly in master-planned communities and infill locations, are being absorbed quickly.
Get started today by speaking with a construction lending specialist who understands the San Antonio market and can structure financing tailored to your project's specific needs.