As banks tighten construction lending, some Rio Grande Valley homebuilders are eyeing alternative financing

After three decades of building homes in the Rio Grande Valley, Emiliano Zapata is increasingly helping finance new construction himself, as banks pull back on lending and builders look to private investors to keep projects moving.

Zapata, the CEO of Capital Insiders, shared an economic outlook for 2026 at the South Texas Builders Association offices in McAllen on Thursday. 

“Banks are getting stricter,” Zapata said. 

Tighter financing 

Most banks finance only up to 80% of commercial loans, while private lenders offer more flexible terms. With that flexibility comes a higher overall cost. Private lenders may charge a 13% interest rate rather than an 8% interest rate at a bank, and instead of a lump sum, the money is drawn out over time as the project is completed.