Thinking about building an elevated new home in Galveston? Between flood rules, specialty loans, and insurance, the path can feel complex. You want a smart plan that protects your budget and keeps closing on track. This guide breaks down local elevation requirements, financing options, insurance, appraisals, and a clear step-by-step checklist tailored to Galveston. Let’s dive in.
Why elevation drives financing
Galveston requires new homes to be built at least 18 inches above the base flood elevation. That minimum design elevation shapes your foundation choice, stairs and ramps, and what counts as habitable space for lenders and appraisers. You can review the City’s elevation and permit guidance in its Flood Protection Information resource. See the City’s guidance.
Local land-development rules measure building height from the base flood elevation, and design standards can differ within flood zones. These details affect costs and timelines, so verify your site’s BFE and zoning early. Review the City’s land-development regulations.
Your financing options
You have several ways to finance an elevated new build. The right choice depends on your eligibility, builder, and timeline.
One-time-close construction-to-permanent
- Combines the construction funds and long-term mortgage in one closing. You make interest-only payments during the build, then convert to principal and interest at completion. FHA One-Time Close is a common path with a low minimum down payment and flexible credit rules. Learn how FHA One-Time Close works.
- VA single-close is now formalized for eligible Veterans. It wraps construction and permanent financing into one VA-backed transaction and can offer 0 percent down with no PMI. Availability varies by lender and builder approval. Read about VA single-close.
- Conventional single-close is available through select lenders. Expect builder vetting, an as-completed appraisal, and a detailed draw schedule.
Two-close approach
- You take a short-term construction loan, then refinance into a separate permanent mortgage when the home is complete. This can help if you expect rates to drop later. You will pay two sets of closing costs and must re-qualify for the permanent loan.
Portfolio or private financing
- Local banks, credit unions, and private lenders may offer flexible options for coastal foundations and unique designs. Costs and terms can differ from agency loans.
Most construction loans require lender approval of your licensed builder, a fixed-price contract, and inspections tied to draws. Origination is longer than a standard mortgage. Plan for about 45 to 75 days to close, depending on the lender and loan type. See typical single-close timelines.
Insurance you will need
If your property sits in a Special Flood Hazard Area, a federally backed loan will require flood insurance. Under FEMA’s Risk Rating 2.0, your premium is based on property-specific features like elevation, foundation type, and distance to water. Elevating the lowest floor above BFE can reduce premiums, but the impact is property-specific. Understand Risk Rating 2.0.
Most coastal properties also need windstorm coverage. In Galveston County, the Texas Windstorm Insurance Association provides wind and hail insurance when private coverage is not available. Eligibility requires meeting windstorm building codes and, in certain zones, may depend on having flood insurance. Check TWIA eligibility.
Tip: Request flood and wind quotes early. Lenders factor insurance premiums into your monthly payment and debt-to-income ratios.
How appraisals treat elevated homes
For mortgage underwriting, appraisers count only finished living area above grade as gross living area. Enclosed space under an elevated home that is used for parking or storage is not considered habitable space and is reported separately. That can affect the appraised value and loan-to-value ratio. See Fannie Mae’s guidance on GLA and below-grade space.
Practical move: Ask your lender how the appraiser will treat the area beneath the living space and what square footage will count in the as-completed appraisal.
Grants and mitigation funds
FEMA’s mitigation programs sometimes fund elevation projects through states and local governments. Homeowners typically cannot apply directly, but you can benefit if the City or County runs a homeowner elevation or mitigation program. Check with Galveston’s Development Services or County emergency management for current opportunities and timelines. Explore FEMA’s Hazard Mitigation Assistance guide.
Step-by-step financing checklist
- Do early lot due diligence
- Confirm the FEMA flood zone and current BFE. Ask for any Elevation Certificate and permit history on file with the City. Start with the City’s flood information.
- Talk to local experts
- Speak with the City’s Floodplain Administrator about your site-specific minimum finished floor elevation and permitting path. Hire a local surveyor or engineer for an Elevation Certificate and site plan.
- Choose your loan path
- Compare single-close options like FHA or VA for eligible borrowers and conventional single-close against a two-close approach. Confirm builder approval, draw inspections, and appraisal method with your lender. Review FHA One-Time Close basics.
- Build a complete budget
- Include coastal foundation systems, longer stairs or ramps, elevated driveways, water-resistant materials below the finished floor, and any extended utility or access work. Require a detailed, line-item builder budget.
- Secure insurance quotes
- Obtain flood and wind quotes using the proposed finished floor elevation. Ask how elevation and foundation type affect pricing under Risk Rating 2.0. Learn the Risk Rating 2.0 factors. Check TWIA rules.
- Plan the appraisal and closing
- Ensure the lender orders an as-completed appraisal based on your plans. Confirm how the appraiser will treat non-habitable space under the living area. Reference Fannie Mae’s GLA guidance.
- Coordinate inspections and draws
- Align the lender’s draw schedule with City permits and inspections. Expect independent inspections before each disbursement and separate City approvals for occupancy.
Pro tips for a smoother build
- Verify elevation first. The City’s freeboard requirement affects design, cost, and insurability. Review the City’s rules.
- Choose a builder and lender with coastal construction experience. Ask for recent Galveston examples and references.
- Lock communication. Set a shared draw schedule and milestone checklist so the builder, lender, and appraiser stay aligned.
Ready to map your financing plan, shortlist lenders, and pressure-test your budget? Connect with Caroline Spagnola for white-glove guidance on coastal lots, elevated designs, and lender-ready contracts in Galveston.
FAQs
Do Galveston elevated homes qualify for conventional mortgages?
- Yes. Lenders finance elevated homes through conventional, FHA, and VA programs with builder approval, an as-completed appraisal, and required flood and wind insurance where applicable.
Will space under an elevated home count as living area for appraisal?
- Usually no. Appraisers count finished above-grade space as gross living area and report enclosed parking or storage under the home separately, which can affect value and LTV.
How does elevation affect my flood insurance premium in Galveston?
- Under Risk Rating 2.0, elevation and foundation type are rating factors. Raising the lowest floor above BFE can lower premiums, but savings are property-specific.
What insurance is typically required for coastal construction loans?
- If the home is in a Special Flood Hazard Area, flood insurance is required for federally backed loans. Lenders commonly require windstorm coverage in Galveston County as well.
How long does a one-time-close construction loan take to close?
- Many lenders need about 45 to 75 days to close due to builder approvals, plan reviews, and appraisal timing.
