<PAGE>
                                                                    EXHIBIT 10.3

                       FIRST AMENDMENT TO CREDIT AGREEMENT


         THIS FIRST AMENDMENT TO CREDIT AGREEMENT (herein called this
"Amendment") made as of December 20, 2001 by and between PREFERRED HOME MORTGAGE
COMPANY, a Florida corporation ("Borrower"), and GUARANTY BANK, a federal
savings bank ("Lender"),

                                   WITNESSETH:

         WHEREAS, Borrower and Lender have entered into that certain Credit
Agreement dated as of July 5, 2001 (as heretofore amended, the "Original Credit
Agreement"), for the purposes and consideration therein expressed, pursuant to
which Lender became obligated to make loans to Borrower as therein provided; and

         WHEREAS, Borrower and Lender desire to amend the Original Credit
Agreement as provided herein;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Original Credit Agreement,
in consideration of the loans which may hereafter be made by Lender to Borrower,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree as follows:


                                   ARTICLE I.

                           Definitions and References

         Section 1.1. Terms Defined in the Original Credit Agreement. Unless the
context otherwise requires or unless otherwise expressly defined herein, the
terms defined in the Original Credit Agreement shall have the same meanings
whenever used in this Amendment.

         Section 1.2. Other Defined Terms. Unless the context otherwise
requires, the following terms when used in this Amendment shall have the
meanings assigned to them in this Section 1.2.

                  "Amendment" means this First Amendment to Credit Agreement.

                  "Amendment Documents" means, collectively, this Amendment, the
         Renewal Note and the confirmation by Guarantor with respect to this
         Amendment.

                  "Credit Agreement" means the Original Credit Agreement as
         amended hereby.

                  "Renewal Note" means a promissory note in the form attached
         hereto as Exhibit A.


<PAGE>

                                   ARTICLE II.

                     Amendments to Original Credit Agreement

         Section 2.1. Definitions. The definition of "Commitment" in Section 1.1
of the Original Credit Agreement is hereby amended in its entirety to read as
follows:

                  "'COMMITMENT' means on any day, the obligation of Lender to
         make Loans to Borrower pursuant to Section 2.1 hereof in an aggregate
         outstanding amount not to exceed at any time the lesser of (i)
         $30,000,000 and (ii) $40,000,000 minus the aggregate amount of
         Purchased Loans outstanding under the Purchase Facility on such day."

         Section 2.2. Exhibits. Exhibit A (Form of Note) attached to this
Agreement is hereby substituted for Exhibit A to the Original Agreement.


                                  ARTICLE III.

                   Conditions, Representations and Warranties

         Section 3.1. Effective Date. This Amendment shall become effective as
of the date first above written when and only when:

                  (a) Lender shall have received, at Lender's office, (i) a duly
         executed counterpart of this Amendment, (ii) the Renewal Note, (iii) a
         duly executed Consent and Agreement in the form of Exhibit B hereto,
         and each other document to be executed and delivered by Borrower
         pursuant hereto or thereto;

                  (b) The representations and warranties contained in Article V
         of the Original Credit Agreement are true and correct at and as of the
         time of the effectiveness hereof;

                  (c) Borrower is duly authorized to execute and deliver this
         Amendment and the other Amendment Documents and is and will continue to
         be duly authorized to borrow and to perform its obligations under the
         Credit Agreement. Borrower has duly taken all corporate action
         necessary to authorize the execution and delivery of this Amendment and
         the other Amendment Documents and to authorize the performance of the
         obligations of Borrower hereunder and thereunder;

                  (d) The execution and delivery by Borrower of this Amendment
         and the other Amendment Documents, the performance by Borrower of its
         obligations hereunder and thereunder and the consummation of the
         transactions contemplated hereby do not and will not conflict with any
         provision of law, statute, rule or regulation or of the articles of
         incorporation and bylaws of Borrower, or of any material agreement,
         judgment, license, order or permit applicable to or binding upon
         Borrower, or result in the creation of any lien, charge or encumbrance
         upon any assets or properties of Borrower. Except for those which have
         been duly obtained, no consent, approval, authorization or order of any
         court



                                       2
<PAGE>


         or governmental authority or third party is required in connection with
         the execution and delivery by Borrower of this Amendment and the other
         Amendment Documents or to consummate the transactions contemplated
         hereby and thereby; and

                  (e) When duly executed and delivered, each of this Amendment
         and the other Amendment Documents will be a legal and binding
         instrument and agreement of Borrower, enforceable in accordance with
         its terms, except as limited by bankruptcy, insolvency and similar laws
         applying to creditors' rights generally and by principles of equity
         applying to creditors' rights generally.


                                   ARTICLE IV.

                                  Miscellaneous

         Section 4.1. Ratification of Agreement. The Original Credit Agreement
as hereby amended is hereby ratified and confirmed in all respects. Any
reference to the Credit Agreement in any Loan Document shall be deemed to refer
to this Amendment also. The execution, delivery and effectiveness of this
Amendment, the other Amendment Documents, shall not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of Lender
under the Credit Agreement or any other Loan Document nor constitute a waiver of
any provision of the Credit Agreement or any other Loan Document.

         Section 4.2. Survival of Agreements. All representations, warranties,
covenants and agreements of Borrower herein shall survive the execution and
delivery of this Amendment and the performance hereof, and shall further survive
until all of the Obligations are paid in full. All statements and agreements
contained in any certificate or instrument delivered by Borrower hereunder or
under the Credit Agreement to Lender shall be deemed to constitute
representations and warranties by, or agreements and covenants of, Borrower
under this Amendment and under the Credit Agreement.

         Section 4.3. Loan Documents. This Amendment and the other Amendment
Documents are each a Loan Document, and all provisions in the Credit Agreement
pertaining to Loan Documents apply hereto and thereto.

         Section 4.4. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas and any applicable
laws of the United States of America in all respects, including construction,
validity and performance.

         Section 4.5. Counterparts; Fax. This Amendment may be separately
executed in counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Amendment. This Amendment may be duly executed by facsimile or
other electronic transmission.

         THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE



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<PAGE>

CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

         THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.


            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]



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<PAGE>





         IN WITNESS WHEREOF, this Amendment is executed as of the date first
above written.



                                             PREFERRED HOME MORTGAGE COMPANY



                                             By:      /s/ Holly Hubenak
                                                      --------------------------
                                                      Holly Hubenak
                                                      Vice President



                                             GUARANTY BANK



                                             By:      /s/ Carolyn Eskridge
                                                      --------------------------
                                                      Carolyn Eskridge
                                                      Vice President




<PAGE>



                                                                       EXHIBIT A


                                 PROMISSORY NOTE


$30,000,000                       Dallas, Texas                December 20, 2001


         FOR VALUE RECEIVED, the undersigned, PREFERRED HOME MORTGAGE COMPANY, a
Florida corporation ("Borrower"), promises to pay to the order of GUARANTY BANK
(herein called "Lender"), the principal sum of Thirty Million Dollars
($30,000,000) or, if less, the aggregate unpaid principal amount of the Loans
made under this Note by Lender to Borrower pursuant to the terms of the Credit
Agreement (as hereinafter defined), together with interest on the unpaid
principal balance thereof as hereinafter set forth, both principal and interest
payable as herein provided in lawful money of the United States of America at
the offices of the Lender, 8333 Douglas Avenue, Dallas, Texas or at such other
place within Dallas County, Texas, as from time to time may be designated by the
holder of this Note.

         This Note (a) is issued and delivered under that certain Credit
Agreement of even date herewith between Borrower and Lender (herein, as from
time to time supplemented, amended or restated, called the "Credit Agreement"),
and is a Note as defined therein, (b) is subject to the terms and provisions of
the Credit Agreement, which contains provisions for payments and prepayments
hereunder and acceleration of the maturity hereof upon the happening of certain
stated events, and (c) is secured by and entitled to the benefits of certain
Security Instruments (as identified and defined in the Credit Agreement).
Payments on this Note shall be made and applied as provided herein and in the
Credit Agreement. Reference is hereby made to the Credit Agreement for a
description of certain rights, limitations of rights, obligations and duties of
the parties hereto and for the meanings assigned to terms used and not defined
herein and to the Security Instruments for a description of the nature and
extent of the security thereby provided and the rights of the parties thereto.
This Note is executed in renewal, modification and extension of, but not in
extinguishment or novation of, the indebtedness of Preferred Home Mortgage
Company owing to Lender pursuant to that certain Promissory Note dated July 5,
2001, in the stated principal amount of $20,000,000 executed by Preferred Home
Mortgage Company and payable to the order of Lender.

         The principal amount of this Note, together with all interest accrued
hereon, shall be due and payable in full on the Drawdown Termination Date.

         So long as no Event of Default has occurred and is continuing, all Base
Rate Loans (exclusive of any past due principal or interest) from time to time
outstanding shall bear interest on each day outstanding at the Base Rate in
effect on such day. If an Event of Default has occurred and is continuing, all
Base Rate Loans (exclusive of any past due principal or interest) from time to
time outstanding shall bear interest on each day outstanding at the applicable
Default Rate in effect on such day. On the fifteenth (15th) day of each calendar
month, beginning on the fifteenth (15th) day of the calendar month immediately
following the calendar month in which this Note is executed, Borrower shall pay
to the holder hereof all unpaid interest which has




<PAGE>

accrued on all Base Rate Loans through and including the last day of the
immediately preceding calendar month.

         So long as no Event of Default has occurred and is continuing, each
Eurodollar Loan (exclusive of any past due principal or interest) shall bear
interest on each day during the related Interest Period at the related Adjusted
Eurodollar Rate in effect on such day. If an Event of Default has occurred and
is continuing, all Eurodollar Loans (exclusive of any past due principal or
interest) from time to time outstanding shall bear interest on each day
outstanding at the applicable Default Rate in effect on such day. On the last
day of the related Interest Period, Borrower shall pay to the holder hereof all
unpaid interest which has accrued on such Eurodollar Loan to but not including
such day; provided that if an Event of Default exists under Section 7.1(a) of
the Credit Agreement, on the fifteenth (15th) day of each calendar month
Borrower shall pay to the holder hereof all unpaid interest which has accrued on
such Eurodollar Loan through and including the last day of the immediately
preceding calendar month. All past due principal of and past due interest on the
Loans shall bear interest on each day outstanding at the applicable Default Rate
in effect on such day, and such interest shall be due and payable daily as it
accrues. Notwithstanding the foregoing provisions of this paragraph: a. this
Note shall never bear interest in excess of the Maximum Rate, and b. if at any
time the rate at which interest is payable on this Note is limited by the
Maximum Rate (by the foregoing subsection (a) or by reference to the Maximum
Rate in the definitions of Base Rate, Eurodollar Rate, and Default Rate), this
Note shall bear interest at the Maximum Rate and shall continue to bear interest
at the Maximum Rate until such time as the total amount of interest accrued
hereon equals (but does not exceed) the total amount of interest which would
have accrued hereon had there been no Maximum Rate applicable hereto.

         Notwithstanding the foregoing paragraph and all other provisions of
this Note, in no event shall the interest payable hereon, whether before or
after maturity, exceed the maximum amount of interest which, under applicable
law, may be charged on this Note, and this Note is expressly made subject to the
provisions of the Credit Agreement which more fully set out the limitations on
how interest accrues hereon. In the event applicable law provides for a ceiling
under Section 303 of the Texas Finance Code, that ceiling shall be the weekly
rate ceiling and shall be used in this Note for calculating the Maximum Rate and
for all other purposes. The term "applicable law" as used in this Note shall
mean the laws of the State of Texas or the laws of the United States, whichever
laws allow the greater interest, as such laws now exist or may be changed or
amended or come into effect in the future.

         If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is proved,
established or collected in any court or in any bankruptcy, receivership, debtor
relief, probate or other court proceedings, Borrower and all endorsers, sureties
and guarantors of this Note jointly and severally agree to pay reasonable
attorneys' fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.

         Except as otherwise provided in the Credit Agreement, Borrower and all
endorsers, sureties and guarantors of this Note hereby severally waive demand,
presentment, notice of demand and of dishonor and nonpayment of this Note,
protest, notice of protest, notice of



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<PAGE>


intention to accelerate the maturity of this Note, declaration or notice of
acceleration of the maturity of this Note, diligence in collecting, the bringing
of any suit against any party and any notice of or defense on account of any
extensions, renewals, partial payments or changes in any manner of or in this
Note or in any of its terms, provisions and covenants, or any releases or
substitutions of any security, or any delay, indulgence or other act of any
trustee or any holder hereof, whether before or after maturity.

         No waiver by Lender of any of its rights or remedies hereunder or under
any other document evidencing or securing this Note or otherwise shall be
considered a waiver of any other subsequent right or remedy of Lender; no delay
or omission in the exercise or enforcement by Lender of any rights or remedies
shall ever by construed as a waiver of any right or remedy of Lender; and no
exercise or enforcement of any such rights or remedies shall ever be held to
exhaust any right or remedy of Lender.

         Borrower reserves the right to prepay the outstanding principal balance
of this Note, in whole or in part at any time and from time to time without
premium or penalty, in accordance with the terms of the Credit Agreement.


             [THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]



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<PAGE>





         THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT THE SAME ARE
GOVERNED BY APPLICABLE FEDERAL LAW.



                                             PREFERRED HOME MORTGAGE
                                             COMPANY



                                             By:
                                                 -----------------------
                                                 Holly Hubenak
                                                 Vice President




THE STATE OF TEXAS            )
                              )
COUNTY OF                     )
          -------------------


         This instrument was acknowledged before me on _____________________,
2001, by Holly Hubenak, Vice President of PREFERRED HOME MORTGAGE COMPANY, a
Florida corporation, on behalf of said corporation.



                                             Notary Public, State of
                                                                    ------------


                                             (printed name)

My Commission Expires:



------------------------



<PAGE>




                                                                       EXHIBIT B


                              CONSENT AND AGREEMENT


         Engle Homes, Inc. hereby consents to the provisions of this Amendment
and the transactions contemplated herein, and hereby ratifies and confirms the
Guaranty dated as of July 5, 2001 made by it for the benefit of Lender, and
agrees that his obligations and covenants thereunder are unimpaired hereby and
shall remain in full force and effect.



                                                ENGLE HOMES, INC.



                                                By:   /s/ Holly Hubenak
                                                      --------------------------
                                                      Holly Hubenak
                                                      Vice President/Secretary