A VA Home Loan is intended for any service member or veteran who intends on purchasing, refinancing, or building, a home. Many people aren’t aware that, because of this last point, a VA home loan can be used as a VA Construction Loan. VA Construction Loans are considered by many lenders as a higher risk investment, so it is important to look around at many lenders to find the best option for you.
Financing for the VA Construction Loan
While funding is required before any building starts with a VA Construction Loan, only the money used to purchase the land will be released at the time of closing. The additional funds will be placed in an escrow account and released in installments as milestones are met in the construction of your home. Furthermore, the borrower must approve each disbursement before any funds are transferred to the builder.
Here is some more advice regarding VA Construction Loans:
- You will need to acquire your Certificate of Enrollment (COE) from the VA to qualify
- Talk with your homebuilder about your specific financial requirements. Your homebuilder might be able to recommend a banker who can work with your needs
- Inquire with several lenders in your area, including your own bank or credit union
- Look for a VA Construction Loan online. Shop for several quotes and pick the best one. The VA Loan specialists in our network can help you find multiple quotes in just minutes
- One option is to first take out a conventional home construction loan, in which your builder will be paid in installments instead of having the entire building cost immediately put into escrow, and then refinance your home, once it’s complete, into a VA Home Loan. In most cases, the VA will treat this as a brand new VA Loan instead of a refinance.
- Manufactured homes and Mobile homes that are classified as real estate may qualify
Looking over the VA Home Construction Loan’s minimum property requirements
The VA requires that minimum requirements are met during the construction of any home build by financing through a VA home mortgage.
This is required to ensure builders are following all local regulations for building codes and that the property complies with all federal regulations, which include regulations for HUD. This process consists of regular inspections, per VA regulations, to make sure all property requirement minimums, along with additional criteria, are being met and respected.
Why are these standards in place?
The VA states that all minimum property requirements are in place to shield the borrower and ensure the home is safe and the builder is following proper construction standards. It also ensures your home’s condition and value will be comparable to other house in the area.
Exploring Specially Adaptive Housing with your loan
In addition to using your VA Construction Loan as a VA Home Loan, you may also use it to finance Specially Adaptive Housing (SAH) construction. If you’d like to learn more about this possibility, call or visit the SAH contact person at your local VA Loan Center.
An SAH Grant is another option you may have. This grant can work in conjunction with your VA Construction Loan and helps disabled veterans and service members complete modifications to their home that make it more accessible and provide barrier-free living.
Talk with one of the qualified VA Loan and VA Construction Loan lenders in our network to begin your journey today. Remember, these loans are not funded by the VA but by private lenders. It is always advised to get multiple quotes to ensure you get the lowest interest rate and the best terms for your needs.