Veterans and service members have access to unbeatable financing called a VA loan. Where VA eligible buyers run into problem sometimes is building a new home. Finding VA construction loans is very difficult today and most lenders require 20% down payment or more. So what if you could have a construction loan and combine it with the benefits of a VA loan?
Well, we offer VA eligible borrowers this combination called a VA construction loan! Imagine the ability to build a custom home with the affordability of a VA home loan. Not only borrowers need construction financing, but builders do as well. Having the ability offer custom built new homes to more veterans would help builders too.
How to Build a Home with VA Construction Loans
We wish we could offer this to all veterans but it is only available at this time in NC and SC. But for building a home in NC or SC, can make a Veteran family’s dream come true. First of all, VA eligibility is paramount. Next is the loan application, credit pull, prequalification, and discussion with your expert loan officer. Even though we offer VA loans for manufactured homes, construction loans are only available for single family detached homes or off frame modular homes. Learn more about modular homes in another of our articles. If the land is owned already, the process is easier. But buying the land through the construction loan is possible as well. Just make sure not to go under contract on the land without completing enough of the steps below first. The rest of the VA construction loans process looks like this.
- Builder approval or choose from approved builders
- Complete builder contract price
- Structure the loan amounts for construction plus permanent VA loan
- Loan terms disclosed and discussed
- Appraisal based on “as completed” value
- Submit for VA loan underwriting
- Clear all conditions per approval
- Submit for construction loan approval
- Construction loan closing
- Construction process
Once the house is nearing completion:
- Update income, asset, & credit documentation
- Lock VA interest rate for permanent loan
- Close VA permanent loan which pays off the construction loan
- Move into your brand new, never lived in home!
VA Loan Benefits
There are so many great qualities of VA home loans. Probably the biggest benefit is the ability to purchase with no down payment. The amount of down payment depends on a Veteran’s entitlement available. Full entitlement available allows for no money down, but even a second VA loan is possible with nothing down. Then VA loans also have no monthly mortgage insurance which makes the monthly payment lower than traditional loans. Additionally, Veterans 10% or more disabled have an additional VA loan benefit. This includes waiving the VA funding fee which saves 2.15 – 3.3% of the loan amount in costs. That is a huge savings! We also offer VA lending down to a 600 credit score on a home purchase, but construction loans require a 660 score. So whether looking for existing homes or building a new home.