It can seem intimidating to build a house with a VA construction loan when you don’t know where to begin.
Most veterans wonder whether they are eligible for the loan. In addition, the documents needed and whether a VA construction loan COE and a regular VA loan COE differ. It is these very questions that tend to delay the lending process before it is even initiated.
Thankfully, obtaining a Certificate of Eligibility for a VA construction loan is relatively easy. Once you understand the process, obtaining a COE is often faster than most veterans expect.
You have reached the section on obtaining a Certificate of Eligibility for VA construction loan financing. You will learn how to establish your eligibility, the forms you will need, and the pitfalls to watch out for. Also, you can learn what purpose your COE serves in the construction loan financing.
How to Get a Certificate of Eligibility for VA Construction Loan Financing: Quick Answer
If you need a VA Construction Loan Certificate of Eligibility, then you’ll need to prove to the VA that you have served in the military. These include veterans on active duty or in National Guard or Reserve status, as well as eligible survivors.
Most applicants will have no trouble obtaining their VA Construction Loan CoE through VA.gov. They may also find this form with the VA construction lender they work with. Applicants can also submit VA Form 26-1880 through postal mail. A COE establishes eligibility, and loan approval is still not guaranteed.
Key Takeaways
- A VA Construction Loan CoE confirms your eligibility for benefits under a VA home loan program.
- That is the same COE you would use for a VA purchase loan and a VA construction loan.
- Most borrowers can obtain a VA Construction Loan COE online within minutes.
- Lenders use the COE to confirm entitlement and funding fee information.
- Construction lenders often add requirements to the standard VA home loan underwriting process.
- Missing service records or entitlement issues are common causes of delays.
- The ability to begin the process of your VA Construction Loan CoE by having a COE readily available will save you time.
- Shirley Mueller is ready to help veterans obtain their COE and avoid common, costly mistakes.
What Is a VA Construction Loan Certificate of Eligibility?
First things first, it is vital to understand what your COE does before diving into the VA Construction Loan COE application. You use your COE to confirm that you are eligible for VA home loan benefits. A COE can help the lender determine whether you’re eligible before starting work on your construction loan.
What a COE Confirms for VA Construction Loan Lenders?
A Certificate of Eligibility helps lenders verify:
- Eligibility for VA home loan benefits
- Available VA entitlement
- Funding fee exemption status
- Previous use of VA loan benefits
- Remaining entitlement for future borrowing
Without a valid COE, lenders cannot move forward with pre-approval.
How a COE Differs for Construction vs. Purchase Loans?
The COE required for VA Construction Loan Financing is the same as that for a conventional VA purchase loan.
The distinction is the loan process; a construction lender has to examine the following:
- Builder qualifications
- Construction plans
- Timeline for the construction process
- Cost breakdown
- Inspection schedules
Real-World Example
A retired Army Veteran wishes to purchase a custom-built home on his existing land for $500,000. His lender obtains his COE for a VA Construction Loan in under one day. He does have his COE, which confirms his eligibility to use VA loan benefits. But he will need to meet multiple underwriting guidelines.
He will still be required to provide income and credit verification from his lender. The lender will still require all construction documents and a builder verification to grant final loan approval.
This example further reinforces a significant point: a COE is a statement of eligibility, not loan approval.
Who Needs a COE for a VA Construction Loan?
However, not all borrowers qualify for the benefit. VA has certain eligibility requirements that a borrower must satisfy. Once they’ve been certified, the VA will issue a COE to the applicant, permitting them to get VA Loan Financing for Construction.
Identifying eligibility early on will help ensure you do not run into complications down the road.
Who Qualifies for the Certificate of Eligibility?
The groups that may be eligible are:
- Veterans
- Active-duty service members
- National Guard members
- Reserve members
- Certain surviving spouses
Why Lenders Require It Before Construction Pre-Approval?
Before your lender is willing to put in the time and effort for underwriting, they will want to see proof that you are indeed eligible for VA financing.
The COE will show them:
- Your entitlement status
- Your eligibility
- If you paid the funding fee or are exempt.
- How many times have you used your entitlement?
Without the COE, your lender will not initiate the formal pre-approval process.
VA Construction Loan Eligibility Requirements You Must Meet
Military service eligibility is just one hurdle. In addition to all the above, you need to meet the proper financial qualifications for construction lenders. This is crucial for obtaining the construction loan for your final approval.
Minimum Military Service per Category
Generally, you must have a service record as one of the following:
- Service during Wartime: A minimum of 90 consecutive days of active duty service.
- Service during Peacetime: A minimum of 181 days of active duty service.
- Members of the National Guard and Reserve Forces: Must meet the applicable VA service requirements.
Specific service dates and individual conditions can influence requirements.
- Construction-Specific Overlays: Credit Score, Reserves, DTI
Most construction lenders look at your:
- Credit score
- Debt-to-income ratio (DTI)
- Cash reserves
- Work history
- The qualifications of the builder
Construction of a new home presents different risks than that of a pre-owned one, therefore;
Why Construction Lenders Have Additional Requirements?
You are in for a world of contracts, inspections, permits, draw schedules, and construction times if you’re building a home. Lenders tend to have tighter guidelines than the VA requires for construction loans.
Try to have them prepared in advance, and your chances of approval increase. For more details on this, please see our guide on VA Construction Loan Eligibility.
Discharge Characterization and Its Impact on COE Approval
Discharge Status. Your discharge status will be one factor used in determining your eligibility. Some typical qualifying discharges are:
- Honorable
- General Under Honorable Conditions
Other specific discharge classifications may require further VA verification.
3 Ways to Obtain Your VA Construction Loan COE
Here’s how you can get your VA Construction Loan Certificate of Eligibility. There are three main ways to obtain your COE.
- Online Via VA.gov
- Online via your VA Construction Lender
- By Mail via VA Form 26-1880
Option 1: Via VA.gov
This way of obtaining your Certificate of Eligibility can often be instant. You’ll be prompted through three simple questions to pull up your certificate:
- Log in to VA.gov
- Request COE
- Verify information
- Download COE
Option 2: via your VA Construction Lender
Many construction lenders can access the Automated Certificate of Eligibility (ACE) system. Your COE can often be pulled up by the lender within minutes. This is generally the easiest route if you’ve already got a construction loan provider.
Option 3: Via mail via VA Form 26-1880
You can also fill out a COE form and mail it in. It can take anywhere between four and six weeks to receive your COE by mail, longer if additional verification is needed.
Documents Required to Apply for Your VA Certificate of Eligibility
Proper submission of the documents can expedite the process.
The required documents may vary depending on military status.
By Borrowing Category:
- Veterans: DD Form 214
- Active-Duty Service Member: Current Statement of Service
- National Guard: Relevant Service Documents
- Reserve Member: Proof of Qualifying Service
- Surviving Spouses: Dependency and Service Documentation
Other documents that construction lenders frequently require:
- Pay stubs
- Tax return documents
- Bank statement documents
- Building plan documents
- Construction contract document
- Builder’s information
- Land ownership documents
If you already own the land, then you may also want to read more about a VA Construction Loan on Owned Land.
Common Reasons COE Requests Are Delayed or Denied
The vast majority of COE applications run smoothly, but a variety of issues could cause a delay:
- No DD214
- No sufficient service record
- Wrong information regarding the veteran or applicant
- Entitlement restoration problems
- Funding fee exemption problem
- No surviving spouse records
Veteran Tip: Verify Your Entitlement Before Applying
Borrowers seem to automatically believe that their entitlement resets after they sell a home.
This is not always the case. Do you have any prior experience with a VA loan? If you do, confirm your benefit level before jumping into the VA Construction Loan Certificate of Eligibility application.
If there is an entitlement issue, address it as soon as you can. The more time you can dedicate to this now, the better off you will be when you come to underwriting delays.
Common COE Issues We See as a VA Construction Loan Specialist
Since helping veterans apply for the VA Construction Loan Certificate of Eligibility, we have encountered a few specific problems that tend to slow down an application. Discover what they are and prepare accordingly to keep the process moving.
1. Previous VA Loan Usage and Entitlement Restoration
There’s a misconception among many veterans that paying off a VA loan or selling their property with a VA-owned loan automatically renews their entitlement. However, this usually isn’t the case, as additional verification may be required.
This process is even more crucial when utilizing your VA entitlement for a construction loan, so be sure to clarify any potential issues.
2. Missing or Incomplete DD214 Documentation
Perhaps the most common COE denial is the lack of proper proof of military service, such as your DD214. When the VA is unable to verify that you served in the military, they will often need more research into your COE application.
Requesting and waiting for the DD214 before beginning your COE application should also save you more time.
3. Surviving Spouse Documentation Delays
VA home loan eligibility may be available to some surviving spouses; however, additional documentation is usually required for the application. Failure to have proper supporting documents, such as dependency records, a marriage certificate, or service paperwork, may lengthen processing time. You should try to have all the needed documentation before submitting your application.
Pro Tip
By far, the fastest VA Construction Loan COE applications are those in which all required documents are provided before submission. Taking a few extra days to ensure that entitlement has been reviewed and service documents have been obtained can eliminate many weeks of loan processing.
COE for VA Construction Loans: Special Considerations
To get approved for VA financing, you need a COE. Yet many prospective buyers are unaware of the special requirements for construction loans. These distinctions are worth noting in your loan application.
Can You Use Remaining Entitlement for a VA Construction Loan?
That’s right.
You may still be able to purchase your next home using a portion of your entitlement if you have a current or prior VA loan.
What will influence your entitlement situation:
- Outstanding VA loan balances
- Restored entitlement
- Remaining eligibility
- Regional lending limits
Your lender can provide you with the most accurate assessment of your available entitlement and borrowing power.
How Your COE Fits into the VA Construction Loan Process?
Obtaining your COE marks a significant step forward; however, it is just the initial stage in the construction process. Once eligibility is confirmed, the lender can begin assessing the finer details of your project.
Next Steps After Receiving Your COE: Pre-Approval to Groundbreak
A normal procedure would be:
- Get COE
- Get a loan pre-approved
- Pick an approved builder
- Submit construction blueprints
- Get appraisal ordered and approved
- Enter underwriting
- Close the loan
- Start building
- Finalize inspections
- Move in
Please refer to our guide “How to Get Approved for a VA Construction Loan” before submitting an application.
How Shirley Mueller Helps You Get Your COE Faster?
Several veterans face delays when initiating the loan process because they are unaware of the rules. This is typically due to not knowing the VA construction loan eligibility criteria before applying.
Shirley Mueller can facilitate the construction loan process and guide borrowers through:
- Eligibility Confirmation
- Certificate of Eligibility requirements
- Entitlement inquiries
- Construction loan readiness
- Loan document review
- Lender communication
This will help streamline your construction loan process and reduce potential delays.
VA Construction Loans — Built for Veterans. Designed for Homeownership.
It’s simply not possible to successfully build your home without a plan of action to obtain financing for your CoE for a VA construction loan. The COE is the document that allows you to access the full benefit that is rightfully yours. This piece of paper signifies that you are approved and eligible, and that a lender can begin reviewing your construction loan.
While obtaining a VA Construction Loan Certificate of Eligibility is vital, that’s just the first part. Your builder must be approved. We will run income and credit to assess the construction. Your loan will be underwritten by an underwriter who will handle all construction-related matters.
Shirley Mueller has the VA loan construction know-how. With over 3000 satisfied veteran clients and 20 years as a VA lending specialist, NMLS ID: 336103, she is uniquely qualified to anticipate and resolve the issues often faced when securing a Certificate of Eligibility for a VA construction loan.
Her team works with borrowers from the beginning, assisting with eligibility verifications and entitlement disputes, lender and third-party requirements and documentation, smoothing the path from COE approval to breaking ground.
Are you ready to build your dream home using the VA benefits you’ve earned? Contact Shirley Mueller today to learn just how easy the process can be when an expert VA construction loan specialist is in your corner.
Frequently Asked Questions
1. What Is A Certificate Of Eligibility For A VA Construction Loan?
Certificate of VA Construction Loan Eligibility: VA approval of a veteran to apply for VA home loans. Lenders use this to confirm eligibility, funding fee status, and entitlement before approving a construction loan.
2. Does A COE Guarantee VA Construction Loan Approval?
No. The COE is proof that you are qualified to use a VA loan. You’ll still have to be approved by the lender for your financial standing. They’ll look at your credit score, income, debt-to-income (DTI) ratio, and employment. Plus, the actual project itself has to pass the final inspections. They will review the builder’s credentials, your project drawings, and related materials.
3. Do I Need A New COE Specifically For A VA Construction Loan?
No. The same COE can be used for VA purchase, refi, and construction loans. No specific COE is required for VA Construction Loans. Lenders may need to verify current entitlement information when approving a loan.
4. How Long Is A VA COE Valid?
The VA Certificate of Eligibility rarely expires. After the certificate is issued, it remains valid as long as your benefits or eligibility remain unchanged. However, some lenders will want you to re-certify your benefits before closing if any changes occur.
5. Can My Builder Start Construction Before My VA Loan Closes?
Most of the time, work cannot commence before your VA construction loan is closed. Starting before getting loan approval could complicate your finances and make it difficult to secure financing. Check with your lender for their policy before you swing the first hammer.
6. Can Surviving Spouses Obtain A COE For A VA Construction Loan?
Yes, eligible surviving spouses can get a Certificate of Eligibility (COE). COE eligibility makes the surviving spouse qualified to use the VA home loan. This benefit is also available for a VA construction loan. At the end of the day, it comes down to proving you meet VA criteria and having the right documents proving the veteran’s military service.
7. Can I Get A COE If I Previously Used My VA Entitlement?
Yes, most veterans can still re-qualify if they have already used their VA loan benefits. VA has a way to analyze whether restoration of entitlement would apply and whether entitlement still applies to the loan. The best resource to assist you with this evaluation is a lender before you submit your application.
8. What Happens If My COE Application Is Denied?
The VA generally offers a reason for the denial. Typically, this involves service records, paperwork issues, or eligibility problems. In most of these cases, the borrower can provide additional documentation and have their application reviewed again.
9. Can I Get A COE If I Have An Other Than Honorable (OTH) Discharge?
Maybe. Having an Other Than Honorable (OTH) discharge doesn’t disqualify you. The VA may perform a Character of Service determination. While your records are being reviewed, they will determine whether you qualify for the VA home loan benefit.
10. How Long Does It Take To Get A COE For VA Construction Loans?
Most borrowers should get the COE very quickly. That can be obtained on VA.gov or through a VA-authorized lender who has been equipped with the Automated COE process.” For COEs that require manual review, approval can take several days to a few weeks, depending on the specific documentation required.
11. Can You Get A VA Construction Loan Without A COE?
No, you must have a valid COE for a VA Construction Loan to validate entitlement and for the lender to commence underwriting. The Certificate of Eligibility is the official proof that you are entitled to VA home loan benefits.
12. Can I Get a COE Before Choosing a Builder?
Yes, your COE can be approved before choosing a builder or locking in construction. Veterans will actually receive a COE in advance to confirm loan entitlement and begin pre-approval for a loan. You’ll still undergo a full assessment to check out your contractor as well as construction plans when your bank’s underwriting is in process. Still, the COE determines if you should have a benefit.
13. Is a COE Required If I Already Own Land?
Yes. Landownership doesn’t negate your COE requirement. For a VA construction loan, whether you’re already a lot owner or planning to purchase the land before beginning construction, lenders will still need assurance of the applicant’s eligibility for VA loan benefits. Your COE is basically the VA equivalent of a letter of authorization.
14. Can I Use a COE for Multiple VA Loans?
Yes, potentially. You can, in some cases, obtain a Certificate of Eligibility showing you have remaining VA entitlement that can be used for future loans – including new VA construction loans for qualifying veterans. You may need additional VA entitlement, but depending on your situation, you could qualify for its restoration.
