Frequently Asked Questions

A VA construction loan allows eligible veterans to finance the construction of a new home, including purchasing land if needed. It’s a One-Time Close (OTC) loan, meaning it combines the construction financing and permanent mortgage into a single transaction.

• No second closing is required; everything is done upfront.
• No mortgage payments during the construction period.
• The loan is locked at the start with no need for a second appraisal after construction.
• 360-day construction rate locks are available.
• Construction loans are serviced in-house, ensuring a smooth process.
• Soft costs and interest reserves are included in the loan; the interest reserve and construction management fee are paid by the builder.
• $0 down on loans up to $1 million (loans over $1 million, up to $2 million, need 5% down).
• Contingency funds (minimum 2%) are built into the loan to cover unexpected expenses.

VA construction loans can be used for:

• New site-built (stick-built), single-family detached homes.
• Modular homes, log homes, and barndominiums.
• New manufactured homes (multi-width; single-width only from select manufacturers).
• 2–4 unit homes when you live in one of the units.
• Homes with accessory dwelling units (ADUs) built simultaneously with the primary residence.

Ineligible properties include attached homes, co-ops, container homes, working farms or ranches, and lots where construction has already started.

1. Qualify and Close: Veterans qualify and close the loan upfront, usually about 2–3 months from application.
2. Construction Begins: Building must start within 60 days of closing.
3. Finalization: Once construction is complete, the loan modifies into a permanent mortgage without requiring another appraisal.
4. Move-In: After the 12-month construction period, the veteran begins making mortgage payments once the home is completed.

Yes, you can include the purchase of the land or pay off an existing lien as part of the construction loan. Construction must start within 60 days of closing.

Builders must be approved by the lender before closing, build under a fixed-price contract, and meet the following criteria:

• Submit proof of licensure (depending on state/county you are in)
• Liability insurance, builder’s risk insurance
• Provide a 24-month project history and evidence of prior permits.
• Use a digital portal for draws and schedules.

Builders do not need to provide credit reports or financials, making the process straightforward. See what builders need.

If your builder is on the approved list, most required documents are already on file, speeding up the process.

Yes. Appraisals are completed “subject to” the plans and specifications of the home prior to loan closing. Required items include:

• Executed building plans and material descriptions.
• Plot plan showing lot dimensions and setbacks.
• Builder contract and lot purchase agreement (if applicable).

Stay up to date with VA Construction Appraisal Updates.

• Included Fees: Construction management fees cover the transaction’s construction aspects.
• Excluded Fees: Third-party fees like appraisals, credit reports, and title fees are not included.
• Interest Reserves: These are financed into the cost to build and paid by the builder, ensuring no payments are required during construction.
• VA Funding Fee: Applies unless you’re exempt (for example, if you receive VA disability compensation) and can be financed into the loan.

A minimum 2% contingency reserve is required and included in the construction budget. It covers unexpected costs during construction. Unused funds are applied as a principal reduction to the loan at modification.

Yes, 360-day construction rate locks are available, so your rate is protected through the build.

Builders get dedicated support, including:

• A dedicated point of contact for communication and support.
• Draw requests managed through a digital portal with funds wired directly to the builder.
• Fast draw processing after each inspection.

If you already own the land, you are also eligible for VA One-time Close Construction Loan. If the lot is owned free and clear, equity may count as part of the veteran’s investment. If the lot has a lien, it can be paid off as part of the loan.

VA construction loans use a 12-month construction period. Expect about 2–3 months to close, then a 12-month construction period. Your builder commits to completing the home within that period so the loan converts to your permanent mortgage on time.

A one-time close (single-close) construction loan combines construction financing and permanent mortgage into one loan, requiring only one closing and reducing overall costs.

Yes, VA loans can be used for new construction, provided you work with a lender that offers VA construction loans, use a builder approved by that lender before closing, and meet all eligibility requirements.

Yes, VA construction loans allow you to finance both the land purchase and home construction in a single loan.

An interest reserve is a portion of the loan set aside to cover interest payments during construction, so borrowers don’t have to make monthly payments until the home is completed. It is built into the loan amount and paid by the builder.

Equity reserves refer to the value of owned assets (such as land or cash) that contribute toward the total project cost, helping reduce loan risk and potentially improving approval chances.

Interest reserve is calculated based on the loan amount, interest rate, and the 12-month construction period. It typically estimates the total interest accrued during staged fund disbursements over the build period.

Yes. Our VA construction loans don’t allow owner-builders or DIY work. You’ll need a qualified builder, licensed where your state or city requires it, who is approved by the lender before closing and works under a fixed-price contract.

The VA guarantee applies throughout the loan, but full completion—including final inspection and certificate of occupancy—is required before the home is considered fully compliant.

Some states offer full property tax exemptions for 100% disabled veterans, including Texas, Florida, Virginia, and Hawaii. Benefits vary by state and county, so check with your local tax assessor.