If you're moving to Fort Carson, Peterson Space Force Base, or another installation near Colorado Springs and can't find a resale home with the layout, lot, or commute you want, building is worth a look.
A Colorado Springs VA construction loan lets eligible Veterans and service members finance the land, the build, and the permanent mortgage in one loan, often with no down payment. This guide covers eligibility, builder requirements, the step-by-step process, typical costs, popular areas to build, and common problems to plan around.
Quick Answer
To get a VA construction loan in Colorado Springs, you need a Certificate of Eligibility (COE), a VA construction lender, a lender-approved builder, and a residential lot to build on. This type of loan provides a single mortgage to cover land acquisition and 100% of your construction costs, with $0 down on loans up to $1 million.
Key Takeaways
- Eligible veterans can build with 0% down.
- One-Time Close financing combines construction and mortgage.
- Builder must meet lender requirements.
- COE is required before approval.
- Plan on a 12-month construction period.
- Choosing an experienced VA construction lender reduces delays.
Why Build a Home in Colorado Springs Instead of Buying an Existing Home?
Resale homes in El Paso County are often priced at a premium even when the floor plans are dated. For military families relocating to the Front Range, building can make sense for several reasons:
- Population growth: Military and civilian families keep moving to the Pikes Peak region, which keeps housing demand high.
- Limited resale inventory: The supply of homes for sale is tight, which can mean competing offers on existing homes.
- Growing custom-home communities: North and east El Paso County is adding new subdivisions, roads, and infrastructure.
- Mountain views: Custom building is the way to position your home exactly right for a clear view of Pikes Peak.
- Larger lots: Many newer communities east of the city offer bigger lots than older neighborhoods.
- Better energy-efficient homes: New insulation, modern heating systems, and better windows usually mean lower winter utility bills.
- Ability to customize: You choose the floor plan and finishes.
Building vs. Buying in Colorado Springs
| Building a New Home | Buying an Existing Home |
|---|---|
| Customize floor plan and finishes | Limited customization |
| Modern energy-efficient construction | May require upgrades or renovations |
| Builder warranty included | Repairs may be needed after purchase |
| New building materials and systems | Older components may have shorter remaining life |
| Typically longer move-in timeline | Faster occupancy after closing |
| Often available in expanding communities | Inventory may be limited in competitive areas |
Can You Get a VA Construction Loan in Colorado Springs?
Yes. The VA home loan benefit can be used to build a new home, not just to buy an existing one. The VA guarantees a portion of the loan (typically 25%), which is what lets lenders offer a Colorado VA construction loan with no down payment on loans up to $1 million and a 15- or 30-year fixed rate.
Eligibility Requirements: Who Qualifies for a VA Construction Loan?
To be approved, you'll need to meet the VA construction loan eligibility requirements:
- Military Status: You must be on active duty, a veteran, or a member of the National Guard or Reserve.
- COE: Your Certificate of Eligibility shows you qualify for the VA home loan benefit and how much entitlement you have.
- Credit Score: VA construction loans start at a 620 minimum credit score, and larger loan amounts may need a higher score. Manual underwrites, or deviations from a credit score, are not allowed by a Lender on a construction file.
- AUS Approval: Your file needs an Approve/Eligible finding from DU before it can move forward through automated underwriting.
- Contractor Vetting: Your builder must meet the lender's approval requirements and maintains general liability and workers' compensation coverage that satisfies current lender minimums.
- Primary Residence: The home must be your primary residence.
- No DIY: Owner-builders and do-it-yourself work aren't allowed; an approved builder does the work.
VA Construction Loan Eligibility Checklist
| Requirement | Typical Guideline |
|---|---|
| Military Service | Eligible veteran, active-duty service member, National Guard, or Reserve member |
| Certificate of Eligibility (COE) | Required |
| Minimum Credit Score | 620 minimum (larger loan amounts may need a higher score) |
| Automated Underwriting | Approve/Eligible finding from DU required |
| Down Payment | $0 down on loans up to $1 million; 5% down on loans over $1 million (up to $2 million) |
| Builder Approval | Licensed and lender-approved contractor |
| Occupancy | Primary residence only |
| DIY Construction | Not permitted |
How to Get a VA Construction Loan in Colorado Springs: Step-by-Step Guide
Building involves your lender, builder, and appraiser working in sequence. Here is the process for a VA construction loan in Colorado Springs:
- Step 1 – Check Your VA Loan Eligibility: Apply for a Certificate of Eligibility (COE). This document establishes your military entitlement and helps determine if you're exempt from paying the funding fee.
- Step 2 – Choose a VA Construction Loan Lender: Work with a lender that offers a true VA one-time close construction loan, so you close once on the lot, the build, and the permanent mortgage.
- Step 3 – Determine Your Budget: Review your BAH and base pay (or other income) to set a comfortable budget for your build.
- Step 4 – Find Land in Colorado Springs: Choose a home site with access to utilities (or room for a well and septic). Acreage in Peyton, Falcon, or Monument can exceed $150,000, while a standard lot on the outskirts of Colorado Springs may start around $50,000.
- Step 5 – Choose a VA-Eligible Builder: Choose a licensed, insured builder that your lender approves before closing, under a fixed-price contract.
VA Construction Loan Timeline
| Stage | Typical Timeline | What Happens |
|---|---|---|
| Certificate of Eligibility (COE) | Same day to 1 week | Obtain or verify your VA eligibility. |
| Pre-Approval | 2–7 days | Lender reviews your income, credit, assets, and military eligibility. |
| Builder Approval | 2–4 weeks | Contractor licensing, insurance, financials, and experience are reviewed. |
| Land Selection & Purchase | 1–6 weeks | Select an eligible home site that meets lender and VA requirements. |
| Plans, Specifications & Appraisal | 2–4 weeks | Construction plans are reviewed, and the home's future value is appraised. |
| Loan Underwriting & Closing | 30–45 days | Final approval, loan documents signed, and construction financing begins. |
| Construction Phase | 12 months | Builder completes the home while receiving scheduled draw payments. |
| Final Inspection & Loan Conversion | 1–3 weeks | The final inspection confirms completion, and the loan converts to a permanent mortgage. |
Colorado Springs Neighborhoods Popular For New Construction
Best Areas to Build Near Colorado Springs Military Bases
| Area | Best For | Approximate Commute |
|---|---|---|
| Falcon | Larger lots and new communities | 10–20 minutes to Peterson SFB |
| Peyton | Acreage properties and custom homes | 20–30 minutes to Peterson SFB |
| Fountain | Affordable new construction | 10–15 minutes to Fort Carson |
| Security-Widefield | Military families | 10–15 minutes to Fort Carson |
| Monument | Luxury homes and mountain views | 25–35 minutes to USAF Academy |
| Tri-Lakes | Larger custom homes | 20–30 minutes to USAF Academy |
What Can a VA Construction Loan Cover?
Most building costs, including land preparation and permits, can be rolled into one loan. A VA construction loan in Colorado Springs can finance:
- Site and land purchase and development
- Site work - grading and excavation, pouring of foundations
- Sewer and water lines, well drilling, and septic installation
- Materials for building the physical home, contractor labor
- Foundation forms, basic site work like driveways and garages, basic landscaping
- Architectural blueprints, structural plans, county permits
- A compulsory 2% contingency fund in builder contracts under current overlays to cover cost fluctuations during construction.
How Much Can You Borrow?
Find out how much you qualify for before you start drawing plans. Here's how VA construction loan limits work in Colorado Springs:
Unlike a standard VA purchase loan, which has no VA-imposed maximum for borrowers with full entitlement, current VA construction overlays cap the maximum base loan amount at $2,000,000. Loans up to $1 million can be $0 down, and loans over $1 million (up to the $2 million maximum) need 5% down (5% of the whole loan). VA construction loans start at a 620 minimum credit score, and larger loan amounts may need a higher score. Qualifying looks at residual income first, and a higher DTI is often fine when residual income is strong.
Common Challenges Veterans Face in Colorado Springs with VA Construction Loans
Building on the Front Range comes with some local challenges. Knowing them up front helps you avoid delays:
- Limited VA construction lenders: Few lenders offer VA one-time close loans that cover both the construction and the permanent mortgage.
- Builder approval delays: Builders have to submit licensing, insurance, and business documents for lender approval, which takes time.
- Appraisal timing: The peak spring and summer PCS season may delay VA appraiser reports.
- Mountain lot challenges: Sloped lots often need soil testing and retaining walls, which add cost.
- Utility installation: Drilling a well and bringing power to a remote lot can be expensive.
- Weather-related construction delays: Heavy winter weather can pause work for stretches.
- Wildfire-prone areas: Forested lots can mean higher insurance premiums and stricter building-material requirements.
Colorado Springs Military Considerations
Colorado Springs is home to five military installations: Fort Carson, Peterson SFB, Schriever SFB, the U.S. Air Force Academy, and Cheyenne Mountain SFS. A home within 20 to 30 minutes of these bases tends to hold its resale and rental appeal after you PCS.
Veteran Property Tax Exemptions in Colorado
Colorado exempts 50% of the first $200,000 of actual value from property tax for honorably discharged veterans with a 100% permanent and total service-connected disability rating (or individual unemployability status). This is a statewide Colorado exemption, administered by the assessor in whichever Colorado county your residence homestead is located, and it reduces the amount escrowed with your mortgage payment.
Estimated Costs of Building a Home in Colorado Springs
Here's an approximate budget breakdown for a custom build in the Colorado Springs area.
| Expense | Estimated Cost |
|---|---|
| Residential Lot | $50,000–$120,000 |
| Site Preparation | $10,000–$25,000 |
| Utility Connections | $5,000–$20,000 |
| Foundation | $12,000–$30,000 |
| Home Construction | $150–$350 per sq. ft. |
| Driveway & Basic Landscaping | $5,000–$20,000 |
| Builder Contingency | 2% of construction cost under current overlays |
The final cost to you depends on your site location, custom floor plan, utilities, and builder prices throughout Colorado Springs.
Mistakes to Avoid with VA Construction Loans
These planning mistakes can lead to costly delays and out-of-pocket expenses:
- Construction starting before you're ready to close.
- Not leaving any "cushion" for unexpected cost overruns.
- Working with someone who isn't a licensed or properly certified contractor.
- Drifting from the original design once your appraisal is done.
How to choose a VA Construction Lender in Colorado Springs
Your lender has a big effect on how smoothly the build goes. Look for one that handles VA construction loans in-house.
Verify that the lender can support in-house construction management, including draws to the builder. You will want an in-house Staff Appraisal Reviewer (SAR), which allows for in-house review and prevents third-party delays.
VA Construction Loans: Your Path from Blueprint to Key.
Shirley Mueller, Sr. VP of Veteran Lending at CrossCountry Mortgage, helps Veterans and military families finance new builds on the Front Range.
The online application takes about 10 minutes and uses a soft credit pull only. Her team reviews every application: if you qualify, you'll get a pre-approval letter and a full itemized estimate; if you don't qualify yet, you'll get a plan to get there. Call 888-788-4977 with questions.
About Shirley Mueller
Shirley Mueller is Sr. VP of Veteran Lending, NMLS ID 336103, and has specialized in VA home loans for over 20 years as a loan originator since 2003. She specializes in entitlement analysis, residual income review, and VA program structuring, and her practice is largely referral-driven.
Schedule a Consultation with Shirley Mueller.
CrossCountry Mortgage, LLC NMLS #3029 | Shirley Mueller NMLS #336103. Equal Housing Lender. This article is for informational purposes only; loan programs, overlays, and eligibility requirements are subject to change and lender approval.
FAQs
Can I Buy Land And Build With One VA Loan In Colorado Springs?
Yes. A single VA One-Time Close loan allows you to finance buying land and building on it. Because the land, construction, and permanent mortgage close together, you pay one set of closing costs instead of two.
Which Neighborhoods Are Best For Building Near Fort Carson?
Fountain and Security-Widefield are popular choices. These southern El Paso County communities have lower land costs than much of the area, are growing quickly, and are about 10 to 15 minutes from Fort Carson's gates.
Can I Use My Own Builder?
You can choose your builder, but you can't act as your own general contractor. Owner-builders and DIY work aren't allowed. Your builder must be a licensed and insured general contractor who meets your lender's approval requirements and carries workers' comp.
Are Mountain Lots Eligible?
Yes, mountain lots can be eligible. Sloped lots often need soil testing and retaining walls, and remote lots may need a private well, a septic system, and extra work to bring in utilities, so budget for those costs.
How Long Does Construction Take In Colorado Springs?
Plan on about 2–3 months to close (lender underwriting, builder approval and the appraisal), then a 12-month construction period.
Does Colorado Have A Property Tax Exemption For Disabled Veterans?
Yes. Colorado exempts 50% of the first $200,000 of your main home's actual value from property tax if you have a 100% permanent and total service-connected disability rating (or qualifying individual unemployability status). This is a statewide Colorado exemption, not specific to El Paso County — it applies to a qualifying primary residence anywhere in Colorado, administered through your county assessor.
How Close Can I Build To Peterson Space Force Base?
You can build within about a 5- to 15-minute drive of Peterson Space Force Base. Eastern Colorado Springs, Falcon, and Peyton have fast-growing communities between the Peterson and Schriever Space Force Base gates.
Can I Use A VA Construction Loan For Acreage Near Monument Or Peyton?
Yes, you can buy acreage outside Monument or Peyton. Make sure it complies with local zoning laws and has clear, safe road access to a public road to meet VA Minimum Property Requirements. Working farms and ranches aren't eligible.
Which Military Installations Near Colorado Springs Make VA Construction Loans Popular?
Demand for construction loans is driven by the installations in the area: Fort Carson, Peterson SFB, Schriever SFB, USAFA, and Cheyenne Mountain. With so many active-duty service members stationed at these five installations, demand for new homes stays strong.
Do I Need A Down Payment For A VA Construction Loan In Colorado Springs?
No down payment is required on loans up to $1 million if you have full entitlement, so you can buy the land and build with $0 down. Loans over $1 million (up to $2 million) need 5% down.
What Credit Score Is Typically Needed For A VA Construction Loan In Colorado Springs?
VA construction loans start at a 620 minimum credit score, and larger loan amounts may need a higher score. Construction loans have strict underwriting: you'll need an automated Approve/Eligible finding from DU, without any manual underwrites or credit-score deviations.
Can I Build A Home With A VA Construction Loan While Relocating To Fort Carson?
Yes. Your documented Basic Allowance for Housing (BAH) can count as income, and you may be able to close from out of state using a valid power of attorney that meets VA and lender requirements.
About the author
Shirley Mueller
Sr. VP of Veteran Lending at CrossCountry Mortgage (NMLS #336103). A loan originator since 2003, Shirley has specialized in VA home loans for over 20 years, and her team focuses on VA one-time close construction loans for Veterans and active-duty families.