VA Construction Loans in Washington, D.C.

Can you build a new home in Washington, D.C. with a VA loan?

Yes, but it's worth being honest up front: D.C. is one of the hardest places in the country to use a VA construction loan. The city is almost entirely built out, vacant lots are rare and expensive, and a large share of its housing is row houses, townhouses and condos. Attached homes aren't eligible for a VA construction loan, so most of that housing is off the table for new construction.

Where it does work, a VA one-time close loan fits well. One closing covers the lot purchase (or payoff of land you own), construction and your permanent mortgage, with $0 down on loans up to $1 million and 5% down on loans over $1 million, up to $2 million. You make no payments during the 12-month construction period, and the loan converts to a 15- or 30-year fixed rate. For a home in the District, Shirley's team handles the loan from application to closing.

Realistic ways to build in D.C.

Most VA construction projects in the District fall into one of two categories:

• A detached home on an infill lot. Occasionally a vacant, buildable lot comes up in a neighborhood of detached houses. These are scattered and competitive, and zoning will set how large the home can be.
• A teardown and rebuild. Buying, or already owning, an older detached house and replacing it with a new detached home, where zoning and historic rules allow. Demolition goes in the builder's fixed-price contract, and new construction can't begin before the loan closes.

Neighborhoods with more detached homes include Upper Northwest areas such as Chevy Chase D.C., Forest Hills, the Palisades and Spring Valley, along with Brookland, Michigan Park and North Michigan Park, Takoma, and parts of Wards 7 and 8 east of the Anacostia River such as Hillcrest. Prices vary enormously across those areas, so the 5% down rule for loans over $1 million comes up more often in D.C. than in most places.

A 2–4 unit building can qualify when you live in one unit, but it must be a detached structure, not a row of attached units. Co-ops are not eligible, and neither are lots where construction has already started. Review the minimum property requirements checklist before you make an offer on a lot or teardown.

Permits, zoning and historic districts

Building permits in the District are issued by the D.C. Department of Buildings. Zoning determines lot coverage, height and setbacks, and some projects need zoning relief, which adds months. Much of the city sits in historic districts, where new construction and demolition go through historic preservation review with the D.C. Office of Planning. Build these steps into your timeline before closing, because the loan expects your builder to start and finish within the 12-month construction period once it closes.

Urban sites also come with their own costs: tight access for equipment, protecting neighboring houses during excavation, utility connections, and city requirements for sidewalks and stormwater. A builder who has worked in the District will know how to price these.

Choosing a builder in the District

D.C. licenses contractors through the Department of Licensing and Consumer Protection (DLCP), which issues General Contractor/Construction Manager and Home Improvement Contractor licenses and requires proof of insurance with each. Confirm the builder's license and insurance before signing.

Separately from the city license, the builder needs lender approval before your loan closes, and the contract must be fixed-price. My team's VA construction loans don't allow owner-builders or DIY work. Our builder information page lists what the builder submits.

Military installations in and near D.C.

The District is surrounded by military commands, and many Veterans want to stay close to them after service or retirement:

• Joint Base Anacostia-Bolling along the Potomac in Southeast and Southwest D.C.
• Fort McNair in Southwest D.C., home of the National Defense University
• Washington Navy Yard on the Anacostia waterfront
• Walter Reed National Military Medical Center, just over the line in Bethesda, Maryland (the former Walter Reed campus in Northwest D.C. has been redeveloped)
• The Washington DC VA Medical Center in Northwest D.C.
• Nearby Joint Base Andrews in Maryland and the Pentagon and Joint Base Myer-Henderson Hall in Arlington, Virginia

If D.C. land prices or zoning don't fit your plans, many Veterans who work in the city build in the Maryland and Virginia suburbs, where detached lots are easier to find. Shirley's team handles those loans too. See our Maryland and Virginia pages.

D.C. property tax relief for disabled Veterans

The District offers a Disabled Veterans' Homestead Deduction that reduces the assessed value of your home by $445,000, according to the D.C. Office of Tax and Revenue. To qualify, the VA must rate you as having a total and permanent service-connected disability, or pay you at the 100% rate due to individual unemployability. The home must be your principal residence (no more than five units), you must own at least 50% of it and be domiciled in D.C., and household income must be under a limit that's updated each year (for tax year 2026, total household federal adjusted gross income for 2024 under $163,500). It can't be combined with the regular Homestead Deduction, Senior/Disabled Tax Relief or the Assessment Cap Credit, and co-ops are not eligible. A separate deduction is available for eligible surviving spouses. Check the current requirements on the OTR real property tax relief page, and see our property tax exemption by state overview.

How the loan works for a D.C. build

The loan amount includes the lot or payoff, the builder's contract (including any demolition), and the interest reserve and construction management fee, which are built into the loan and paid by the builder. That's why there are no payments during construction. VA construction loans start at a 620 minimum credit score, and larger loan amounts may need a higher score. Qualifying focuses on residual income. Plan on about 2–3 months to close, often longer in D.C. if zoning or historic review is needed, then a 12-month construction period. Read the VA one-time close construction loan page and our eligibility guide.

Washington, D.C. VA construction loan FAQs