VA Construction Loans in Vermont

Building a new home in Vermont with your VA benefit

Many Vermont builds involve rural acreage, a private well and septic system, and a house designed for long winters. A VA one-time close construction loan can finance that kind of project. One closing covers the land (or the payoff of land you already own), the construction and your permanent mortgage, with $0 down on loans up to $1 million and no mortgage payments during the 12-month construction period.

When a Vermont Veteran contacts us, my team goes over your plans and handles the loan itself.

Where Veterans build in Vermont

• Chittenden County: Essex, Colchester, Williston, Milton, Jericho and Hinesburg. This is the state's largest job market, and it's near Camp Johnson in Colchester and the Vermont Air National Guard's 158th Fighter Wing in South Burlington.
• Franklin and Lamoille counties: St. Albans, Swanton, Fairfax, Morrisville and Hyde Park, with more rural land and lower lot prices.
• Central Vermont: Barre, Berlin, Northfield and Waterbury, close to Montpelier.
• Southern Vermont: Rutland, Bennington, Brattleboro and Springfield, and the towns around them.
• The Upper Valley and Northeast Kingdom: White River Junction and Hartford, plus St. Johnsbury and Newport, where rural land is easier to find.

Wells, septic and state permits

Most rural Vermont homes have a private well and an onsite septic system, and the state is closely involved in both. Vermont's Department of Environmental Conservation runs the wastewater system and potable water supply program, which permits soil-based wastewater systems and private water supplies. Those systems have to be designed by a licensed designer, and permitting staff work out of regional offices around the state.

For you, that means two things. First, have a licensed designer evaluate the soils before you buy land, because ledge, high groundwater and heavy clay can limit where a septic system can go or what it costs. Second, give permitting time a spot in your schedule so the build can start soon after closing. Your town may also have its own zoning permit, and some projects need additional state review, so ask your town office what applies to your parcel.

Building for Vermont winters

• Energy standards: Vermont's Residential Building Energy Standards apply to all new homes. Expect solid insulation, air sealing and efficient mechanical systems in your plans, which also helps keep heating costs in check.
• Frost and foundations: Deep frost means footings must go well below grade. Full basements are common, and drainage around the foundation matters in wet spring conditions.
• Snow load: Roof framing has to handle heavy snow, especially at higher elevations.
• Driveways and access: The house needs legal, year-round access. A long driveway on a hillside or a seasonal town road can be a problem, so confirm who plows and maintains the road. See the minimum property requirements checklist.
• Flooding: Lots near rivers and streams can sit in a flood zone. Check the flood map before you buy; a VA loan requires flood insurance in a special flood hazard area.

Vermont builders: registration and contracts

Vermont requires residential contractors to register with the Office of Professional Regulation when a project's estimated value is $10,000 or more, including labor and materials, and registered contractors must sign a written contract before starting work. You can look up a builder's registration through OPR, as explained on its homeowner resources page.

For the VA loan, your builder must also be approved by the lender before closing and must build under a fixed-price contract. VA construction loans don't allow owner-builders or do-it-yourself work. Our builder information page lists what builders provide. Many Vermont buyers like modular homes for a shorter on-site schedule, and those are eligible too when built by an approved builder.

Veterans' property tax exemption in Vermont

Vermont exempts at least $10,000 of a home's value from both the municipal and education grand lists for a disabled veteran who owns and lives in the home, and towns can vote to raise the municipal exemption to as much as $40,000. You qualify with VA disability compensation at 50% or more, a VA pension for non-service-connected disability, or military retirement pay for a permanent medical retirement. Surviving spouses of veterans who received the exemption may also qualify. Proof of eligibility goes to the Vermont Office of Veterans Affairs by May 1. Most veterans file every year; veterans rated permanently and totally disabled file only for the first year in a home, or again after moving to a new town. The Vermont Office of Veterans Affairs fact sheet explains the steps.

This is separate from Vermont's homestead declaration and property tax credit, which you file on your own. Check our property tax exemption by state page to compare.

Qualifying for a VA construction loan in Vermont

VA construction loans start at a 620 minimum credit score, and larger loan amounts may need a higher score. VA underwriting puts residual income first, and a higher debt-to-income ratio is often fine when residual income is strong. If you receive VA disability compensation, you're exempt from the VA funding fee.

While the house is being built, the interest reserve covers interest, so there's nothing for you to pay until it's finished. The reserve and the construction management fee are part of the loan amount and paid by the builder. Start with the eligibility guide, and if you own land already, read about building on land you own.

Vermont VA construction loan FAQs