Building a custom home gives Veterans more control—but financing it can feel overwhelming. A VA construction-to-permanent loan allows eligible borrowers to finance land, construction, and a long-term VA mortgage under one loan, often with no down payment and no private mortgage insurance.
This guide explains how VA construction-to-permanent loans work, eligibility requirements, advantages and disadvantages, and how they compare to conventional construction loans—so you can decide with confidence.
KEY TAKEAWAYS
- VA construction-to-permanent loans combine construction and long-term financing
- $0 down and no PMI for eligible Veterans
- One-time close loans simplify budgeting
- Builder approval and appraisal are required
- Expert guidance improves approval speed and outcomes
What Is a VA Construction-to-Permanent Loan?
A VA construction-to-permanent loan is a VA-backed mortgage that starts as a construction loan and automatically converts into a permanent VA mortgage once the home is completed.
Instead of applying for multiple loans, Veterans can manage construction and long-term financing through one structured solution, reducing complexity and costs.
Many borrowers access this option through a VA one-time close construction loan.
How Do VA Construction-to-Permanent Loans Work?
Understanding how VA construction-to-permanent loans work helps avoid delays and confusion.
VA Construction-to-Permanent Loan Process (Step-by-Step)
- Confirm VA construction loan eligibility
- Get pre-approved with a VA construction lender
- Select land (or use land you already own)
- Choose a VA-approved builder
- Submit plans, specifications, and budget
- Complete a VA appraisal based on future value
- Close on the loan and begin construction
- Loan converts into a permanent VA mortgage
Funds are released to the builder in stages as construction milestones are completed.
VA Construction-to-Permanent Loan Eligibility & Requirements
VA Construction-to-Permanent Loan Eligibility
You may qualify if you:
- Meet VA service requirements
- Intend to occupy the home as your primary residence
- Have a stable income and manageable debt
- Work with a VA-approved builder
VA Construction-to-Permanent Requirements
- Certificate of Eligibility (COE)
- Signed construction contract
- Builder licensing and insurance
- VA construction appraisal
- Income, asset, and credit documentation
Official VA loan guidelines are established by the U.S. Department of Veterans Affairs and published on the VA Home Loans program: https://www.va.gov/housing-assistance/home-loans/
VA One-Time Close Construction Loan Benefits
A VA one-time close construction loan combines construction and permanent financing into one transaction.
Key Benefits
- Single loan application and closing
- One interest rate lock
- No refinance after construction
- Reduced overall closing costs
These benefits make budgeting easier and eliminate the uncertainty of refinancing later.
VA Construction to Permanent Loan Pros and Cons
VA Construction to Permanent Loan Advantages
- No down payment required
- No private mortgage insurance
- Competitive VA-backed rates
- Simplified long-term financing
- Protection through VA appraisal standards
VA Construction to Permanent Loan Disadvantages
- Fewer lenders offer this option
- Builder approval is required
- Longer pre-construction review process
- More documentation upfront
VA Construction Loan vs Conventional Construction Loan
| Feature | VA Construction-to-Permanent | Conventional Construction |
| Down payment | $0 | 10–25% |
| PMI | Not required | Required |
| Rates | Typically lower | Often higher |
| Loan conversion | Automatic | Refinance required |
| Eligibility | Veterans only | Open to all |
For eligible borrowers, VA construction-to-permanent financing often provides lower risk and stronger long-term value.
VA Builder & Appraisal Requirements
VA Builder Requirements
- Valid licensing and insurance
- VA approval or eligibility
- Residential construction experience
- Compliance with VA inspections
VA Construction Appraisal Requirements
- Based on the future completed value
- Confirms VA Minimum Property Requirements
- Protects Veterans from overpaying
VA Construction-to-Permanent Loan Rates
VA construction-to-permanent loan rates are generally competitive due to VA backing. Rates vary based on:
- Credit profile
- Market conditions
- Loan structure
- Rate-lock timing
Veterans with service-connected disabilities may qualify for a VA funding fee waiver, reducing overall loan costs.
Why Veterans Choose VA Construction Loan
VA Construction Loan focuses exclusively on VA construction and one-time close loans. Our specialists help Veterans navigate:
- Eligibility review
- Builder approval
- VA appraisals
- Loan approval
- Automatic conversion to permanent financing
Explore programs by location on our State Listing page or speak with a specialist to review your options.
Ready to Use Your VA Benefit to Build?
Your VA home loan benefit isn’t limited to buying what’s already available. It can be used to fund new construction, manage building costs, and secure long-term financing—all under one VA-backed loan.
Our specialists help Veterans navigate eligibility review, builder coordination, VA appraisals, loan approval, and automatic conversion to permanent financing with clarity at every step.
👉 Contact us today to start your VA construction-to-permanent loan
Call us: 1-888-795-9850
One benefit. One loan. One clear path to your custom home.
Frequently Asked Questions
Do VA construction-to-permanent loans require a down payment?
No. Eligible Veterans can finance 100% of land and construction costs.
Can land purchase be included?
Yes. Land can be included if it’s part of the primary residence.
What credit score is needed?
Many lenders look for 620 or higher, though flexibility exists.
How long does approval take?
Usually 45–75 days, depending on builder and appraisal approval.
Can I use my own builder?
Yes, if the builder meets VA approval requirements.
What happens after construction?
The loan automatically converts into a permanent VA mortgage