VA New Construction Loan | Guidelines & Property Types
Looking for a VA new construction loan? Most construction loans require two loans – a bridge loan and a permanent VA loan. This VA new construction loan allows veterans to finance the lot, construction, and permanent loan with one single closing.
A veteran can finance the construction, lot purchase, and permanent mortgage for stick-built, modular, and manufactured homes. This allows you to avoid a second appraisal, re-qualifying for permanent financing, and incurring additional costs.
There are ineligible property types such as, single-wide manufactured homes, condominiums, multi-unit, multiple homes on one lot, attached or semi-detached, and other types of non-traditional construction types.
Land can be purchased, gifted following VA gift guidelines, or owned.
Most types of new construction loans require a larger down payment with unfavorable interest rates. These types of loans incur additional costs because of having to qualify twice for a loan and pay for closing costs twice.
The VA new construction loan does not require re-qualification or a second appraisal due to the nature of the loan.
Funding for the construction, lot purchase, and permanent financing is done at one closing. You will work with a team that is knowledgeable with the new construction loan process.
- No payments are due during the construction of the home.
- Single closing reduces total costs.
- You do not have to qualify for a second loan once the construction is complete.
- Streamline process through experience and expertise.
- Rate is locked prior to the closing and construction period.
VA New Construction Guidelines
- 100% VA financing available with high balance and VA jumbo allowed up to VA loan limits.
- Debt-to-income ratios are determined by the Automated Underwriting System (AUS) finding, which is run during the pre-approval process.
- Manual underwriting is available for other types of VA loans.
- Minimum credit score is 620 for the VA new construction loan, but traditional VA financing is available with lower credit scores.
VA Construction Loan Requirements
After closing, the construction can begin. The loan is closed prior to construction beginning, which no re-qualifying of the borrower is required. The Builder/Retailer does not have to get their own loan for construction costs – often bridge loans require larger down payments with unfavorable interest rates.