Sometimes the perfect home doesn't exist yet. Luckily, if you're a veteran or active-duty servicemember, you aren't limited to buying a home that's already been built.
The VA loan program can be used to build a brand new home on land you've purchased. However, the process is more complicated and will take you through a variety of phases. But with an experienced lender like Low VA Rates, more complicated doesn't have to mean more hassle.
At Low VA Rates, we do what are sometimes called dual-close construction loans. Nearly every VA lender follows this process. It involves two separate loans with their own closing dates:
The first step in the construction process is to buy the land your home will be built on. However, VA loans don't cover land purchases, even if you're planning on building a home there in the future. So, you can either get a traditional land loan or you may be able to finance the land purchase as part of your construction loan.
You want to start the process by choosing a builder with a VA Builder ID because it makes it easier down the road when it's time for you to roll your construction loan into a VA loan. That's because the VA requires new constructions to have a one-year warranty from a VA builder.
Often construction loans require a down payment, which is one downside to the dual-close VA construction loan process. However, you may be able to find a lender who is willing to make an exception because of your military status.
Once you have the land, builder, and a construction loan secured, you can start building your home. During this process, your builder will work with the construction loan lender to periodically pull out money to cover the costs.
You'll want to find your VA loan lender while the construction of your home is still happening. Don't wait until it's finished! As soon as your home is done, the construction loan lender will want you to pay the loan balance in full, so you'll want the VA loan already set up and ready to go when that happens.
In general, the construction loan portion of the process will have its own requirements separate from the VA loan requirements. And just like with typical VA purchase loans, the lender you choose for either loan may also have their own separate overlays.
However, if you choose Low VA Rates as the lender for your VA mortgage loan portion, the only requirements you will, personally, need to meet will be the same as those for a standard VA loan: