Can Someone Construct a Home With No Money Down?

VA Construction Loan

Are you interested in knowing about building a new home from the ground? Right now, do you have the membership of an active-duty service or veteran? If yes, you may qualify for a VA Construction loan. You can use this loan everywhere, from land purchase and construction to a permanent mortgage for the finished residence. In addition, the VA mortgage requires no down payment.

Got the idea? Finding VA construction loan lenders is difficult. Therefore, you need to make some efforts to find out.

What Is A VA Construction Loan?

If you have active duty service or veteran membership, you can apply for a benevolent loan program provided by the U.S Department of Veterans Affairs. Moreover, this loan can make your struggle to get your dream a success.

This loan is user-friendly. Some uses:

· The finance of VA construction can be utilized in purchasing and constructing a home. It can also be used in financing the permanent mortgage on the residence once it is completed. There is only one underwriting process, one evaluation, and one closing step. This program is also known as VA one-time close construction loan.

· This option gives you the combined facility of buying land and building a house on it, after which your VA construction loan can utilize a separate permanent VA mortgage loan. Therefore, with this option, evaluation and closing occur with the short-term loan.

· The construction of your home on land that you already possess or are supporting separately, after which your VA construction loan can utilize a separate permanent VA mortgage loan. For this option, there is one evaluation and closing for the VA construction loan. Still, a permanent VA mortgage loan requires a separate underwriting process, evaluation, fee, and closing.

The VA Construction Loan Procedure

This construction loan process includes some steps. The steps:

  • By obtaining a Certificate of Eligibility (COE), your claim to VA benefits verifies and provides personal financial information to the lender. Review copies of current credit reports, income proof, Current bank statements, and investment accounts, and other financial documents the lender may ask for.
  • Find a lender that offers VA construction loans and get pre-approved. Also, Keep in mind that VA does not lend directly, so you will have to hunt for a private lender offering this program.
  • Select a licensed builder/general contractor that’s VA-approved and submit your home construction plans to the lender.
  • Have a complete evaluation of the property completed.
  • Have the completed home examination according to VA standards and complete the last step.
  • Lastly, if this loan of yours does not support a permanent mortgage loan component, you will need to sustain a VA home loan once the home is constructed.

Requirements of VA Construction Loan

Several rules apply to VA construction loans, including the course of action for the borrower, the contractor, and the home under construction.

Borrower Requirements

Initially, you need a good credit score. Experts recommend 620 to 640 minimum credit scores to increase the chance of eligibility chances.


  • Your debt-to-income ratio (DTI) should be under 41%.
  • You must meet the requirements of income depending on the size of your family.
  • Must have a decent bank history.
  • You have a stable income and secured employment.

Requirements of Property

The home constructed needs to satisfy the demands, too, including,

  • The owner must utilize the finished home as a primary residence.
  • The property must be in a locality that is a VA-approved area and meets the other criteria of VA.
  • An official executive approved by the VA must examine the property.
  • Your total loan amount for construction/ the permanent mortgage must not go beyond $548,250 for most U.S. states in 2021.

Requirements for Lender

Following are the requirement for the lender:

  • First, you must opt for a VA-approved mortgage lender that takes part in the VA construction loan program.
  • Secondly, the VA must approve of your opted lender.
  • Finally, you must get a new construction warranty from the builder.

Dig more yourself to get more aspects regarding VA construction loans even though activities related to construction are complex.

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