Here at Security America Mortgage, we are loan experts dedicated to offering veterans access to better loans to help them build their dream homes. We are grateful for veterans’ service and take pride in providing our services to help veterans access better loan terms.
With the demands of military life, it can be challenging to find housing in areas close to good schools or other desirable areas. The VA construction loan is designed to help veterans build their own homes to make up for the lack of supply in the housing market and ensure they can create a home that suits their family’s needs.
The VA construction loan to build a house is similar to a traditional construction loan; but it offers the benefits associated with VA loans. VA construction loans can be used to purchase land, construct a home, and the borrower can receive builder credits that cover the construction loan closing costs except the VA funding fee (as long as these costs do not exceed the house’s appraised value).
The VA loan benefit is a federal benefit that was created from the GI Bill of Rights. With a VA-backed home loan, the Veterans administration guarantees and protects a portion of the loan you get from Security America Mortgage or another private lender. If your VA-backed home loan goes into foreclosure, the guaranty allows the lender to recover some or all of their losses. Since there is less risk for VA lenders in general, it’s easier to give better terms. If you are within your county loan limits and the appraisal covers the loan amount then you will likely not need any down payment. A VA construction loan offers competitive interest rates and since there is only one closing there are less closing costs and no need to requalify a 2nd time.
To be eligible for a VA construction loan, you must meet requirements based on the length and nature of your service. You can provide evidence of your service using your DD form 214 and a statement of service from your commanding officer. You must submit this information to gain a certificate of eligibility COE, which is required to access a VA construction loan. You can use the certificate of eligibility application form on our website to apply. Security America Mortgage can access the LGY system, meaning we can get you your certificate of eligibility in seconds. To gain your certificate of eligibility, the following must apply:
If you meet these standards, you should encounter no issue with attaining your certificate of eligibility.
The VA construction loan comes with lenient credit requirements compared to conventional loans, making the loan more accessible to veterans with lower credit scores. This means that veterans without optimal credit scores will be able to access VA construction loans.
The VA construction loan requirements are as follows:
The VA construction loan process is relatively straightforward, so long as you have the help of a VA loan officer who will guide you through each step in the loan process. To get started on your application for a VA construction loan, contact Security America Mortgage today!
The first step in the VA construction loan process is obtaining your eligibility certificate. You can obtain your certificate of eligibility easily using the COE application form on our website. Our access to the LGY system means we can help you get your eligibility certificate in seconds.
You will need to enlist the services of an experienced VA lender like Security America Mortgage and an experienced VA loan officer to help guide you through the loan application, process and closing of your VA construction loan. At Security America Mortgage, we aim to make the loan process stress-free. Security America Mortgage offers VA construction loans with a hands-on loan officer and personalized experience for our valued veteran customers.
You must use the services of a VA-approved builder in the VA construction loan process. If you already have an insured builder in mind, contact your VA lender and ask them to help you get your builder registered with them too. The VA and the lender both approve builders.
You can find VA-approved builders using our user-friendly VA-approved builders map, which will help you find a builder in your area. Or, you can use the Veterans Affairs website to check if a builder is registered with the VA.
Just because a builder is registered with the VA does not mean that we will approve them at Security America Mortgage.
Your lender will enlist the services of an appraisal expert during the VA construction loan application process. The VA lender will require an accurate value depicting the completed home’s value, as they can not lend above this value. The appraisal will also help the VA lender ensure you are not being overcharged for the construction of the house.
Closing on VA construction loans can take from 30-60 days to close based on factors such as having builder plans, the land status, the builders approval and your approval. There can be a range from 5 months up to a year to build. 12 months is the max allowed. Once you have closed on the loan, construction can begin. You are not required to make any payments on a VA construction loan until the construction phase is complete and you have a certificate of occupancy.
Once construction is complete, there will be a final inspection of the property to ensure it meets VA minimum home requirements and that the home has been built in line with VA guidelines. Once the final inspection is complete, you are free to plan the move into your new home and make your first monthly mortgage payment on your VA loan.
If you already own or wish to purchase a property in need of repairs, you can use the VA renovation loan to finance the purchase of the property and the renovations and repairs desired. The renovation loan is designed to allow veterans to broaden the scope of their search when looking for houses, allowing them to choose homes in need of renovations and repairs.
The benefits of a VA renovation loan include:
To be eligible for a VA renovation loan, you must apply for a certificate of eligibility. The certificate of eligibility can be obtained on the Security America Mortgage website using our straightforward application form. You may be required to provide a statement of service or your DD Form 214. The GC/Builder must carry sufficient insurance equal to the amount of $100,000/per occurrence through a valid and current general liability insurance policy and must provide a detailed estimate/bid itemizing all of the repairs that are to be completed with costs broken down to material and labor, and not, if permits are going to be required. Ineligible repairs include:
Did you know that you can use a VA renovation loan to refinance your existing mortgage? You can access better mortgage terms by refinancing your existing mortgage when applying for a VA renovation loan. This could be preferable to getting a second mortgage or cash-out refinancing to fund the repair and renovation of your home.
Here are some of the properties not permitted with a VA construction loan:
The mortgage rate of a VA construction loan is more competitive than a conventional construction loan because the Department of Veteran Affairs guarantees the loan when it is closed. This protects the lender from losses if the borrower can’t pay. The mortgage rate on a VA construction loan will most likely be higher than the rate on a VA purchase loan because on a purchase you are only locking in your loan rate for approximately 30 days. On a VA construction loan, you’re locking in your loan rate for significantly more time and up to 12 months. The added risk of market volatility is built into that rate. This means if the interest rates increase during construction, you are locked in at the lower rate. If the interest rates go down significantly, we can refinance your loan. You are required to wait at least 210 days, or long enough to have made six payments, whichever is longer.
It can be quite challenging to attempt this process on your own, so finding a VA home loan expert is important. Navigating eligibility requirements, construction plans, building requirements, and other VA requirements will be far less stressful with an experienced team working on your behalf.
As the name suggests, there is only one closing when you opt for a VA One-Time Close construction loan. You do not have to worry about requalifying or incurring additional costs with a second closing. Also, mortgage payments do not begin until after the home has passed final inspections and has a certification of occupancy.The VA one-time close construction loan can also wrap the construction financing and the land purchase into one closing or 2 based on your choice and need at the time.