Can I Use VA Loan To Build A House in 2023

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VA Loan to build a house - Security America Mortgage

Experienced, Proficient VA Construction Loan Experts Supporting Veterans To Build Their Dream House

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.


There are many benefits VA construction loans and VA home loans offer over traditional construction loans. Here are some of the VA loan benefits you can access with a VA construction mortgage:

  • More lenient credit standards – VA construction loans have more flexible credit standards to make the loan more accessible to a wider range of veterans, despite any blemishes in their past credit history that are over 2 years old.
  • No payments during construction
  • Ability to lock in a fixed rate loan and protect yourself from market volatility
  • No down payment  – veterans can get a VA construction loan without making a hefty upfront payment. This means veterans without significant savings can still access the VA construction loan.
  • No second closing – the VA construction loan process has only one closing, meaning that veterans will not have to worry about requalifying or incurring additional costs with a second closing.
  • No PMI payments – in a traditional loan, private mortgage insurance protects the lender should the borrower not be able to make a payment. PMI can cost around $150 per month for a home valued at $250,000. Veterans who opt for a VA construction loan or any VA loan do not have to worry about PMI.  The VA funding fee is the Veterans version of PMI.  Vets with more than 10% disability won’t have a funding fee.


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:

  • You are an active service member with at least 90 days of active duty service.
  • You are a veteran who has served at least 181 days of active duty service.
  • You are a current National Guard member who has served at least 6 years.
  • You are a discharged National Guard member who has served at least 6 years.
  • You are a National Guard or Reserves member who has been called to active duty and served 90 days of active service.
  • You are a widowed and un-remarried military spouse whose partner has died in the line of duty or due to a service-related injury. (You will need to provide evidence of your Dependency and Indemnity compensation).

If you meet these standards, you should encounter no issue with attaining your certificate of eligibility.

VA Construction Loan Credit Requirements

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:

  • 620 Minimum Qualifying Credit Scores for all qualifying borrowers
  • 620-659: A minimum of 2 qualifying credit scores are required for all qualifying borrowers. Use the middle score if 3 credit scores or the lower of the two if 2 credit scores.
  • 660+: A minimum of 1 qualifying credit score is required for all borrowers.
  • The lowest representative score from all borrowers will be used for the qualification process.

VA Construction Loan Process

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!

Confirm Eligibility and Entitlement

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.

Choose VA Lender for VA Loan To Build A House

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.

Find VA-Approved Builder

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.

Complete Property Appraisal

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.

Final Inspection

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.

VA Renovation Loan For House Remodeling & Repairs

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:

  • 100% financing – with a renovation loan, you can finance the current value of the property and repairs!  This means that veterans, active service members, and their families can access a mortgage without saving for many years or deplete their existing savings.
  • Competitive mortgage rates – Purchase, 100% LTV including renovation costs
  • Refinance, 100% LTV including renovation costs
  • No minimum rehabilitation cost
  • $100,000 is the max for renovation costs


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:

  • No tear downs or structural modifications
  • Oil Tanks can’t be part of the equation
  • No repairs for private water systems
  • No repairs on private waste management such as septic systems, lagoons, cesspools and pits
  • No Mold Mediation
  • No landscaping and site improvements
  • Luxury improvements aren’t acceptable (satellites, hot tubs and bath houses are a few examples)
  • You cannot move a double wide or existing structure over as part of renovation
  • You can’t do any repair that prevents you from occupying the property for over 15 days.
  • The home must be habitable at the time you apply
  • 15% contingency reserve of the alteration or repair cost
  • 3 possible draws
  • Same builder requirements as VA construction loans


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.

  • 9 month max timeframe
  • Any unused contingency must be applied to the principal balance of the loan and not cash to the borrower.
  • The Appraisal cannot be ordered prior to the Builder/Contractor VA ID Number being obtained
  • The Appraiser must ask to have utilities turned on and complete all requirements under Mechanical Components if the utilities are off at the time of the inspection.  A pressure test and electrical test is required and must be completed by an appropriately licensed professional if the appraiser doesn’t have the utilities on.
  • No renovation or construction of an Accessory Dwelling Unit (A.D.U.).
  • Renovations greater than $50,000 require the use of an approved 203(k) HUD Consultant.


Here are some of the properties not permitted with a VA construction loan:

  • 2 Units, 3 Units, 4 Units, Co-Ops, Manufactured Housing Units built before June 15, 1976, Manufactured Housing in a Condominium Project, Manufactured, Housing that has been traded, Mixed-Use properties, properties Under Construction. Properties with commercial influence are subject to additional review.
  • Any property where marijuana is grown or processed inside the home or on the property, regardless of the quantity or state law, is unacceptable.
  • SAM/AFR will not permit properties over 100 acres, but perhaps you can subdivide.

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.