VA Construction Loan Requirements (2026): What You Need to Build With Your VA Benefit

Building a home with your VA benefit works differently from buying an existing one. You still get the core VA advantages, but the lender also has to approve your builder, your plans, your budget, and your land. This guide covers the requirements for a VA One-Time Close construction loan with Security America Mortgage, so you know what to have ready before you apply.

VA Construction Loan Requirements at a Glance

• Eligibility: a valid VA Certificate of Eligibility (COE), and the home must be your primary residence.
• Credit score: 620 minimum; most approvals are 640 or higher.
• Down payment: $0 down with full entitlement; financing up to 100%.
• Builder: licensed, insured, and approved by the lender before closing.
• Build time: 11 months maximum.
• Payments during construction: none. Payments start after the home is complete.
• Closings: one. The construction loan becomes your permanent mortgage when the home is done.

What Is a VA Construction Loan?

A VA construction loan finances the land (if you’re buying it) and the cost to build your home in a single loan. With a one-time close loan, you close once, before construction starts. The lender pays the builder in stages, called draws, as the work passes inspection. When the home is finished, the loan is converted into your permanent VA mortgage without a second closing or a second set of closing costs.

“We do offer a two-time close on a conventional one-time close. VA requires a fixed-price contract, so the VA OTC must be a one-time close. This also removes the risk that the veteran would not qualify when the house is complete, which is one of the risks of a two-time close.”

Jason Noble, COO and VA Loan Specialist, Security America Mortgage, NMLS #352672, on why VA construction loans are one-time close

Credit Score Requirements

The VA doesn’t set a minimum credit score, but lenders do. For a VA One-Time Close construction loan with Security America Mortgage, the minimum is 620, and most approvals come in at 640 or higher. Scores from 620 to 639 can be approved through automated underwriting when the rest of the file is strong, so if you’re in that range, talk with a loan officer before you rule yourself out.

“Quality of credit. This is something most consumers do not understand. The score is one requirement, but not the only credit requirement. An applicant can have a 620+ score but have poor quality of credit, making it hard to get them approved: recent late payments, collections, or other derogatory events.”

Jason Noble, COO and VA Loan Specialist, Security America Mortgage, NMLS #352672, on what separates an approved 620–639 file

Income, Debt-to-Income, and Residual Income

You’ll need stable, documented income, typically with a two-year history. The VA looks at your debt-to-income ratio (41% is the general benchmark) and at residual income, the money left over each month after your major expenses, which varies by family size and region. If you rent your current home, your rent isn’t counted against you; if you own your current home and are keeping it, that payment is included. Because new construction takes longer to close, income, credit, and asset documents are generally good for 180 days instead of the usual 120.

Down Payment and Loan Amount

With full VA entitlement, you can finance up to 100% with no down payment and no private mortgage insurance. Your loan amount is based on the lower of your total cost (land plus construction) or the appraised value of the finished home. You generally can’t take cash out of the loan; the exception is getting back a deposit you paid the builder out of pocket, once it’s documented.

Land: Buying It vs. Already Owning It

• Buying land: the land purchase and construction are financed together, and you take title to the land at closing. See our guide to a loan to buy land and build a house.
• Already own the land: any remaining loan on the lot is paid off through your construction loan. If you’re required to pay the VA funding fee, the equity in your land can count as a down payment and may lower that fee. Learn more about how a construction loan works when you own the land.

Builder Requirements

The VA no longer issues builder ID numbers, but your lender still has to approve your builder before closing. Expect the builder to complete a contractor questionnaire, show licensing and insurance, provide a detailed project budget, and sign a VA builder attestation. At completion, the builder provides a one-year warranty on VA Form 26-1859.

Construction Contract, Plans, and Timeline

You’ll need a signed construction contract, plans and specifications, and a construction schedule. The contract must:

• require the builder to complete the home according to the plans and specifications;
• include a completion date, with a maximum build period of 11 months;
• identify the property (address, legal description, or parcel number);
• not make your deposit non-refundable if you don’t qualify for the VA loan;
• not force you to pay price increases unless you can cancel and get your deposit back;
• not stop you from selling the home or waive your claims if the builder doesn’t finish.

Every change order has to be provided to the lender. If a change order raises the price after the appraisal, the appraisal may need to be updated.

Construction Budget, Contingency, and Payments During the Build

The project budget includes a 5% contingency to cover cost overruns. It also includes the costs of carrying the loan during construction: the interest that accrues while the home is built, insurance during construction, and inspection and draw fees. Because those are built into the budget, you make no mortgage payments during construction. Your first payment comes after the home is complete and the loan converts. For more on pricing, see VA construction loan rates.

Appraisal

Since the home doesn’t exist yet, the VA appraisal is completed “subject to completion per plans and specifications.” The appraiser values the finished home using your plans and recent sales of similar new homes nearby. Unique homes such as barndominiums are eligible when the appraisal finds acceptable comparable sales.

Insurance and Permits

You’ll need either a builder’s risk policy (plus a quote for regular homeowners insurance) or a homeowners policy with a dwelling-under-construction endorsement. If the lot is in a flood zone, flood coverage is required as well. Your builder pulls the permits; at completion the home needs a certificate of occupancy, or, where the local authority doesn’t issue one, a 10-year insurance-backed warranty in addition to the builder’s one-year warranty.

Eligible and Ineligible Homes

• Eligible: single-family homes, modular homes, manufactured homes, and barndominiums (with acceptable comparables). Barns, shops, and garages on the lot are allowed.
• Not eligible: co-ops and attached condos; renovating an existing home (see our VA renovation loan instead); and homes whose foundation is already completed before closing.

Draws, Inspections, and Converting to Your Permanent Loan

After closing, the builder is paid in draws as each stage is completed and inspected. When construction is finished and final documents are in (certificate of occupancy and builder warranty), the construction loan is modified into your permanent VA mortgage. There’s no second closing.

Next Steps

To see how the program works from application to move-in, read our guide to the VA One-Time Close construction loan, or learn more about how VA construction loans work. When you’re ready, a Security America Mortgage loan officer can review your credit, land, and builder before you sign a contract.