Land Ownership or Purchase

To qualify for a VA construction loan, you must either already own land suitable for residential construction or include the land purchase as part of the loan.

In Texas, land prices vary significantly from high-demand metro areas like Austin and Dallas to more affordable rural regions where larger lots are available. Many borrowers choose to combine land and construction into one loan, which is explained in this loan to buy land and build a house guide.

If you already own land, it’s important to understand how construction loans work when you own land, since land equity may be applied toward the project.

Builder Approval

VA guidelines require that a qualified and approved builder be selected before construction begins. Builders must be licensed, insured, and familiar with VA inspection and documentation requirements.

Working with builders who already understand VA processes helps avoid delays. Many borrowers work directly with                     VA construction loan lenders to confirm builder eligibility. Choosing from VA-approved builders or verifying a VA Builder ID can speed up approval.

Construction Phase

Once the land, builder, and plans are approved, construction begins. During this phase, loan funds are released in stages known as draws.

Each draw is tied to completed work and requires inspections to confirm progress and VA compliance. In Texas, many borrowers use a single-close structure, meaning construction and permanent financing are combined into a construction to  permanent loan, reducing paperwork and eliminating a second closing.

Final Inspection and Mortgage Conversion

After construction is completed, a final VA inspection is conducted. Once approved, the loan automatically converts into a permanent VA mortgage.

Mortgage payments typically begin once the borrower occupies the home. Preparing early with a VA home loan pre-approval helps ensure a smooth transition from construction to permanent financing.