While VA loans are primarily used to purchase existing homes, it is also possible to secure a VA loan in order to build the home of your dreams. For the average American, building a home can come with a heap of complex loan procedures, souring what should be a fun and exciting process.
But — because of your military background, you have more options than most civilians. VA home construction loans come with a variety of perks, including zero down payment. Keep reading to learn about the specifics of VA construction loans, and whether this is the perfect loan option for you.
What do I need to qualify for a VA construction loan in Texas?
In order to secure a VA construction loan, you need to fill out the Certificate of Eligibility
and mail it to the Department of Veterans Affairs Office in Texas, at:
Department of Veterans Affairs
Houston Regional Loan Center
6900 Almeda Road
Houston, TX 77030-4200
Bear in mind that, if you choose to submit your form by mail, this process can take up to two weeks.
Alternatively, you could visit the Veterans eBenefits portal
for your digital Certificate of Eligibility. The VA recommends this option for faster processing.
Additionally, you could contact your loan lender and ask them to submit an application electronically on your behalf. In most scenarios, an eligibility determination can be made instantly.
How do VA construction loans work in Texas?
After you’ve established your eligibility, there are still some things you need to do before you can receive your VA construction loan.
First, VA construction loans are only granted to projects that will be completed by a VA-registered builder. A registered builder is a construction company that has registered with the Department of Veterans Affairs. If you want to work with a builder that is not registered, then you can ask them to submit the following documentation to your regional loans center:
Next, once you either find a registered builder
or complete the registration process, you need to secure a lender for your VA loan.
Unfortunately, it’s typically more difficult to get a construction loan than an existing home loan, as lenders are reluctant to fund a home that doesn’t exist yet. There are a multitude of risk factors to consider, such as construction delays and unplanned expenses.
Because of this, veterans usually need to apply for two separate loans: one short-term construction loan and one VA home loan upon completion. Then, you need to find a lender who can craft a loan plan that merges the two separate loans.
It’s possible to finance your home construction plan with this method…but it doesn’t have to be so convoluted. You see, Security America does things differently. We offer start-to-finish VA construction loans. Our loans help you through three stages of the home-building process:
- 1. Purchasing the land you want to build on.
- 2. Covering the construction of your house.
- 3. Serving as your mortgage once your house is finished.
You typically don’t have to pay any money upfront, plus you have reduced VA-mandated interest rates.
This type of loan actually operates in two phases for you, as the borrower. The first phase of your loan is the construction phase, and it lasts for roughly 12 months or the duration of the building process. In this phase, the builder draws money from the lender (us) in increments, and you will make monthly loan payments (to cover the interest). Once your home is finished, then we move into phase two of your loan. In this phase, you roll over to monthly mortgage payments, which are calculated based on the remainder of your home construction balance.
What is a one-time-close construction loan?
The type of construction loan that Security America provides — the loan that assists you through every stage of your home construction project — is also called a one-time-close construction loan. This type of loan is called “one-time-close” because it simultaneously closes both the construction loan and the permanent financing of the new home.
There are many advantages to a VA one-time-close construction loan. First off, with this type of loan, you do not have to worry about qualifying for two home loans or two closing dates. Additionally, with a one-time close construction loan, you can lock in a VA-approved interest rate before the building process begins — and this rate will not change during construction. Lastly, one-time-close loans allow you to save money, as you only need to worry about a single closing cost.
If you think that a VA construction loan is the right option for you, then give Security America a call today. We’ll help you get on the path to your dream home.