How To Build a House With Your VA Home Loan

You read that right alright. Not only can you use your VA loan to buy a house, you can use it to build one as well. Qualified military borrowers can use VA entitlement toward a new construction mortgage. The hard part is finding a lender who isn’t scared away by upfront construction costs and is willing to issue a VA construction loan after the 2008 housing collapse. More so, most lenders won’t grant the all-important no-money-down feature that makes VA loans so attractive.

According to the Mortgage Research Center Network, many borrowers are getting short-term construction loans through local builders or local lenders because lenders won’t make a no-money down VA construction loan. Once the construction comes to its end, the borrower can refinance the construction into a permanent VA home loan. In the Corpus Christi area many home builders will carry the loan until you are ready to purchase the home making a construction loan unnecessary and the process easier. Once construction is completed you can close using your regular VA home loan.

The Mortgage Research Center Network explains that the problem with resorting to a local builder or lender for a short-term loan is that they may also require a down payment: Closing costs and other expenses could arise, so it’s imperative that you compare every construction loan option. They offer the following suggestions:

Talk with a VA lender before getting a construction loan. You can ask builders and lenders if they can make any exceptions for military families working toward home construction. Remember that each business is vying for borrowers to be their customer. That puts borrowers in the driver’s seat, so do not rush into a construction loan agreement. Be diligent about researching businesses with customer review websites and other organizations.

Select VA lenders can turn those interim construction loans into full-blown VA home loans. A lender may handle this like a refinance or a new purchase loan. Borrowers are subject to all the VA lender’s standards regarding credit score, debt-to-income ratio, income, employment and more.

Builders must submit a one-year warranty on the construction to the lender and have a valid VA builder ID during said construction. Again, it’s wise to talk with a VA loan specialist prior to seeking a construction loan. They may know local entities that might lend you a construction loan with better terms, and VA loan specialists can certainly assist in turning a short-term construction loan into a VA loan.

It’s a good idea to get the ball rolling toward your permanent home financing long before the builder finishes building your dream home. A construction loan is a short-term loan by design, and you will need to have the long-term financing ready to go.”

Call me, Elizabeth Straessle from the All American Home Source Realty team, at 361-878-8000. We understand what military buyers are looking for, as well as the ins and outs of military moves. Let us help you experience a smooth PCS move to Corpus Christi TX. Thank you for your service!