WASHINGTON, August 6, 2025 - Having a house built is an excellent way to obtain your dream home. Building your own home could also be a solution in areas where there is a low inventory market. While most construction projects can be complex, it’s a great benefit for those Veterans willing to invest the necessary time, energy and funds to ensure the project’s success. Just like a traditional VA home loan where the Veteran purchases a pre-existing or newly built property, there may be no down payment, no private mortgage insurance requirement, and depending on your VA disability rating, you may be exempt from the VA funding fee.
A construction loan is structured differently from a traditional mortgage, and it comes with stricter qualifications and greater documentation. One of the first steps is to find a participating VA lender who offers a construction loan product. Once you’ve chosen a lender, you’ll need to provide proof of income, reserves, assets and debts along with a complete credit check. There are numerous construction loan calculators that can help provide estimates, but it’s best to work with your lending professional to determine how much you can afford.
Having a home built to your specifications requires architectural plans and hiring the right contractor to do the work. Veterans should conduct a thorough search and utilize trusted sources when choosing a builder. A good place to start is your local home builders’ association that maintains a list of builders who construct homes in your area and meet state and/or local licensing requirements. Construction loans require a good amount of pre-planning and paying out of pocket expenses before purchasing the land. You’ll want to do proper due diligence with the local building authority to ensure all necessary permits can be obtained.
Once approved, construction can begin with initial proceeds disbursed into an escrow account. The money in this escrow “draw account” pays the builder at certain points during construction. Your lender must obtain your written approval before each disbursement or draw payment is provided to the builder. Choose your new home builder wisely. The best ones take charge and communicate well. Check references, read reviews and look at their past building projects. Don’t be afraid to ask questions and compare builders just the same as you’d do to choose a lender.
Today, most construction projects can take a year or more to complete. It’s important to understand factors that are outside your control and may potentially extend or delay the timeline of your construction project that can drive-up costs. Unforeseen circumstances like weather, lumber costs, labor shortages or plan changes can throw a construction project off track. Although the loan will normally be considered guaranteed upon closing, the guaranty on a construction home loan will not be issued until a clear final compliance inspection report has been received by VA.
VA is always working hard to improve the well-being for our Nation’s Veterans, and VA home loans are a great opportunity for those wanting to build their “forever” home.
For more information about the specifics of the VA construction loan process and requirements, please see the VA Buyer’s Guide.