Two years ago, it was difficult to find a lender willing to loan money on a zero-down VA construction loan. But as more and more lenders expand their product offerings, this valuable loan product has resurfaced and thousands of veterans are taking advantage.
But before you head out to construct your dream home, there are a few guidelines you need to understand. For starters, you have to find a VA approved builder. This program does not allow you to build the home yourself. In order for a contractor to become a VA approved builder, they must simply register on the VA website.
Once you have selected a builder, you’re well on your way to building your dream home with no money down. Here’s what to do next:
- Submit a complete set of architectural plans to the lender. The builder may also be required to submit a full inventory of materials and finishes that will be used.
- Builders hold additional risk with a zero-down VA construction loan than a conventional construction loan, so it’s important to ensure your builder and lender are in proper communication with each other throughout the entire process.
- One of the big differences between a conventional mortgage and a construction loan is that the builder is responsible for paying all closing costs. However, the VA does allow builders to incorporate those costs into their overall fee.
- Ensure the home you are building fits in with the neighborhood. Since the home still needs to be appraised to qualify for a zero-down VA construction loan, overbuilding for the neighborhood or building an uncommon home, can reduce the value and throw a wrench in the process.
It’s important to be realistic when it comes to the timeline of using a VA construction loan. Even with an experienced loan officer, it can take up to two months to process the loan. It can take even longer if you are purchasing the land as part of the loan.
The additional regulations that accompany VA construction loans means it’s of dire importance that you work with a loan officer who understands the process. Since VA loan is all we do, you know you’re in good hands with us. For more information on how a VA construction loan works, contact us today at 888-320-7888.