Veteran Home Loans for Construction

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VA construction government loans are one of the mortgage loans guaranteed by the U.S Department of Veteran Affairs. These government loans were created to provide long-term financing to eligible American veterans so that they could purchase properties with no down payment for self-occupancy. VA construction loans are a sub category of the VA home loans available to military veterans. The main advantage of VA home loans is that they allow veteran to qualify for government loans in amounts much larger than what they could have under the Fannie Mae/conforming loans. Some other advantages are negotiable interest rates, no mortgage insurance premiums, VA assistance, and the right to repay without penalty. In addition, for most loans used for new houses, construction is inspected at appropriate stages.

Finding an organization to fund the loan may not be easy because these government loans do not require down payment. Moreover such VA home loans may not cover every aspect of construction. Before you approach the institutions for the VA construction loans, you need to get in touch with your nearest VA office to request the VA Eligibility Certificate. The requirements to avail of this certificate depend on your dates and duration of service. Once the certificate has come through, you can begin your search for the lender best suited to your needs. A lender will usually review your credit history and determine the amount of loan you can qualify for. This varies from lender to lender and it may be beneficial to shop around.

Once the government loan has been granted, you can begin to build your dream home. Eligible areas for such VA construction loans are typically in the rural and small towns as designated by the VA. Building a home is more difficult than buying an existing one. You also need to find a builder who is comfortable working on the project, as the funds will not provided until the completion of the project. This may limit your choice of builders. You could approach the local estate agents or brokers to guide you to a suitable builder.

There are various repayment plans to choose from. There is the traditional fixed principal and interest payment plan, Graduated Payment Mortgage (GPM) with low initial payments and Growing Equity Mortgages (GEMs) with gradually rising payments towards the principal resulting in an early pay-off. Depending on your finances, you can choose the plan suitable to your needs and even manage to repay your VA construction loans early without any penalty.

VA construction loans are government loans made available to military veterans fulfilling certain criteria. These VA home loans have benefits such as no prepayment penalty and negotiable interest rates.