VA Construction Loans: Building Your Dream Home with VA Financing
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For many eligible homebuyers, including veterans and active-duty service members, the idea of building a custom home may seem out of reach. Traditional financing? Often includes high fees, confusing terms, and long wait times.
But what if your VA loan benefits could help you do more than just purchase an existing property?
That’s where VA construction loans come in—and why real estate tools like reAlpha and VA-specialized mortgage brokers like Be My Neighbour are working to simplify the process with transparent, supportive services.
Key Takeaways
- Yes, you may be able to build a home using a VA loan benefit.
- VA construction loans offer eligible borrowers zero-down financing for new construction.
- The builder and lender must be approved by the U.S. Department of Veterans Affairs (VA).
- Be My Neighbour assists qualified borrowers in navigating the VA construction loan process.
- reAlpha provides commission-free real estate tools to help you search for land and properties, potentially reducing upfront expenses.
What is a VA Construction Loan?
A VA construction loan lets eligible veterans, active-duty members, and some surviving spouses finance the building of a new primary home. Unlike a standard VA loan for buying an existing house, this option can cover land and construction costs. Some lenders even offer it as a one-time close loan, combining everything into a single transaction.
VA Construction Loan vs. VA Purchase Loan
Can You Build a House with a VA Loan?
This is a common misconception. YES, under certain conditions, you can use your VA loan benefit to finance new home construction.
According to the VA Lender's Handbook (Chapter 7), VA-guaranteed loans may be used for construction purposes, provided the lender offers construction financing and the builder is VA-registered.
While some lenders may not offer VA construction loans, they are available through VA-approved partners. The key is working with experienced, qualified professionals.
Pro Tip: Need help? Speak with a VA construction loan specialist at Be My Neighbour. The team assists eligible buyers through every step—from eligibility to closing—without requiring a down payment.
Step-by-Step: How to Secure a VA Construction Loan?
Step 1: Get Your Certificate of Eligibility (COE)
This document verifies your eligibility for VA loan benefits. You can request it via the VA eBenefits portal, or a participating VA lender can obtain it for you.
Step 2: Choose a VA-Approved Builder
Only builders registered with the VA may be used. Confirm your builder's approval status and ensure they understand VA-specific documentation.
Step 3: Work with a VA Construction Loan Lender
Not all lenders offer VA construction financing. Be My Neighbour helps connect borrowers with VA-approved lenders that offer this specialized product.
Step 4: Understand Loan Terms & Phases
Funds are typically distributed in construction "draws" as the build progresses. Lenders will conduct inspections at each phase before releasing additional funds.
Step 5: Close & Convert to Permanent Loan
Most VA construction loans are structured as a one-time close, converting automatically into a traditional VA mortgage once the home is completed.
Pros and Cons of a VA Construction Loan
Pros:
- $0 Down Payment (if eligible)
- One-Time Close Option (reduces fees and simplifies process)
- Competitive Interest Rates
- No Private Mortgage Insurance (PMI)
- Flexible Credit Guidelines (may vary by lender)
Cons:
- A limited number of participating VA-approved builders and lenders
- Longer construction timelines compared to existing home purchases
- Additional documentation and inspection requirements
Common Mistakes First-Time Buyers Make (and How to Avoid Them)
Mistake #1: Choosing a Non-VA-Approved Builder
Solution: Confirm your builder’s VA registration. Ask your lender for a list of verified options.
Mistake #2: Not Budgeting for Land, Permits & Site Prep
Solution: VA loans may not cover all pre-construction costs. Reserve funds for surveys, permits, and land improvements.
Mistake #3: Forgetting the Post-Construction Conversion
Solution: Understand how and when your construction loan transitions into a permanent VA-backed mortgage.
Why Choose reAlpha + Be My Neighbour?
reAlpha: Commission-Free Real Estate Platform
Search for land or new listings without commission-based fees. Save on agent costs upfront.
Be My Neighbour: VA Mortgage Specialists
Specializing in VA loans, Be My Neighbour helps guide eligible borrowers through the construction loan process—from builder selection to final loan conversion.
"We’re not just mortgage professionals—we're veterans too. We understand how to navigate the VA process to help build your future."
Final Thoughts: Your Dream Home Is Closer Than You Think
A VA construction loan may seem complex—but with knowledgeable support, it’s completely achievable.
With reAlpha’s commission-free property search tools and Be My Neighbour’s specialized VA loan guidance, you’re not just building a house—you’re building long-term financial stability and security.
Let’s build your future, together.
FAQs
Can I use a VA loan to buy land and build?
Yes, if land is part of the overall construction plan and you work with a VA-approved lender that offers construction financing.
How long does a VA construction loan take?
On average, 6–12 months, depending on builder timelines, inspections, and permit approvals.
What credit score is needed?
Minimum scores vary, but many lenders may accept 620+. Higher scores may improve your loan terms.
Is there a VA one-time close loan?
Yes. Some VA lenders offer a single-close option that covers both construction and the permanent mortgage phase.
Be My Neighbour Mortgage, LLC (NMLS #1743790) | Equal Housing Lender. This is not a commitment to lend. All loans are subject to credit approval and underwriting review. Loan terms, availability, and eligibility requirements are subject to change without notice. Not all applicants will qualify. Consult your licensed mortgage professional for personalized guidance.
