can you build a house with a va home loan

Yes, it is possible to build a house with a VA home loan. The Department of Veterans Affairs (VA) offers eligible service members and veterans the opportunity to use their VA home loan benefits to not only purchase an existing home but also construct a new one. Building a house with a VA home loan can be a great option for those who prefer a brand-new home tailored to their specific preferences and needs.

Eligibility Requirements for Building a House with a VA Home Loan

Before considering building a house with a VA home loan, it’s essential to understand the eligibility requirements. To qualify, you must meet the following criteria:

  • You must be an eligible service member, veteran, or surviving spouse.
  • You must have a Certificate of Eligibility (COE) from the VA.
  • You must meet the lender’s credit and income requirements.
  • You must have sufficient entitlement.

The COE is a crucial document that establishes your eligibility for a VA home loan. It verifies your length and character of service, among other factors, confirming your eligibility to build a house using a VA home loan.

Types of VA Construction Loans

When it comes to building a house with a VA home loan, there are three primary options:

  1. Construction-to-Permanent Loan: This loan combines the construction financing and permanent mortgage into one. It allows you to build your house and then convert the construction loan into a traditional VA home loan once the construction is complete.
  2. One-Time Close Loan: Rather than closing on multiple loans, this loan option wraps the construction and permanent financing into a single loan with one closing.
  3. Two-Time Close Loan: With this loan, you have separate loans for the construction phase and the permanent mortgage. The construction loan is converted to a permanent loan once the house is built.

It’s important to discuss these options with your lender and choose the one that best fits your needs and financial situation.

Building Process with a VA Home Loan

Once you have determined your eligibility and selected the appropriate loan type, you can start the building process. Here are the general steps involved:

  1. Find a suitable lot: You’ll need to find a lot suitable for building your house. Consider factors like location, size, and utilities available.
  2. Work with an approved builder: Select a builder who is VA-approved and experienced in constructing homes.
  3. Obtain required permits: Work with your builder to obtain the necessary permits and approvals for construction.
  4. Construction loan phase: If you opt for a construction-to-permanent or two-time close loan, this is the phase during which the construction loan is used to finance the building process.
  5. Inspections and draw requests: Throughout the construction phase, the lender will conduct inspections to ensure progress and issue funds based on predetermined draw requests.
  6. Home completion and conversion: Once the construction is complete, the house will go through a final inspection. At this point, the construction loan is converted into a permanent mortgage.

Advantages of Building with a VA Home Loan

Building a house with a VA home loan offers several advantages:

  • You have the opportunity to customize your house to meet your needs and preferences.
  • VA construction loans typically have lower interest rates compared to other construction loans.
  • VA loans come with no down payment requirement, making it easier for eligible individuals to build their dream home.
  • VA loans do not require private mortgage insurance (PMI).
  • VA loans have flexible credit requirements.

Considerations and Limitations

While building a house with a VA home loan offers many advantages, it’s important to be aware of certain considerations and limitations:

  • Construction loans may have higher closing costs compared to traditional VA home loans.
  • VA construction loans have a maximum loan limit set by the VA, which varies depending on the county.
  • Builders must adhere to VA-approved plans and specifications.
  • The building process may take longer compared to purchasing an existing home.

It’s crucial to thoroughly research and consult with lenders, builders, and real estate professionals who specialize in VA home loans to ensure a smooth and successful building experience.


In conclusion, building a house with a VA home loan is indeed possible. Eligible service members and veterans can take advantage of their VA home loan benefits to construct their dream homes. By meeting the necessary requirements, selecting the appropriate loan type, and following the building process, individuals can enjoy the benefits of a brand-new home tailored to their preferences. However, it’s essential to consider the limitations and seek guidance from experts to ensure a successful building experience.