If you’re a service member or veteran who’s looking to build your dream home, you might consider applying for a VA construction loan. Unlike with traditional VA mortgages, not all lenders offer VA construction loans, and quite a bit of paperwork is involved.
Let’s walk through the process of how to qualify for a VA construction loan. Note that Rocket Mortgage ® doesn’t offer funding to build the house, but we can help you refinance into a permanent VA loan once the house is complete.
VA construction loans are short-term loans that will help you cover the cost of constructing a new home. Instead of coming as one upfront payment, a VA construction loan only pays for the portions of your home that are completed.
In many cases, a VA construction loan will have no down payment requirement. And if you choose not to make a down payment, you won’t be required to pay private mortgage insurance (PMI). Another advantage of a VA construction loan is that some borrowers who take out this type of loan are exempt from paying the VA funding fee, which typically accompanies a standard VA loan. This exemption applies to those receiving VA disability, and it’s likewise the case for qualified surviving spouses.
Perhaps you’re familiar with the common types of VA loans, where you receive a lump-sum payment to buy an existing home. But what if you’re an active-duty service member or you’re qualifying National Guard personnel, an eligible reservist, a qualifying surviving spouse or a veteran looking to build your own home? If this is you, a VA construction loan may be an excellent option.