Home Finance How to Know If You are Qualified for VA Construction Loan?

How to Know If You are Qualified for VA Construction Loan?

by Gerua Senia

VA construction loans can be beneficial for any veteran who’d want to build their own home from ground-up instead of buying an existing construction. However, there are certain restrictions on how these loans could be used and one needs to meet certain requirements to be able to qualify for getting a VA construction loan. So, are you qualified for a VA construction loan or not? Let’s find out some pertinent details.

1. You Must Build Approved Building Type

Lender standards turn out to be important for such VA loans. Not all the VA construction loan lenders will approve your loans for every property type. For instance, your lenders may not like the idea of mobile homes, manufactured housing, or modular homes. What they might approve are only the “stick-built” homes that refer to the typical houses built from ground-up. Some lenders may not even approve your loans for the multi-unit properties. 

So, it is important that you first discuss your home construction plans with their loan officer and see if they approve loans for such constructions or not. 

2. Licensed/Insured Builder

To qualify for the VA construction loans, you should also collaborate with a licensed and insured builder who is also ready to submit the necessary documentation to get approved. In a VA program, the owner/builders are not allowed. Even though the VA requirement for the builders is to be registered in the VA program to participate, the lenders may also require them to go through the approval process. 

The builder and the borrower need to submit their complete plans and specifications for the desired construction when submitting their application. 

3. The Credit Qualifications For The VA Construction Loans

To be honest, the credit qualifications can change with the VA construction loan lenders. The VA construction loan rules do not specify any minimum FICO score to get approved which makes the lender standards take over. So, you should find out what FICO score your lender requires to approve your loan and how those requirements are affected by the complex nature of this type of loan. 

4. VA Loan Funding Fee Requirements

Unless you have an exemption from the VA loan funding fee, you’ll be required to pay a funding fee for your VA construction loan as well. Those eligible for the exemption, because they get a VA compensation for any service-related conditions, must discuss this beforehand with the loan officer. 

5. Other General Requirements

Here are some other general requirements that you must fulfill to qualify. 

  • You must have the Certificate of Enrollment from the VA
  • You must be a veteran who meets the length-of-service requirements
  • Your debt-to-income ratio must not be more than 41%
  • Formal escrows are required when dealing with construction loans. Lender standards and state law might also apply

Ready to apply for your VA construction loan? Get in touch with Blake Mortgage experts and schedule your free consultation now! Please visit here for more details: https://www.blakemortgage.com/loan-options/va-loan 

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