You’re probably familiar with the idea of using VA mortgage loans to purchase existing homes, but did you know you can also use these benefits to build a custom home? Below, we’ve discussed how VA loans can help you create the home of your dreams.
VA Mortgage Loans for New Construction
VA loans aren’t just for purchasing existing homes. They can also be used for new construction, allowing you to build a custom home tailored to your needs. This lesser-known aspect of VA mortgage loans opens exciting possibilities for eligible borrowers.
Benefits of Using a VA Loan for a Custom Home
Using a VA loan to build a custom home offers several advantages. Like traditional VA loans, you can finance up to 100% of the home’s value, meaning no down payment is required. These loans often offer competitive interest rates compared to conventional loans, and you won’t need to pay for private mortgage insurance (PMI), resulting in significant savings over the life of your loan. Additionally, you have the flexibility to choose your own builder and have control over the home’s design.
Process of Building a Custom Home with a VA Loan
Building a custom home with a VA loan is a fairly straightforward process. Here are the steps involved:
- Confirm your eligibility with a valid Certificate of Eligibility (COE)
- Find a VA-approved lender experienced in construction loans
- Choose a licensed builder with VA construction project experience
- Get your home plans approved by the VA and local building authorities
- Get prequalified by your lender and go through the loan process
- Begin construction with funds released in stages
- Complete a final VA inspection and close on your mortgage
Important Factors to Consider
If you’re considering using a VA mortgage for a custom home, there are a few important factors to keep in mind. Some lenders offer construction-to-permanent loans, which allow for a single closing for both the construction phase and the permanent mortgage, simplifying the process. While VA loans don’t require PMI, there is a funding fee, which can typically be rolled into the loan amount. The VA also has specific requirements for builders, so ensure your chosen builder meets these criteria. Keep in mind that building a custom home usually takes longer than purchasing an existing home, so plan your timeline accordingly.
To maximize your VA mortgage loan benefits when building a custom home, it’s crucial to work with experienced professionals who understand VA construction loans. Be prepared for a more complex process compared to buying an existing home and stay involved throughout the construction to ensure your home meets your expectations.
Building a custom home using VA mortgage loans can be an excellent way to create a space that perfectly fits your needs and lifestyle. However, it’s important to consider factors such as your timeline, budget, and willingness to be involved in the process.
Get Advice from an Expert
At Mortgage Solutions Financial, we’re here to guide you through every step of using your VA mortgage loan benefits. Our experienced team understands the nuances of VA construction loans and can help you navigate the process with confidence.
Remember, your VA loan benefit is a powerful tool that can help you not just buy a home but build one tailored to your exact specifications. Whether you’re considering building a custom home or exploring other options, we’re here to help you make the most of your benefits and achieve your homeownership goals. Don’t hesitate to reach out to us for personalized guidance.
