After a career of service in the armed forces, you’re ready to retire — at least to civilian life. You’re thinking about buying a home — better yet, building a new one from the ground up, something for you and your family to enjoy for years to come. You know that you probably qualify for a VA loan for an existing home mortgage, but what about building your own home? Can military retirees get VA loans for new construction homes?
The short answer is yes, but there are some conditions. At Lowder New Homes, we are well-versed in VA loans and have worked with countless military retirees over the years. Here’s what you need to know.
VA Construction Loans
When you build a house from the ground up, you don’t launch right into a mortgage loan the way you would when buying an already existing house. You typically begin with a construction loan — a short-term loan product that provides the funds to purchase the land (if necessary) and build the house. Once construction is complete, the lender converts the construction loan into a more traditional mortgage.
The same process holds true with VA loans. When building a new construction, you want to look for a lender who offers a VA-backed construction loan first, which has its own qualification process. This loan can later be converted into a mortgage. The challenge here is that not as many lenders offer VA construction loans, and obtaining one may be a bit involved. To simplify matters, some military retirees choose to get a conventional construction loan (which requires a down payment) for the building process, and then convert it into a VA mortgage loan. There’s no rule here for the “best” way to do it — just know that you have options and Lowder and our preferred lenders are here to help you along the way.
Can I Use a VA Loan to Purchase Land?
Yes, you can — but again, with conditions. VA loans cannot be used simply to buy vacant, unimproved land with no immediate intent to build a house. The VA loan, however, can cover the land purchase in combination with the house that is to be built upon it. If your new construction costs includes purchasing a lot you don’t already own, you’ll need to present paperwork showing you’ve contracted with a builder to put up a house. (As a side note, if you purchase a mobile home to go on the land, you’ll need to put it on a permanent foundation to qualify for the VA loan.)
Can I Build the House Myself?
In most cases, no, not with a VA loan. This program doesn’t really cover owner/builders who want to build a house for themselves. The lender and the VA want to see that you’ve contracted with a licensed, insured, approved builder — like Lowder New Homes — before they will back and approve the loan. This gives them the assurance that the home will be built to code and to a certain standard of quality.
In Montgomery, Alabama, Lowder New Homes offers special programs and incentives to members of the U.S. Armed Forces, including military retirees. To learn more about how you can build a new construction home with a VA loan, give us a call today at 334-270-6789.