Plan with your Construction Loan Calculator
The Construction Loan calculator helps you plan out the VA construction loan process. There are many variables in the process. For example, it’s helpful to know the following data:
Do you own land yet?If you own land do you have equity?
If you don’t own your land then decide if you want to own it and build later or try to buy land and build at the same time
What’s the cost of the construction project? Likely you have talked to a builder and have an idea of the cost of the home you want to build and the cost of the land or lot.
What’s the value of the home you want to build? Are there comparable sales in the most recent 6 months that support the value?
How long will your project take?
Using a BAH Calculator for Your VA Construction Loan
If you’re considering a VA construction loan, it’s essential to factor in your Basic Allowance for Housing (BAH) into your financial planning. Your BAH is an important part of your income as a military service member, and understanding how it contributes to your overall budget is crucial. To make this process easier, you can use a BAH calculator to determine your monthly housing allowance, which can be particularly useful when evaluating your loan affordability and planning for the expenses associated with your construction project.
Single Qualification for Borrowers
For most OTC construction loans, the requirements for approval include:
The borrower must have contracted with a licensed general contractor approved by a VA leder and registered with the Department of Veterans Affairs.
The borrower needs to own the land or purchase the land at closing in conjunction with the construction loan.
After closing, the funds are kept in an escrow account and disbursed as needed.
The amortization of the permanent mortgage would start no later than the first month following 60 days from the issuance of the Certificate of Occupancy or the date of the final inspection.
For a VA construction loan, the requirements include:
The borrower cannot carry out any of the work.
The borrower must work with a general contractor that is registered with the VA.
The builder must provide a one-year VA builder’s warranty.
The property under construction requires periodic inspections.
The general contractor must have sufficient insurance through a general insurance liability policy.
How Does A One Time Close Construction Loan Work?
A one-time close construction loan or a single-close construction loan allows you to receive a construction loan that’s a permanent mortgage. Once you apply for the VA Construction Loan, you get all the funds that you need to build your home kept in an escrow account and paid out in draws usually. The funds would be kept there, and whenever it is needed during construction, it would be disbursed.
What is the VA Construction Loan Process?
When you apply for a single-close construction loan, you first choose your builder and need to make plans. You need to choose a VA Approved builder that is registered with the VA and approved by a VA Lender.
After the builder has been selected, you should prepare the contract, which would cover the entire VA construction loan process. It would include the timeline, what the responsibilities are to the builder, and what happens if the construction project passes the budget.
Once the contract is completed, you will sign the contract and then send it to the underwriting team for the construction crew. Then, review the project and loan as the underwriting process begins. The loan would close, and the construction would start.
Can I buy land with a VA loan?
That’s a question out there a lot on the internet and the short answer is yes but only if it is in conjunction with a construction loan. You can’t get a VA loan to just buy land unless you are in Texas and work with the Texas Veterans Land Board. Otherwise, most land loans require a 20% down payment.
What are the benefits of owning land before closing on a VA construction loan?
If you already own your land and have equity then that can reduce your loan amount and increase your equity. Also, it can help you qualify easier b/c the more equity you have the safer your loan is for a VA lender. In some situations, maybe your VA loan entitlement isn’t a full entitlement like a first-time VA loan user and maybe you need a large loan amount more than the VA loan limit for that particular county. Having land equity might reduce your need for a down payment in an unusual situation.
How One-Time Close Construction Loans Will Benefit Borrowers?
A one-time close construction loan will benefit your borrowers because the borrower only has to qualify once, and it reduces the risk for them. If you are a lender, you would also see that there are fixed interest rates and reduced closing costs, which would benefit your borrowers. Also, the single appraisal valuation gets rid of surprises.
Benefits of the VA One-Time Close Loan
Providing Zero Out of Pocket, 100% VA One-Time Close Construction Loans
Only one closing so need to requalify
One closing means less closing costs and only one appraisal needed
One closing means your rate is locked in and protected.
How Long Does It Take To Close On A VA Construction Loan?
That depends on the borrower and the stage of the process. Do you own your land or still need to find it? Do you have a builder with approved plans? If you have everything lined up on your end then you can close quickly.
Permanent VA Financing for Construction Loans
If you already opted for temporary financing and the home is almost complete you should shop for a permanent loan. If you’re a Veteran then you probably want a permanent VA loan.
Do I need a certificate of eligibility (COE) for a construction loan?
You only need a COE for a va construction loan not an alternative one like FHA, conventional, and USDA.
Can you buy land with a VA construction loan?
Yes, as long as you close on the land and construction at the same time. To do so, it’s important you have a builder, approved plans, and the land you want to buy under contract.
What kind of house can I build with a VA construction loan?
- 1 Unit Stick Built Housing – Primary Residence
- New Manufactured Housing – Primary Residence o Multiwide only; single-wide units not permitted
- Modular Homes – Primary Residence • PUDs
VA construction loan LendersSecurity America Mortgage is a VA construction loan lender that specializes in one-time close construction loans. It’s important to work with VA lenders who know the VA loan program as it relates to construction loans. You can reach them at 1855GOVANOW or visit their website.
Contact Info:
Name: Garrett Puckett
Company: Security America Mortgage
E-mail: garrett@securityamericamortgage.com
Phone: (855) 701-2816
Website: securityamericamortgage.com
Address: 7514 Shadyvilla Ln Houston, TX, 77055, United States
