My Perfect Mortgage
Guide to VA Construction Loans 2024: Build Your Dream Home with VA Loan
4 minute read
March 17, 2024

Discover how a VA construction loan can help you build your dream home with a VA loan. Explore the process and benefits of using a VA loan to build a home.

  • available in AL, CA, CO, CT, FL, GA, IL, MA, MD, MI, MN, NC, NJ, NY, OH, PA, SC, TX, VA, WA
  • Simple application
  • Quick decisions
  • Common sense underwriting
  • Fast closing period
  • Lend in all 50 states
  • Veteran lending specialist available to you, no matter where you are
  • In-house processing and underwriting
  • Express Loan Approval program, which allows you to be done with the whole process (minus the contract and appraisal), so you can focus on finding your home.
  • Rate Protect (Lock & Shop) lock in your rate before you even find a home!

The Ultimate Guide to VA Construction Loans in 2024: Building Your Dream Home with a VA Loan

Are you a veteran or active-duty military personnel looking to build your dream home? VA construction loans can help make that dream a reality. 

This comprehensive guide will walk you through everything you need to know about VA construction loans in 2024.

What is a VA Construction Loan?

Unlike traditional construction loans, a VA construction loan is a short-term loan that allows veterans to combine both construction financing and a permanent mortgage into one loan. 

This means you can use the funds to cover not only the construction costs but also any additional expenses like construction plans and permits.

Navigating the VA Loan Process for Home Construction

You’ll need to work with a VA lender familiar with the VA loan program.

Make sure that you understand all associated fees, including the VA funding fee and appraisal/inspection costs, to set a realistic budget.

VA construction loans are different from traditional construction-only loans—you can use one loan for both land purchase and construction.

Key advantages of using a VA construction loan:

  • No down payment required for qualified veterans
  • Lower VA funding fee compared to other loan types
  • Combine land purchase and construction costs into one loan
  • Streamlined process with a single loan closing
  • Competitive interest rates offered by VA lenders
  • VA guaranty program makes it easier for veterans to get approved.

Before you can get a VA construction loan, there are a few things to keep in mind:

  • You will need a VA appraisal and inspection to ensure the property meets VA standards.
  • You must have a VA builder ID number for your contractor. A VA builder ID number ensures your contractor is qualified for VA construction loans.
  • VA construction loans are short-term and need to be converted into a permanent loan after construction is complete.

Steps to Applying for a VA Construction Loan:

  • Find a VA lender who offers construction loans.
  • Get pre-approved for a VA construction loan.
  • Submit your construction plans and obtain a VA builder ID number.
  • The lender will conduct a VA appraisal and inspection.
  • Complete the loan application and secure loan approval.
  • Construction begins and is funded in draws as the project progresses.
  • Once construction is complete, convert the loan into a permanent VA mortgage.

Types of VA Construction Loans Available:

  • VA new construction loan: Allows you to purchase land and finance construction costs with one loan
  • VA purchase loan: Can be used to buy land to build a house

Choosing the Right VA Construction Loan Lender:

  • Ensure the lender is approved to offer VA construction loans.
  • Ask about the VA funding fee associated with the loan.
  • Make sure they offer VA new construction loans if needed.
  • Consider if you might need a VA cash-out refinance after construction.

Converting a VA Construction Loan into a Permanent VA Loan

While it is possible to convert a VA construction loan into a permanent one, some steps must be taken. 

Once construction is complete, convert the short-term loan into a permanent mortgage. The finished property must meet VA appraisal and inspection requirements.

If everything is passed, you’ll need to pay closing costs to close on the permanent loan the same way that you would in a traditional mortgage process. 

Common Challenges and Solutions with VA Construction Loans:


  • Higher fees: The VA funding fee for a new construction loan can be higher.
  • Finding a qualified lender: Not all VA lenders offer construction loans.
  • Complex appraisal and inspection process: More involved than traditional VA loans.


  • Work with a VA lender specializing in construction loans
  • Consider a VA cash-out refinance to cover construction costs

Start Building Your Dream Home

By leveraging a VA construction loan, veterans and active-duty military personnel can turn their dream of building a custom home into a reality. 

With its no-down-payment option, competitive interest rates, and streamlined process, a VA construction loan offers a significant advantage over traditional construction financing. 

While there are some unique challenges to navigate during the application process, the potential rewards of building your dream home with the support of the VA program make it a worthwhile endeavor. 

So, if you're a veteran looking to embark on this exciting journey,  consult with a VA lender specializing in construction loans and take the first step toward building your dream home.


Our advise is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.