Building a home with the VA home loan guarantee - VA News (2024)

FAQs

Can you build a house with the VA loan? ›

VA construction loans can help qualified Veterans finance the purchase of land and the construction of a brand-new home without the need for a down payment. VA construction loan lenders are challenging to come by. True, $0 down VA construction loans aren't incredibly common in today's lending climate.

The guaranty is based on each veteran's interest in the property, but the guaranty on the loan may not exceed the lesser of 40 percent of the loan amount or $36,000 ($89,912 for certain loans over $144,000).

By far, the single-largest benefit of the VA loan is that qualified Veterans can purchase without a down payment. This huge advantage allows Veterans and service members to buy homes without having to spend years saving for that typical lump-sum payment.

Common Reasons VA Loans are Denied

Income outside the qualification range. High debt-to-income ratio. Inconsistent employment history. Other factors outside your control (e.g., a private mortgage lender choosing to reduce or end participation in the VA loan program)

Credit score – There's no minimum set by the VA, but most lenders require a credit score of at least 620. Debt-to-income (DTI) ratio – You'll need to have a DTI of 41 percent or less to get most VA loans, although there are circ*mstances where that requirement is waived (if you have tax-free income, for example).

VA loans help military members and their families achieve homeownership with no down payment or private mortgage insurance required. But VA loans can be used for purposes other than buying an existing home, such as buying land and building a new home.

On a salary of $36,000 per year, you can afford a house priced around $100,000-$110,000 with a monthly payment of just over $1,000. This assumes you have no other debts you're paying off, but also that you haven't been able to save much for a down payment.

Who pays closing costs on a VA loan? The buyer is typically responsible for paying for things like the VA funding fee, loan origination fee and more. However, the seller might be able to contribute; they can pay closing costs up to 4 percent of the total home loan price.

Eligible Veterans, service members, and survivors with full entitlement no longer have limits on loans over $144,000. This means you won't have to pay a down payment, and we guarantee to your lender that if you default on a loan that's over $144,000, we'll pay them up to 25% of the loan amount.

VA loans are attractive because they usually don't require any down payment. This is an important benefit for home buyers who are short on cash. A down payment of 10% on a home costing $240,000 comes out to $24,000.

What are the disadvantages of a VA loan? ›

VA helps Veterans, Servicemembers, and eligible surviving spouses become homeowners. As part of our mission to serve you, we provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain, or adapt a home for your own personal occupancy.

Red flags include the presence of radon gas, asbestos or lead-based paint within the home, or properties located in a flood zone, near a sinkhole, or proximity to any type of environmental contamination.

One of the primary reasons some sellers may hesitate to accept a VA loan is due to misconceptions about the program. Some sellers believe that VA loans involve more red tape, delays, or stricter inspection requirements compared to conventional loans. In reality, VA loans are not as cumbersome as they may seem.

The fictitious reason why realtors don't like VA loans

They often wrongly presume that deals with VA loan buyers are riskier, cost more, and are more challenging to close than other types of loans. Some of them even believe that the home sellers will have to pay for the buyer's closing costs.

As we step into 2024, data suggests that the average cost to build a house in Virginia stands at approximately $155 per square foot. This figure, while providing a general ballpark, is an average derived from various projects across the state, encompassing both modest homes and luxury estates.

VA loans are designed to assist veterans, servicemembers, and other eligible military associates with housing. The VA One-Time Close loan allows borrowers to use the benefits available to them from the VA, such as no down payment requirement, in conjunction with the financing of a Construction loan.

Overall, it's cheaper to build a home than to buy one in California, with 13 out of the 20 counties saving you money if you decide to build your house from scratch. Budget-wise, building is more favorable in Southern California whereas Central California caters best to those interested in buying.

The Department of Veterans Affairs (VA) makes buying a home more affordable for Veterans, service members, and surviving spouses who qualify. Even better—you can use your VA loan entitlement again to refinance your current home or buy a new one. There are no limits on the number of times you can get a VA loan.