There is no secret to the fact that the Department of Veteran Affairs (VA) has played a key role in helping military veterans to buy their own homes. They have been doing it for decades, after all. However, it is also possible to use VA home loans for new homes to be built on Greenfield sites.
The VA has been a savior for millions of former military personnel and their families for the past 70 years. The whole purpose of the association was (and still is) to help those into civilian life after years serving the country. Obviously, building homes with VA mortgages has been included in the range of financial aid that the VA offers.
But even for military veterans, there are conditions that must be met before they can qualify for a VA home loan to build their own brand new home.
Qualifying For A VA Loan
So, what is needed for a military veteran to qualify for this kind of financing? Well, getting a VA home loan for new homes comes down primarily to affordability, just like any other loan. But the starting point is obviously that the applicant proves their military background.
Doing so is pretty simple, with the VA only requiring confirmation via a military ID card, which will detail rank and station. Genuine candidates will have no problem in producing this ID card, so building homes with VA mortgages is not difficult.
However, approval is a different matter. An applicant must have a source of income, proving they can repay the VA home loan comfortably. There is also a requirement to prove that the property to be built is not to be used for commercial purposes, but will be a residential home.
Getting Your Home Built
But that is only a matter of securing the financing. For those seeking to have their home built from scratch, finding a reliable construction company is essential. This is little trouble when securing a VA home loan for new homes as help is provided in that area too.
The VA certifies recognized and trustworthy contractors by issuing them with a VA builder ID number. This number is only issued to contractors that have registered with the US Department of Veteran Affairs, and if they have a good reputation they stay on the register.
What this means is that building homes with VA mortgages is the safest option, in terms of quality of work and fairness in price. When a contractor is selected, then the application for a VA home loan can be submitted. However, everything must be agreed before the ground is broken for the construction, with written permission given to the VA to pay the contractor.
Terms To Watch Out For
The terms of a VA home loan for new homes is different when the home is to be built rather than simply bought. This is due mainly to the fact that the home cannot be moved into immediately. For example, repayment on the mortgage usually begins after 30 days of the agreement, but when building homes with VA mortgages repayments do not begin until the property is ready to be moved into.
The maximum period of grace, however, is 1 year and the term of the VA home loan is shortened accordingly. So, a 30-year mortgage will be paid over 29 years should construction actually take a year.
Once construction is completed, then the VA will pay the contractor in full, so be sure to budget the deal accurately, and also take into account the VA funding fee, which must be paid after 15 days too.