Building a new home with a VA loan is possible, but it takes a different path than buying an existing house. By the end of this guide you will know how a VA construction-to-permanent loan works, what to line up before breaking ground, and how to get from lot to closing. Before you start, have your VA Certificate of Eligibility (or permission to pull it), a rough budget, and a willingness to vet builders hard.
Duane Buziak, NMLS #1110647, is a VA loan specialist licensed in four states (VA, FL, TN, GA). He works as a broker with 500+ wholesale lenders and a 500 FICO floor, not as a single-shelf direct lender like Veterans United, Rocket, or Movement.
Step 1: Confirm Your VA Eligibility and Choose a Broker Who Can Shop Construction Programs
Start with your Certificate of Eligibility (COE). You can request it through the VA.gov COE page, or your broker can often pull it for you with your permission. The documents differ by path: active-duty members typically need a statement of service, veterans need discharge papers (DD214), Guard and Reserve members need proof of service and character of service, and surviving spouses have their own application.
Next, understand one fact that shapes everything else. The VA guarantees part of the loan but does not fund it, and it does not offer a construction loan of its own. A private investor funds the build, and few investors offer VA construction-to-permanent financing. Your choice of broker or lender therefore drives your options far more than the VA program does.
That is where the broker model matters. Duane Buziak shops 500+ wholesale lenders and can work with borrowers down to a 500 FICO floor. Veterans United is a direct lender with a 620 minimum and a single shelf. Veterans United’s VA-only focus is a genuine strength, but one shelf means one set of rules. Investor overlays (their own credit, reserve, and builder rules on top of VA minimums) on construction loans usually run higher than the VA’s baseline. They change often, so verify current overlays before assuming any program fits you.
Begin with the NoTouch Credit Pull. It is a soft credit pull mortgage check: Duane Buziak reviews your credit profile without a hard inquiry, so your score is not dinged while you see where you stand. A standard pre-approval usually triggers a hard pull on day one.
Step 2: Understand How VA Construction Financing Actually Works
Two structures exist. A construction-to-permanent (one-time close) loan has a single application and closing. The loan funds construction in stages, then converts to a standard VA mortgage when the home is finished. A two-time close means a separate construction loan first, then a second application and closing for the permanent VA loan. One-time close avoids a second round of underwriting and the risk that your credit or income changes mid-build.
A few terms you will see throughout:
- Draws: staged releases of loan funds to the builder as work is completed and inspected.
- Interest-only payments: during the build you typically pay interest only on the amount drawn so far.
- Conversion: the point where the construction phase ends and your permanent VA loan begins.
Entitlement. With full entitlement, the VA sets no loan limit and no down payment requirement, though the investor still decides what it will lend. If you have an active VA loan or a prior loan not fully restored, remaining entitlement or second-tier entitlement can change how much down payment is required. Check the VA.gov loan limits and entitlement page and your COE for your specific situation.
Two misconceptions. You cannot use a VA loan to buy raw land alone. If you already own a lot, it is handled inside the construction loan, where its value can count toward your equity or its payoff can be included. If you do not own one, the lot is acquired as part of the financing. Owner-builder projects are also generally off the table, because the VA expects a qualified, approved builder to be responsible for the work.
Funding fee. The VA funding fee depends on your down payment and whether you have used the benefit before. It is waived for veterans receiving VA disability compensation and certain others, such as Purple Heart recipients and eligible surviving spouses. As of 2026, confirm the current rate table on the VA.gov funding fee page before you finalize a budget.
Step 3: Set a Budget and Run the Numbers Before You Pick a Lot
Here is an illustration. Suppose a lot costs $120,000 and the build contract is $330,000, for $450,000 total with 0% down. Using the first-use, no-down funding fee of 2.15% (the rate on VA.gov as of 2026; verify before relying on it):
- Funding fee: $450,000 × 0.0215 = $9,675
- Financed total: $450,000 + $9,675 = $459,675
- Estimated principal and interest at an illustrative 6.5% on a 30-year term: about $2,905 per month
The 6.5% is a placeholder for the math, not a quote or a prediction. If you receive VA disability compensation and are exempt, the fee line drops to zero and the loan is $450,000.
Add a contingency reserve on top. A common planning guideline (not a sourced statistic) is 5 to 10% of the build cost for overruns and change orders. On a $330,000 build that is $16,500 to $33,000 you should have available.
Budget for two payments, too. Interest-only draw payments during construction are separate from your final payment. For instance, if $150,000 has been drawn at an illustrative 6.5%, interest is roughly $812.50 per month. If you are paying rent or a current mortgage in the meantime, you carry both.
For a state-specific benchmark, FHFA set the 2026 baseline conforming loan limit at $832,750, with higher limits in designated high-cost counties. Check your county on the FHFA conforming loan limit page, whether you are building in Virginia, Florida, Tennessee, or Georgia. With full entitlement the VA has no loan limit, but these figures still matter when second-tier entitlement is calculated.
Step 4: Get Pre-Qualified With No Hard Pull and Compare Your Options
A mortgage pre approval without hard pull lets you learn your standing before committing. Duane Buziak uses the NoTouch Credit Pull to start a no credit hit mortgage application conversation: you review credit, income, and budget first, and a hard inquiry comes later, when you commit to a program.
Here is how the main options compare. Fees and construction availability change often, so verify each before you decide.
| Option | FICO Min | Lender Type | Loan Shelf | Fees | Construction Availability |
|---|---|---|---|---|---|
| VA Loans Pro by Duane Buziak | 500 | Broker | 500+ wholesale lenders | Broker-negotiated, shop-able | Shopped across investors that offer VA construction-to-permanent; varies by investor |
| Veterans United | 620 | Direct lender | Single shelf (VA specialty) | Verify current fee data | Confirm directly |
| Rocket | No public VA-specific floor | Direct lender | Single shelf | Varies; hard pull before real numbers | Confirm directly |
| Movement | 580 on VA | Direct lender | Single shelf | Varies; full application and hard pull at application | Confirm directly |
Credit where due: Veterans United’s VA-only specialization and scale are real. The practical difference is credit flexibility and investor choice. A broker with 500+ wholesale lenders has more leverage than one rate sheet, and the NoTouch Credit Pull gives you digital, no-hit pre-qualification. Duane Buziak is ranked #114 nationally by Scotsman Guide and was named VA Broker of the Year for 2024 and 2025.
One mistake to avoid: submitting full applications to several companies and stacking hard pulls. Credit-scoring models often group mortgage inquiries made within a short window, but the length of that window depends on the scoring model, so verify it before you rely on it. Starting with a soft pull sidesteps the question.
Step 5: Choose a VA-Acceptable Builder and Lock Down Your Plans
The builder must be acceptable to the investor funding your loan, and new construction must be registered with the VA so the home can be inspected during the build. Requirements are laid out in the VA Lender’s Handbook (Chapter 12 covers new construction). Check it for current rules before you sign anything.
Your broker will typically need:
- A signed construction contract
- Plans and specifications
- A line-item cost breakdown
- The builder’s license
- Proof of the builder’s insurance
- Builder financials
Vet the builder before you fall in love with a floor plan:
- Call at least three recent references and ask what went wrong, not just what went right.
- Visit homes the builder completed at least a year ago and look at how they have held up.
- Confirm the warranty. The VA requires a one-year builder warranty on new construction, so verify the current requirement and ask to see the actual warranty form.
- Compare contract types. A fixed-price contract protects you from overruns. A cost-plus contract can leave you exposed if the loan amount does not cover the final cost.
Red flag: a builder who pushes for large upfront deposits or suggests skipping permits. Permits protect your appraisal, your final inspection, and your certificate of occupancy. A builder who wants them skipped is a problem for your loan and your future resale.
Step 6: Submit the Application, Appraisal, and Underwriting
Now the hard pull and the full file come together. Expect to provide a complete application, income and asset documentation, and the builder package from Step 5. The VA appraisal is done on the plans and specifications, and it results in a Notice of Value (NOV). The NOV reflects the “as-completed” value, which must support the loan amount.
This is where the broker model earns its keep. If one investor’s overlay stalls your file, such as a reserve requirement or a builder-approval issue, Duane Buziak can move it to another wholesale lender rather than sending you back to square one at a single shelf. That flexibility is also why a 500 FICO floor is worth something on construction: the VA does not set the credit rule, the investor does, and you can shop investors. It is not a guarantee of approval, since each investor still underwrites to its own standards.
Lock strategy. Builds can take many months, so ask about extended rate locks or float-down options. Both typically cost something, either upfront or in the rate. Weigh that cost against your risk tolerance, and do not assume any rate is available until it is locked in writing.
If the appraisal comes in low, you have three options:
- Renegotiate the price with the builder.
- Adjust the specifications to bring costs down.
- Bring cash to cover the gap between value and cost.
Plan for this possibility in your contingency reserve.
Step 7: Manage Construction Draws, Inspections, and Final Closing
During the build, an inspector verifies completed stages before funds are released to the builder. Keep your own calendar of stages (foundation, framing, mechanicals, drywall, finishes) and expect delays from weather, permits, and materials. A delay is not a problem unless it outruns your rate lock or contract deadlines, so check in with your broker whenever the schedule slips.
When construction ends, the final steps run in order:
- The local authority issues a certificate of occupancy.
- The final VA inspection is completed.
- The loan converts to your permanent VA mortgage.
- Your first full mortgage payment comes due on the schedule set at conversion, so confirm the date in writing.
Two mistakes cause most of the late-stage trouble. First, unapproved change orders: upgrades that push the cost beyond the loan amount come out of your pocket and can require re-approval. Get every change in writing and cleared with your broker before the builder starts. Second, missed builder deadlines that let a rate lock expire.
On cost, ask about no-out-of-pocket closing options. Depending on the program, seller or builder concessions may cover some or all of your closing expenses. Availability varies, and it is worth asking before you sign the construction contract, not after.
Frequently Asked Questions About Building With a VA Loan
Can I build a home with a VA loan?
Yes, you can build with a VA loan through a construction-to-permanent loan, if the investor funding it offers the program. The VA guarantees the loan but does not fund it, so availability depends on the investor. See the VA Lender’s Handbook.
Can I buy land with a VA loan?
No, a VA loan generally cannot buy raw land by itself. The lot must be acquired as part of the construction financing, or already owned and handled within the loan.
What credit score do I need to build with a VA loan?
The VA sets no official minimum, so the requirement is set by the investor. Duane Buziak works with borrowers down to a 500 FICO floor, while Veterans United’s minimum is 620. Construction overlays often run higher than the baseline, and nothing is guaranteed.
Is there a down payment?
With full entitlement, no down payment is required by the VA. Remaining or second-tier entitlement can change this if you have an existing VA loan. Verify on the VA.gov entitlement page.
Can I act as my own builder?
Generally no, because owner-builder projects are restricted under VA rules. An approved, licensed builder is normally required to take responsibility for the work.
How long does VA construction take to close?
The loan typically closes before construction starts, and the build itself commonly takes many months. Underwriting, the appraisal, and builder approval add time up front, so ask your broker for a realistic timeline for your project and area.
Do I pay the VA funding fee on construction?
Yes, unless you are exempt. As of 2026, the first-use, no-down rate is 2.15%, and veterans receiving VA disability compensation and certain others are exempt. Confirm current rates on the VA.gov funding fee page.
Can I use a VA loan to build if I already have one?
Often yes, if you have remaining entitlement, or after restoring it. Second-tier entitlement may require a down payment on part of the price. For general borrower guidance, see the CFPB’s Owning a Home resources.
Start Your Build With a Soft Pull, Not a Hard One
Your next step is a conversation, not an application. Begin with the NoTouch Credit Pull through VA Loans Pro by Duane Buziak, see where your credit and budget stand, and then decide on a builder and a lot with real numbers in hand. Learn more about our services.
Written by Duane Buziak, NMLS #1110647; Coast2Coast Mortgage LLC NMLS #376205.
Disclaimer: This article is general information, not financial or legal advice. Rates, fees, and program rules are subject to change, and nothing here is a guarantee of approval or of any rate. Consult a licensed professional about your situation. Equal Housing Opportunity.
About the author: Duane Buziak is a VA loan specialist and independent mortgage broker licensed in Virginia, Florida, Tennessee, and Georgia. He is a Scotsman Guide Top Originator (#114 nationally, $51.2M), a VA Broker of the Year for 2024 and 2025, and holds 1,400+ five-star reviews. Read more about Duane Buziak.