VA New Construction Loans: Buying or Building With 0% Down

Buying a completed new home with a VA loan

For a finished or nearly finished home from a builder's inventory, a VA purchase loan works much like it does for a resale home. A VA appraiser issues a Notice of Value, and the home must meet VA minimum property requirements. The builder provides its VA builder ID and warranty documents to your lender.

Building a home with a VA construction loan

VA construction-to-permanent loans let you finance land and construction and convert to a VA mortgage with one closing. Because they're niche, expect to shop several lenders, and expect lender overlays such as builder experience or reserve requirements.

What does a VA new-construction loan cost?

• Funding fee: 2.15% of the loan on first use with less than 5% down (lower with 5%+ down); veterans receiving VA disability compensation are generally exempt.
• Closing costs: builders can pay them, plus up to 4% in additional concessions such as paying off debts or prepaid items.
• No monthly mortgage insurance.