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What You Need To Know About A VA Construction Loan

What You Need To Know About A VA Construction LoanDo you plan on building your dream home? If you are a veteran, you may qualify for a VA construction loan. This could help you save a significant amount of money as you build your dream house, but it is important to understand the details.

An Overview Of A VA Construction Loan 

In general, a VA construction loan has three separate parts. The first part is the cost to purchase the land, the second part is the cost to construct the home, and the third component is the bundle that gives you your final, long-term mortgage. You have the option to close on the construction process either once or twice, and you should work with a professional who can help you decide which one is better for your situation.

The Benefits Of A VA Construction Loan

There are several significant benefits that come with a VA construction loan. First, it does not require a down payment, so you don’t have to worry about saving tens of thousands of dollars before you start building your house. It also does not have a cap on the maximum size of the loan, so you do not have to worry about running into a roadblock when borrowing money; however, you still have to qualify for the size of the loan you want. You also do not have to worry about paying any interest during the construction process. 

Applying For A VA Loan

Applying for a VA construction loan is similar to applying for any other mortgage, but you will also need a Certificate of Eligibility (COE) showing that you are a veteran and eligible for this type of loan. Apart from that, you will also need to provide evidence of your credit history, prove you have enough income to pay back the loan, and show proof of employment.

Consider A VA Construction Loan

If you are a veteran and want to build your dream house, you should consider applying for a VA construction loan. It could open the door to new options that might not have otherwise been available. 

Buying A House With No Money Down

Buying a Home with no money down.If you dream of owning a house one day, you have probably realized that one of the biggest challenges is saving money for a down payment. You have already found your dream property, but then the lender asks you to put 20 percent down, which can be tens of thousands of dollars. Fortunately, there are alternative options available, and you may be able to purchase a home for no money down.

VA Loans

One option for qualifying borrowers is a VA loan. As the name suggests, this is a loan that is backed by the Department of Veterans Affairs, and eligible veterans may be able to qualify for a home loan with no money down. You still need to have a credit score that is high enough, and you must have a solid debt-to-income ratio. You will also need to reach out to a lender that has experience with VA loans to see if you qualify.

USDA Loans

Another option that could allow you to purchase a home for no money down is a USDA loan. This is a specific loan program that is available for borrowers located in rural areas who are going to use the property for a specific purpose. Borrowers need to have a credit score of at least 620, meet certain qualifications for debt-to-income ratios, and not learn more than 115 percent of the median income in the area.

FHA Loans

While you may not be able to purchase a home for no money down through an FHA loan, this can make your home loan much more affordable, and you don’t necessarily have to be a veteran or located in a rural area. An FHA loan could allow you to purchase a home for 3.5 percent down as long as you are a first-time home buyer. You may still have to purchase private mortgage insurance (PMI) until you build up a certain amount of equity in your home, but it could make it easier for you to purchase a house for the first time.

Consider exploring some of these options if you are interested in buying a house. 


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