A VA construction loan and land — these two things go together more often than veterans realize.
Whether you already own land, are buying land as part of the build, or still owe money on land you purchased years ago, a VA construction loan can work for your situation. This article explains how.
If You Already Own the Land
If you own land free and clear and want to build on it, a VA construction loan and land equity work together. The appraised value of your land counts toward the total project cost.
If you have owned the land for one year or less, the VA uses the purchase price you paid. If you have owned it for more than one year, the VA uses the current appraised value. Land that has appreciated since you bought it can reduce how much you need to borrow.
If You Still Owe Money on the Land
Many veterans carry a loan on land they purchased with plans to build later. A VA construction loan and land payoff can be combined. The construction loan proceeds pay off the existing land loan as part of the transaction. You do not need to pay off the land separately before applying.
This is one of the most useful features of the VA construction loan that most veterans never hear about.
If You Are Buying Land and Building at the Same Time
You do not need to own land before applying for a VA construction loan. The loan covers both the land purchase and the construction cost together. You close on one loan, the land is purchased, and construction begins.
Land Requirements
Not all land qualifies. The VA requires the property to be residential in nature. You cannot use this benefit for commercially zoned land. The home must be your primary residence — not an investment property or vacation home.
The land must be accessible by road. It must be able to support utilities or have an approved alternative system such as a well and septic. If the property is in a flood zone, flood insurance will be required.
Rural Land
VA construction loans can work for rural acreage. Septic systems must meet local health department requirements. Wells must pass water quality testing. Some lenders are more experienced with rural properties than others — ask directly before you spend time on an application.
Getting Started
If you want to understand how your land situation affects your VA construction loan options, use the form on this site. Answer eight quick questions and a VA construction loan specialist will reach out within one business day.
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