A VA construction loan is a type of home loan that allows eligible active-duty military personnel, veterans, and their surviving spouses to finance the construction of a new home. The VA construction loan program is designed to help eligible borrowers build their own home and obtain permanent financing for the completed home in one transaction.
VA construction loans offer several benefits compared to traditional construction loans, including no down payment requirement, lower interest rates, and no mortgage insurance premium. However, VA construction loans also have some restrictions and requirements, such as a VA funding fee, which can vary based on the type of loan and the borrower’s military status.
To be eligible for a VA construction loan, the borrower must meet certain service requirements and be approved by the VA. The loan can be used to finance the cost of building a new home, including the cost of the lot, construction materials, and labor. The VA construction loan program also requires that the home be built to meet VA standards and that it be used as the borrower’s primary residence.
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