You may already know that VA home loans are a great deal for qualifying individuals. VA loan rates are as much as a full percentage point lower than the ones offered by private lenders, and you don’t have to put any money down when you purchase a single family home or condo unit. These loans can save veterans, active service personnel, and certain military spouse a lot of money over the life of their mortgage loan.
What you may not know is Houston residents can also use the VA loan program to finance a new construction home as well.
VA Construction Loans
Although the VA provides construction loans, they can be hard to secure because lenders do not want to take on the level of risk associated with the construction process.
VA construction loan guidelines work as follows:
- Eligible veterans must provide detailed building plans and specifications from a licensed general contractor. These funds are held in escrow and given to the contractor in stages as work on the new home progresses.
- The lender will check to make sure that the construction is going according to plans.
- The lot can be purchased separately, if not already owned, or the funds needed to purchase the land may be included in the VA Construction Loan amount.
- “Soft funds,” such as the fees required for building permits, can also be included in the VA loan.
Refinance to a VA Home Loan Once the Construction is Finished
A much more common way for eligible veterans to use VA loans to finance new construction is to obtain a construction loan from a traditional lender, then refinance over into a VA Home Loan once the construction process is finished.
This option involves putting money down and making interest payments on the loan while construction is underway. It is not for poeple who don’t have the money for a downpayment. However, because it allows qualified individuals the chance to take advantage of the VA Home Loans’ great low interest rates, this option still saves you money in the long-term.
Whether you are looking to build new or purchase an existing home, the selection of VA loans Houston residents can choose allows you to get in the housing market now and starting building equity.
Interested in VA Home Loans?
Contact Daron or Corey at Mortgage Loans for Texas today to discuss the VA loan that is right for you.