VA Construction Loans: Build Your Home With $0 Down

What is a VA construction loan?

A VA construction loan — often called a VA one-time close or construction-to-permanent loan — is a VA-guaranteed mortgage that pays for building a new home and then becomes your permanent mortgage when the home is finished, through a simple loan modification. Because it carries the same VA guaranty as a purchase loan, it carries the same core benefits: no down payment for borrowers with full entitlement, no monthly mortgage insurance, and competitive fixed rates.

The alternative most builders steer veterans toward is a short-term bank construction loan followed by a separate VA purchase or refinance at the end. That route means two approvals, two sets of closing costs, and the risk that rates or your finances change mid-build. The one-time close removes that risk.

Can the land be included?

Yes. If you are buying a lot, its purchase price can be rolled into the loan. If you already own the land, the equity in it can count toward the transaction. Raw land on its own cannot be financed with a VA loan — the land must be part of a home being built for you to occupy.

Builder requirements

• Choose an experienced builder with a solid track record. Some states and cities license builders and some (like Texas) don’t — where a license is required, your builder needs one.
• No VA builder ID required. VA eliminated builder registration for guaranteed loans in 2025 (Circular 26-25-01), so you can work with far more builders than before.
• Builder warranty protections on new construction still apply.
• Your lender will review the builder’s financials, insurance and references — this protects you as much as the lender.
• You can’t act as your own builder or do the work yourself, and the builder’s contract must be fixed-price.

Costs and the funding fee

The VA funding fee on a construction loan follows the purchase chart: 2.15% for first use with less than 5% down, 3.3% for subsequent use with less than 5% down, and lower with a down payment. Veterans receiving VA disability compensation are exempt. The fee can be financed into the loan. You make no payments during the build; the interest during construction is covered by an interest reserve set up at closing, so your first payment comes after the home is finished.

How long does it take?

Plan on 30–60 days from application to closing (plans, appraisal and builder review), and a 12-month construction period (the size of the home, weather and the builder’s schedule affect how long the build actually takes). Delays happen; a good builder and lender plan for them in the contract. After the home is finished, allow up to 30 days for the final draw and conversion to your permanent loan. See the full step-by-step journey →

Is a VA construction loan right for you?

It is a strong fit if you want a home that does not exist on the resale market, own (or have found) land, and want to keep cash in the bank. It is a weaker fit if you need to move within a few months, or if your builder won’t work with a construction draw schedule — in that case a builder-financed build with a VA loan at completion may be the practical path.