Construction Loans For Veterans and Military Members

The Federal Reserve Bank of St. Louis estimates the American veteran population was just under 18 million in 2023. Add about a million and a half or more Guard, Reserve, and active duty troops and you have quite a large number of people.

Thanks to military benefits like the VA loan program and government-backed loan programs like FHA loans, these Americans are all potential applicants for One-Time Close loans, whether they are VA, FHA, or conventional.

What do these approximately 19 million 360 thousand people need to know before taking advantage of their VA home loan benefits or the FHA One-Time Close construction loan program to build a home on their lot or land they buy with the loan?

Down Payment Issues

Do you need a down payment for a typical VA mortgage if you meet the lender’s qualifications for credit, employment, and your loan repayment history? Not according to the VA, at least in typical cases.

Qualifying vets and current military members may build a home from the ground up with no VA-required down payment if they choose to apply. Zero down is a powerful incentive to build.

But don't commit to a VA construction loan before discussing no-money-down options with the participating lender.

Lender standards are very important for construction loans.  Ask all lenders you compare what the options are, what the perks of making a downpayment are if you choose to use a VA mortgage, and how your FHA loan options compare to VA mortgage options.

Typically, an FHA or VA lender is required to verify 24 months of overall employment as well as the current status of your job and income.

If you are retiring or separating from the military soon, your employment status will become more critical for construction loan approval. The same is true for those who have already left the military and are exploring their options as veterans.

It pays to compare lenders a year before you retire or separate. Talk to several lenders and ask specifically about using your military pay, benefits, or other options to qualify for the loan. You will also need to know lender employment standards.

Ask each lender to tell you how long an applicant must work in a new job before they may apply for a One-Time Close construction loan.

Military benefits, including the monthly housing allowance, might be considered qualifying income.

What does it take to qualify? The benefits must be likely to continue in the foreseeable future according to lender standards. Not all military benefits will count.

But other benefits (specifically, the Post 9/11 GI Bill housing allowance) offered to students using military education benefits to attend college can’t be used as qualifying income for a VA or FHA mortgage.

It’s an important difference to be aware of, be sure to ask your FHA or VA lender about any military benefits you want considered as qualifying income for a VA or FHA mortgage, but especially when weighing your construction loan options.

Want More Information About One-Time Close Loans?

We have extensively researched the FHA (Federal Housing Administration) and the VA (Department of Veterans Affairs) One-Time Close Construction loan programs.

We have spoken directly to licensed lenders that originate these residential loan types in most states, and each company has supplied us with the guidelines for their products. We can connect you with mortgage loan officers who work for lenders who know the product well and consistently provide quality service.

If you are interested in being contacted by a licensed lender in your area, please send responses to the questions below. All information is treated confidentially. 

OneTimeClose.com provides information and connects consumers to qualified One-Time Close lenders to raise awareness about this loan product and to help consumers receive higher-quality service.

We are not paid for endorsing or recommending the lenders or loan originators and do not otherwise benefit from doing so. Consumers should shop for mortgage services and compare their options before agreeing to proceed. 

Please note that investor guidelines for the FHA and VA One-Time Close Construction Program only allow for single-family dwellings (1 unit) – and NOT for multi-family units (no duplexes, triplexes or fourplexes).

In addition, the following homes/building styles are not allowed under these programs: Kit Homes, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes. 

Contact Us:  Send Us Your Request – Spam Safe - FHA / VA One-Time Close

Please send your email request to [email protected] which authorizes OneTimeClose.com to share your personal information with one mortgage lender licensed in your area to contact you. 

1.  Send your first and last name, e-mail address, and contact telephone number.

2.  Tell us the city and state of the proposed property.

3.  Tell us your and/or the Co-borrower’s credit profile: Excellent – (680+), Good - (640-679), Fair – (620-639), or Poor- (Below 620). 620 is the minimum qualifying credit score for this product. 

4.  Are you or your spouse (Co-borrower) eligible veterans? If either of you is an eligible veteran, down payments as low as $0 may be available up to the maximum amount your debt-to-income ratio per VA will allow – there are no maximum loan amounts as per VA guidelines.

Most VA lenders will go up to $1,500,000 and review higher loan amounts on a case-by-case basis. If not, the FHA down payment is 3.5% up to the maximum FHA lending limit for your county.