The VA recently revised a section of the VA Lenders’ Handbook to include additional guidance for construction loans.
Data released from the Department of Veteran’s Affairs for their fiscal 4th quarter of 2020 showed the number of VA home purchase loans that were guaranteed at 128,927, an increase of 11.27% from the 4th quarter of 2019 which showed 115,873 home purchase loans guaranteed. Most veterans are more concerned about their educational, health and dental benefits than they are about their eligibility status for home ownership. When it comes to utilizing their home loan benefit, they think about purchasing an already built new home or resale. But very few know that they can build a brand-new home with a builder and design it from scratch on a lot for either a stick-built, modular, or manufactured home and finance the construction and home with one single VA loan. The Department of Veterans Affairs recently revised and expanded a section of the VA Lenders’ Handbook to include additional guidance for VA construction loans. The VA One Time Close loan allows qualified borrowers to finance both the construction (including the land) and the permanent loan for the home itself (the mortgage) at the same time. Criteria for VA financing also include meeting loan guidelines for credit and income eligibility where borrowers can finance 100 percent of their home purchase. Not only is there no downpayment requirement, but eligible veterans do not pay mortgage insurance. They do, however, pay a VA funding fee. For $0 down loans, the first time use fee is 2.3% of the loan amount and for subsequent use, the fee is 3.6%. The funding fee can be rolled into the loan amount, and larger downpayments allow for lower funding fee amounts. The funding fee is waived for all Veterans who were injured while in service and receive disability compensation or have a disability rating of 10% or more.
Source: The Mortgage Leader