Your Ultimate Guide to VA Construction Loans: Build Your Texas Dream Home

1. Review Your Eligibility and Financial Qualifications

The process begins with an initial review of your VA loan eligibility and financial profile.

This stage may include:

• Completing a loan application
• Obtaining or verifying your Certificate of Eligibility
• Reviewing income, employment, assets, debts, and credit
• Discussing your estimated construction budget
• Evaluating your available VA entitlement
• Reviewing the proposed property or land situation

VA eligibility alone does not guarantee loan approval. The borrower, property, builder, construction plans, appraisal, and complete transaction must meet applicable VA and lender requirements.

2. Select Your Land, Plans, and Builder

Once the initial financing review is underway, you can begin finalizing the major parts of your construction project.

This may include:

• Selecting an eligible building site
• Choosing or developing the home plans
• Preparing detailed specifications
• Establishing a construction budget
• Selecting a properly licensed and qualified builder
  Submitting the builder and project for lender review

Your builder must meet applicable Texas and local requirements and must also be reviewed under the lender’s current construction program.

3. Complete the Builder and Project Review

Our lending team will review the builder and construction project before the loan can proceed.

The review may include:

• Builder experience and qualifications
• State and local licensing requirements
• Insurance documentation
• Financial and business information
• Construction plans and specifications
• Building contracts
• Cost breakdowns
• Construction timelines
• Required warranties
• Applicable permits and approvals

A builder is not automatically accepted simply because the project is being financed with a VA-guaranteed loan. The builder must satisfy the requirements of the lender’s construction program.

4. Obtain the VA Appraisal and Notice of Value

A VA-approved appraiser reviews the proposed home using the plans, specifications, site information, contract, and other project documents.

Because the home has not yet been completed, the appraiser estimates the property’s value as if construction were finished according to the approved plans and specifications.

The completed project must support the required value and meet applicable VA Minimum Property Requirements.

5. Complete the One-Time Loan Closing

After the borrower, builder, property, plans, appraisal, and construction documents have been approved, the loan can proceed to closing.

The construction financing and permanent VA mortgage are established through the same closing, subject to the terms of the approved loan.

6. Begin Construction and Release Funds in Stages

Construction funds are generally released through scheduled draws as work is completed.

The process may include:

• Draw requests submitted by the builder
• Inspections at designated construction milestones
• Verification that completed work matches the approved plans
• Review of invoices or supporting documents
• Progress monitoring throughout construction
• Final inspections and completion documentation

Funds are not ordinarily released to the builder all at once. Draws are tied to verified construction progress and the requirements of the lender’s construction program.

7. Complete the Home and Begin Permanent Repayment

When construction is complete, the lender verifies that the home has been built according to the approved plans and applicable requirements.

Final documentation may include:

• A final inspection
• Certificate of occupancy
• Builder warranties
• Final lien documentation
• Evidence that required work has been completed
• Any additional VA or lender-required certifications

Once the construction phase is completed, the loan continues as the permanent VA mortgage under the terms established at closing.