VA construction loan calculator guide: how your loan is figured
Every piece that goes into a VA construction loan in Texas, from the lot and the build to your payment once the home is finished.
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✓ Soft credit pull only. Applying won’t affect your credit score.
- My team reviews your application as soon as it comes in.
- If you qualify, you get a pre-approval letter and a full itemized estimate.
- If you’re not there yet, you get a clear plan to get ready.
What goes into a VA construction loan
A VA one-time-close construction loan covers your lot, the build and your permanent mortgage with one loan and one closing. The loan amount is built from the pieces below, and these are the same pieces any VA construction loan estimate adds up.
| Piece | What it is | How it’s figured |
|---|---|---|
| Cost to build | Your builder’s fixed-price contract. | The contract price. Everything needed to finish the home has to be in it. |
| Your lot | The land the home is built on. | Buying the lot: the purchase price goes into the loan. Own it but still owe on it: the payoff goes into the loan. Own it free and clear: nothing is added, and your equity can count toward the deal. |
| Contingency | A 2% cushion for unexpected costs, like higher material prices, weather delays or change orders. | A percentage of the cost to build. Any amount not used goes toward your principal when the build is done. |
| Interest reserve account | An account set up at closing that pays your interest-only payments during the build. | Based on the loan amount, the 12-month construction period and how the builder draws funds over the build. It’s funded as part of your loan amount. |
| Construction management fee | Covers running the loan during the build: inspections, builder draw requests, change order approvals, and coordination with your builder and the title company. | Part of the loan amount, paid by your builder through the loan. |
| VA funding fee | A one-time fee paid to VA that keeps the home loan program running. | A percentage of the loan, added to the loan amount. $0 if you receive VA disability compensation. |
No payments during the build
You won’t make a mortgage payment while your home is being built. The interest reserve and the construction management fee are part of the loan amount and paid by your builder, because VA doesn’t allow the Veteran to pay them. During the build, your interest-only payments come out of the interest reserve account automatically.
Any contingency or interest reserve that isn’t used becomes a principal reduction when the loan is modified after the build, which can lower your payment.
VA funding fee for construction loans
VA construction loans use the same funding fee as a VA purchase loan. It depends on your down payment and whether you’ve used your VA loan benefit before.
| Down payment | First use | After first use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% to less than 10% | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
Veterans who receive VA disability compensation, at any rating, don’t pay the funding fee.
Your monthly payment after the build
Construction takes 12 months. When the home is finished, the loan becomes your permanent VA mortgage at a fixed rate. The 12-month build counts toward the loan term, so a 30-year loan has 348 monthly payments and a 15-year loan has 168.
Your monthly payment is made up of:
- Principal and interest on the full loan amount at your permanent rate.
- Property tax, figured on the appraised value of the finished home.
- Homeowners insurance.
- HOA dues, if the home is in an HOA.
There’s no monthly mortgage insurance on a VA loan.
Down payment, appraisal and credit
VA doesn’t set a minimum credit score or a maximum loan amount for borrowers with full entitlement. These are the program guidelines my team uses for VA construction loans:
- $0 down up to $1 million. Loans over $1 million (up to $2 million) need 5% down, and equity in a lot you already own counts toward it.
- The appraisal has to support the whole project. The finished home needs to appraise for at least the total of the lot and the build.
- Credit: a 620 minimum credit score, and larger loan amounts may need a higher score.
Get your real numbers
Every piece above depends on your builder’s contract, your lot and the appraisal. My team builds a full itemized estimate from your actual numbers, so you can see your total loan and your payment before you sign a build contract.
Building in Texas
- Lot equity counts. If you own your lot free and clear, its value works in your favor. If you still owe on it, the payoff can be rolled into the construction loan.
- Taxes are figured on the finished home. Texas appraisal districts tax the completed value, and rural land outside city limits often has a lower combined rate than a suburb with a MUD. Use the county’s rate for your address.
- Your builder has to be approved by the lender. That review happens before the loan closes, so if you already have a builder in mind, have them reach out early.
VA construction loans require a minimum 620 credit score, unlike my VA purchase and refinance loans, which have no minimum. Construction lending is available in the 48 contiguous states and D.C. For the full program, see VA construction loans in Texas and the step-by-step construction loan journey; for the step-by-step process, read how a VA construction loan works in Texas.
Questions Texas veterans ask
Do I need a down payment to build with a VA loan in Texas?
Usually not. Loans up to $1,000,000 can be $0 down. Above that, 5% down is required.
What if the home appraises for less than the loan?
The loan is limited by the appraised value of the finished home, so the appraisal has to support the lot plus the build. If it comes in short, the difference has to be made up by renegotiating with the builder or covering it in cash.
Can I build a barndominium in Texas with a VA loan?
It depends on the design and how it appraises. The home has to meet VA’s minimum property requirements and appraise as a residence. Talk with my team before you commit to plans.
Talk it through with my team
Every build is different. A review by my team gives you real numbers for your lot, your builder’s contract and your payment. The application takes about 10 minutes and uses a soft credit pull only.
More Texas VA calculators
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