VA Construction Loan FAQs

A VA Construction Loan is a type of mortgage financing that allows veterans to build their home using their VA home loan benefit and obtain all the benefits of a normal VA loan (no down payment, no private mortgage insurance, competitive interest rates, flexible credit). This is a one-time close allowing you to close on the construction and land (if not already owned) in one closing. Once the closing has been completed, then construction begins. Once the home is built, the loan turns into a permanent VA loan and there is not a second closing.

We have found that a lot of lenders do not offer VA construction loans. Here at CrossCountry Mortgage, we are able to offer VA construction loans not only in Texas but in the 48 contiguous states and D.C.

No down payment is required under the VA guidelines. However, the lender that is offering this loan can require a down payment. Here at CrossCountry Mortgage, we require a 5% down payment if the loan amount is over $1 million. Any loan amount up to $1 million has no down payment.

Assuming you do not have an existing VA loan, we are able to lend up to $2 million on a VA construction loan. Loans over $1 million require 5% down.

You would submit your application online. At this stage we only do a “soft” credit pull which will not impact your credit. Once we receive your application, we will contact you to go over it and then will request the items needed to understand how much you would be qualified for under the VA Construction Loan program. Once you understand that, we issue a pre-approval letter, provide an estimate and wait for you to find your builder and your land if you don’t own that already.

Yes, we would consolidate the land loan into your construction loan. If you do not own the land yet, the VA construction loan would include the land purchase in the closing.

Each scenario would need an evaluation. We would need to evaluate this to confirm this specific need.

The builder would complete our builder package as well as provide 3 projects they have worked on in the past. Our team and the builder will work together to gather all the necessary documents.

No, as of 2025, the VA no longer requires the builder to become VA approved or issued a VA builder ID number.

Single-family homes, 2–4 unit homes (you live in one unit), barndominiums, modular homes, log homes and new manufactured homes (primary residence only). Attached homes, co-ops and container homes aren’t eligible.

No, we do not finance container homes on any construction loan products.

Yes, but they must be built at the same time as the primary structure. ADU’s are not allowed with manufactured homes.

No, we do not allow you to be your own builder. You would have to select a builder and then we would need to approve your builder.

Only the lot prep can be started, and no construction or structural work of any kind can be started.

We would need to review and see what is needed to meet the VA guidelines. If needed, you can adjust the construction contract or put additional money down in order to meet the VA appraisal requirements.

We only charge a construction management fee, and it is a tiered fee schedule based on the loan amount. This is a fee that includes everything associated with the construction.

Yes, depending on how much equity you have you would be able to cover your closing costs in your loan. The VA appraisal that is ordered during the loan process will show us how much equity is available.

No, on VA construction loans there will be no payment made during construction. Instead, an Interest Reserve amount is added to the budget/cost to build. Any interest reserve that isn’t used becomes a principal reduction when the loan is modified after the build.

Yes, there is a 2% contingency fee required that is a reserve credit line established in the budget/cost to build and can be used during construction period for items that are added after the loan has closed. If the entire amount of the contingency is not used, it will be a principal reduction to the loan amount at the time of modification.

Third party fees. This is your appraisal, credit report, flood certificate and all title fees. We do not collect escrows during construction. You would be responsible for the taxes during construction period.

To quote you an interest rate we would need a loan application from you. This only involves a “soft” credit pull and will allow us to give you an accurate rate quote. We will also be able to provide you a detailed estimate to give you an idea of all costs and fees involved.

VA construction loans start at a 620 minimum credit score, and larger loan amounts may need a higher score. Loans over $1,000,000 also require 5% down.

Yes, the one-time close VA construction loan closes upfront as if the house were already built (like an existing purchase transaction). You would need to qualify with both house payments unless the home is sold prior to your construction loan closing or you intend on renting your home after your home is built.

Possibly. If you plan to rent out your current home once the new one is finished, the rent can be used to offset that mortgage payment, following VA guidelines. That usually takes a signed lease, and VA may also look for cash reserves or past landlord experience. My team will tell you exactly what’s needed for your situation, so you can stay in your home while the new one is built.