The ability to build a home from the ground up with no down payment requirement from the VA is a powerful incentive. Before you commit to a VA construction loan, discuss your no-money-down options with the participating lender. Home Purchase and Refinance Loans

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VA and FHA Construction Loans for Military Members and Veterans

January 18, 2024

The Federal Reserve Bank of St. Louis estimates there were just under 18 million veterans in 2023.

The Pew Research Center estimates there were just over a million people serving on active duty around the same time period. Members of the Guard and Reserve number over 360,000, according to

 It’s a large demographic, and thanks to military benefits like the VA loan program, millions of veterans are 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 to build a home on their own lot or land they buy in conjunction with the loan?

Down Payment Issues

You won’t need a down payment for a typical VA mortgage if you meet the lender’s qualifications for credit, employment, and your loan repayment history.

The ability to build a home from the ground up with no down payment required from the VA is a powerful incentive. Before you commit to a VA construction loan, discuss your no-money-down options with the participating lender.

Lender standards will definitely apply for a construction loan. You want to know what the options are, what the perks of making a downpayment anyway are (there are perks), as well as how your FHA loan options compare to the VA program.

FHA construction loans always require a downpayment regardless of your veteran status, and that is a factor to consider if you need help determining which government-backed construction loan is right for you.

Application Timing Is Important

Typically, an FHA or VA lender is required to verify your employment. 

If you are retiring or separating from the military soon or you have done so in the last six months, your employment status will become more important for loan approval. It’s smart to talk to a lender in the earliest stages of your planning for the construction loan.

Lender standards are critical in this area, which is why it pays to compare lenders a year before you leave the service or as soon as possible once you know you are separating.

The lender can tell you how long you need to be in a new job before you can successfully apply for the construction loan.

Military Benefits Sometimes Can’t Help You Qualify

Some military benefits, like the monthly housing allowance, may be used as qualifying income if those benefits have been paid long enough and are likely to continue according to lender standards.

But other benefits like the Post 9/11 GI Bill housing allowance paid to qualifying students using military education benefits to attend college can’t be used as qualifying income.

It’s an important nuance to understand, and you should definitely ask your lender about any specific benefit programs you want to be considered as income for the purposes of qualifying for an FHA construction loan or the VA equivalent.

Construction Loans at FHA, VA, and USDA: One-Time Close Loans

Want More Information About One-Time Close Loans?

We have done extensive research on 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 the guidelines for their products. We can connect you with mortgage loan officers who work for lenders that know the product well and have consistently provided 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. 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 allows 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, including but not limited to: Kit Homes, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes, Dome Homes, Bermed Earth Sheltered Homes, Tiny Homes, Accessory Dwelling Units, or A-Framed Homes.

Contact Us: Send Us Your Request – Spam Safe

Please send your email request to [email protected] which authorizes 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 are eligible veterans, 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 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.

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