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VA New Home Purchase - Construction loans
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VA New Home Purchase - Construction loans
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VA Construction Loan

Use your VA Construction loan to purchase or build a new home. To be eligible for appraisal as “VA new construction Loan”, the property must be fully completed or completed except for customer preference items (such as, interior wall finishes, floor covering, appliances, fixtures and equipment, etc.) and those improvements for which escrows are permitted.  This eliminates the need for construction exhibits.

 

Otherwise, properties which do not meet the criteria for appraisal as “VA new construction” are classified as “Proposed or Under Construction” and “Existing Construction”.

Neither construction exhibits nor VA or HUD inspections during construction are required for properties appraised as “new construction”.

VA Construction Warranty

Properties appraised as “new construction” must be covered by either

  • a one-year VA builder’s warranty, or
  • a ten-year insurance-backed protection plan.
If the builder will provide a one-year VA builder’s warranty, then both of the following will be required
  1. the veteran purchaser’s written acknowledgment that, “I am aware that VA did not inspect this property during construction and that VA assistance with construction complaints will be limited to defects in equipment, material and workmanship reported in writing during the one-year VA builder’s warranty period.”.
  2. a one-year VA builder’s warranty on VA Form 26-1859, Warranty of Completion of Construction..

 

If the builder will provide a ten-year insurance-backed protection plan, then both of the following will be required

  1. the veteran purchaser’s written acknowledgment that, “I am aware that VA did not inspect this property during construction and that it does not qualify for VA assistance with construction complaints.”
  2. evidence of enrollment of the property in a ten-year insured plan acceptable to HUD.

 

Exception: An exception may be made for a veteran who wishes to purchase a new home from a builder who is not more than occasionally involved with VA financing and will not provide either a one-year VA builder’s warranty or a ten-year insured protection plan. In that situation, all of the following will be required:


 

  • the veteran purchaser’s written acknowledgment that, “I am aware that this property does not qualify for VA assistance with construction complaints, since it was not inspected by VA during construction. I am also aware that this new property will not be covered by either a one-year VA builder’s warranty or a ten-year insured protection plan, as is normally required in this situation.”
  • the builder’s written certification that, “This company is not more than occasionally involved with VA financing and is aware that this property is being accepted without any VA-required warranty on an exception basis only upon the request of the veteran purchaser. The dwelling was constructed according to standard building practices and is in conformity with all applicable building codes and complies with the energy conservation standards of the 1992 Council of American Building Officials Model Energy Code,” and,
  • the lender obtains a copy of documentation issued by the local building authority to verify that construction was acceptably completed, such a final inspection or occupancy permit. Where local authorities do not perform building inspections, the builder must certify in writing that “The dwelling was not inspected during construction by any State, county or local jurisdiction.