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VA New Home Purchase - Construction loans
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VA New Home Purchase - Construction loans
Page 2

Proposed or Under Construction

Properties can be appraised prior to the start or completion of construction either

  • individually, or
  • as a group of 5 or more on a “master” appraisal. Each model or house type is appraised at the same time by the same fee appraiser on a separate appraisal report. All of the properties are included on the same VA Master Certificate of Reasonable Value.

Properties appraised as “proposed or under construction” must be inspected by VA or HUD during construction.

The purpose of the inspection(s) is to help ensure that the property

  • is built according to the construction exhibits used in the appraisal, and
  • meets VA Minimum Property Requirements for proposed construction.
Only a final inspection is required if either
  • the property is to be covered by a ten-year insured protection plan, or
  • VA can rely on local building authority inspections in lieu of first and second stage VA inspections.
    • Note: VA acceptance of only a final VA or HUD inspection during construction is a privilege available only to builders who routinely provide good quality construction. Builders who are required to obtain a full complement of inspections during construction will be notified by VA in writing. VA, not lenders, will monitor builder compliance with the restriction.

VA Construction Warranty Requirements

In every case processed as proposed or under construction, the builder must provide the veteran home buyer with a one-year VA builder’s warranty on VA Form 26-1859, Warranty of Completion of Construction.

If only a final VA or HUD inspection is made during construction, a ten-year insured protection plan acceptable to HUD is also required (unless the builder provides evidence of local building authority inspections acceptable to VA in lieu of VA first and second stage inspections).

VA Construction Exhibits

VA Construction exhibits are required for properties appraised as “proposed or under construction”. They are not required for properties appraised as either “new construction” or “existing construction.”.

Each set of proposed construction exhibits must include

  • specifications on VA Form 26-1852, Description of Materials, signed and dated by the builder in all cases and by the veteran when one is under contract in an individual case processed as “proposed or under construction”. Other specification formats are also acceptable, provided they are signed and dated by the builder and veteran as described above and are sufficiently detailed for VA appraisal and compliance inspection purposes.
  • plot plan which includes the location of the well/septic systems, if applicable.
  • all exterior building elevations.
  • foundation or basement plan.
  • plan of all floors.
  • sectional wall details.
  • a certification signed and dated by a technically qualified and properly identified individual (such as, builder, architect, engineer, etc.) which states, “I certify that the construction exhibits for (identification of the property by house type, lot, block, subdivision name, etc.) meet all local code requirements and are in substantial conformity with VA Minimum Property Requirements, including the energy conservation standards of the 1992 Council of American Building Officials’ Model Energy Code and the requirement for lead-free water piping.” VA will accept HUD Form 92541, Builder’s Certification of Plans, Specifications and Site, in lieu of this certification.




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