How to Choose a VA Approved Builder

A VA construction loan is designed to finance the cost of new home construction as well as the purchase of land in one loan. Unlike traditional construction loans, VA construction loans offer several advantages to qualifying borrowers, such as no down payment requirement.

If you’re using a VA loan to build a home, it’s important to choose a builder who understands the VA loan process and meets lender requirements for new construction.

Finding the right home builder can make all the difference, so we’ve put together some questions to help guide you during the selection process.

3 Questions to Ask a VA Builder

The VA does not actually approve builders, so you must do your due diligence when researching them. Let’s look at some vital questions you should ask a builder to ensure your dream home comes to fruition.

1. Are You Experienced with VA Loan Requirements?

Builders no longer need to be VA-registered or obtain a VA Builder ID for new or proposed construction, but experience with VA-backed construction loans can be a big plus. It often means the builder is familiar with the documentation, property standards and timelines involved in the process to help avoid delays or confusion.

Look for builders who are licensed, insured and able to provide home warranty, as these are common lender and VA expectations. If your preferred builder hasn’t worked with VA loans before, don't worry. Your Veterans United loan officer can help guide them through the steps needed to meet VA and lender standards.

2. Do You Finance the Construction?

Whether a builder finances the construction of the home will play a significant role in determining the type of financing you need to obtain. If the builder finances the construction, you'll just obtain permanent financing and close once the home is complete.

Alternatively, your builder might prefer that you obtain a construction loan to finance the home build. In this scenario, the borrower's path to a VA loan is typically through refinance.

If you want to go this route with a construction loan, you'll want to weigh the pros and cons with a knowledgeable loan officer.

3. What Type of Warranty Do You Offer?

Builder warranties for newly constructed homes offer limited protection concerning workmanship, materials and systems for specific elements of the house.

The VA requires a one-year builder's warranty or a 10-year insured protection plan for new construction homes. Policies vary by builder; some may offer additional protections or warranty options.

Discuss each option and determine which warranty plan best fits your needs. You might also consider whether it would be cost-effective to pay for additional warranty protection or if you would rather pay for the expense out of pocket if a repair arises.

Know that when you work with Veterans United Home Loans, you have the support of a lending team that understands all aspects of VA loans. Whether you want to build or buy an existing home, we are committed to supporting you through your entire homebuying process.

How to Become a VA Registered Builder

Although VA Builder IDs are no longer required, builders can still get VA-registered. The VA does not actually approve builders, so in most cases, a builder can receive their VA Builder ID Number within five business days.

There are four documents a builder needs to submit to the local VA Regional Loan Center. These documents include:

How to Help Your Builder Navigate the VA Loan Process

Your builder still plays a key role in meeting the VA’s construction and loan approval standards. Here’s how you can help set them up for success:

Introduce Your Builder to Your Loan Team Early

Your lender will need things like construction plans, an itemized cost breakdown, permits and a signed contract to get started. Looping your builder in upfront helps set expectations and avoids any last-minute surprises.

Clarify VA-Specific Requirements Upfront

Your builder doesn’t need to be a VA expert, but they should know that VA loans come with some specific guidelines — like required inspections and Minimum Property Requirements (MPRs). Your loan officer can help explain anything they’re unsure about.

Double-Check Warranty Coverage

For VA loans, new construction must come with a warranty that protects against defects in materials or workmanship. Most builders include a standard one-year warranty, but if not, your lender can help line up an approved alternative so you’re covered from day one.

Stay Involved and Keep the Lines of Communication Open

You don’t have to manage everything yourself, that is what your Veterans United loan team is for. But being responsive and helping connect your builder and lender can go a long way — especially during important milestones like obtaining permits and the VA appraisal.

In conclusion, selecting the right builder for your VA construction loan is a crucial step in ensuring the success of your home-building project. If you need help finding a VA approved home builder, the VA maintains a list of registered builders on its Loan Guaranty Hub.

Collaborating with a builder who has a proven track record of delivering quality homes can streamline the process and help you realize your dream home. With the right builder by your side, you can navigate the complexities of a VA construction loan with confidence.