There are many types of VA home loans and refinancing loans for qualified borrowers. Some borrowers want to purchase a condo rather than a suburban home, while others are interested in multi-unit properties or residences with a business unit attached. VA mortgage loan rules cover a variety of these types of home loans, including regulations and requirements for construction loans.

VA construction loans are permitted under the VA loan program, but under market conditions at the time of this writing, very few (if any) lenders are willing to underwrite or originate these types of mortgages. No lender is required to offer a construction loan--the VA loans program is voluntary--but a lender that chooses to do so would be able to.

There’s no telling when market conditions might be right for VA construction loans once again. The trends of the housing market can go up and down for these types of loan products and borrowers who are looking for a brand new home should consider another option with their VA mortgage--purchasing a “new construction” home.

Houses classified as “new construction” have been built for a year or less in most cases, and have never been sold or occupied.

New construction homes sometimes can be found in new subdivisions or with the help of a local professional who knows where to look. VA loans for new construction homes may be slightly different than those for what the VA classifies as “existing construction”.

Some borrowers might want to go an alternative route and purchase land instead of a home. Does the VA permit this? According to the VA loan rules found in the VA Lender’s Handbook (VA Pamphlet 26-7), this practice may not be possible except under certain conditions.

“Purchase of unimproved land with the intent to improve it at some future date (that is, the land purchase is not in conjunction with a construction loan)” is described in the list of “ineligible loan purposes” for VA mortgages. For more information on your options for a VA loan, speak to a loan officer about new construction, existing construction, and VA construction loan details.

VA construction loans may not be on offer in the housing market where you wish to buy a home today, but there’s no telling what may be available in the future as housing market trends change and grow.

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