Applying for a VA Construction Loan: 4 Useful Tips

A VA construction loan can help you make repairs to a home or property in a wide array of areas. For example, loan guarantees are available to repair mold and mildew damage, replace water and sewage systems, remove asbestos or get rid of termites. If you are a veteran of the US military, you can use this VA program to help make your loan cheaper. Try these useful tips before you get started on the construction project.

#1 Research Appropriate Programs

Start by seeing which programs may apply to you. Before considering any construction program, it is worthwhile to learn if you can save a little money through the VA programs. For example, you may want to remodel your kitchen. This would not be covered in its entirety, but any adjustments you make to the plumbing or energy efficiency of the home in the process may be. This could qualify you for a partial guaranty on the loan. You can research programs and answers to your questions on the Department of Veterans Affairs website. Or, go to your local VA office to ask your questions.

#2 Determine Eligibility First

It can be a huge problem to start a construction program only to find out you were denied the savings you expected through the VA home loan construction program. Start at square one: get your loan guaranty first. You will need a certificate of eligibility that essentially shows you are indeed a veteran in good standing, and you qualify for a guaranty of a given amount in your unique case. You can file for this certificate online, and the process is automated for your benefit. It is worth noting that you may have difficulty getting the guaranty if you were discharged in any manner other than honorably.

#3 Work with VA Approved Lenders

Cut out the need to file extra paperwork. Sign your contract directly with a lender who is familiar with the VA program. If possible, work with a lender that carries the VA's stamp of approval. This will allow you to file papers directly with the lender when it comes time to apply the VA guaranty, instead of filing a separate request. It also assures your lender meets the standards required by the VA and even excludes fees that would be denied under the VA's program.

#4 Credit Still Matters

In a VA loan, you use your status as a veteran to help you gain insurance on your financing. This program is designed to overcome the problem many veterans face: low or no credit. However, even with the guaranty, you will still have to apply for the loan and get funding through a private lender with specific standards. If your credit score is too low, you could be denied financing, despite having a guaranty. Watch your credit while you are in the military and afterward. Before seeking a large construction loan, make all your debt payments for at least two years. File disputes on any report you do not think is accurate, and have these resolved before you seek your loan.