The $0 Down VA Construction Loan

Mortgage and Lending with

In all my years of Mortgage Banking, I have not met or spoken with an eligible veteran who has not heard of the $0 down VA home loan program that is partially guaranteed by the United States Department of Veterans Affairs.  This well-deserved home loan entitlement is bestowed upon our Military Heroes who are either active duty or honorably discharged after serving a specified number of days in the armed forces. Kudos to both the public and the military for continuously getting the word out.  

But what is not widely known is that this $0 down VA home loan can be used to purchase a newly constructed “to be built” home on a lot of their choice where the veteran gets to make color and design selections with a builder.  As a VA One-Time Close Construction to Permanent Warehouse lender, I constantly have discussions with select industry group leaders and contacts whose clients revolve around Veterans.  Veteran demand for the construction part of this program has substantially increased over the years and is expected to be the rising star for Veteran borrowers in 2021. But it is not widely known or easily available.  If you would like to learn more about offering the product, I am here to “Unmuddy The Waters” and give you a road map. 

I hear daily from both industry professionals and veterans from all over the country wanting to know if the $0 Down VA One-Time Close Construction to Permanent Loan really exists and if so, how can they find a lender that offers this specific product?    

As a Veteran advocate, my goal is to educate as many people as possible about this program and help to connect the dots so that every eligible Veteran who wants to build a newly constructed home instead of buying a resale can do so.  Most of the mortgage industry has gone AWOL on this product, and I am here to tell you that we “Got Your Six”.  I am fortunate enough to be in the Room Where it Happens – and learned each piece of the puzzle that makes this product work.  If you come across a Veteran looking for this product and really want to do a solid for them, here are a few suggestions. 

For Licensed Mortgage Bankers / Mortgage Brokers

1) You can originate these loans as a mortgage banker and use our line to fund these by setting up with our partner administrator or

2) You can broker through a National Lender who offers this product for Correspondents to sign up.

Many Loan Officers "think" they want to learn this program, yet most will not make it through Boot Camp and revert to originating vanilla loans. Training LO's on OTC loans is a very labor-intensive task.  But if you / your company has an established community of veterans, local builders, and excellent real estate industry contacts so that you can offer this product, I believe that with our shared guidance, you can succeed at it.  Roger That! 

Real Estate Professionals

In most cases I underwrite, the Veterans first step was to purchase a lot / land through the services of a licensed real estate agent. It can only benefit your real estate business by knowing this program exists, for the Veteran buyer may want to expedite their purchase sooner by combining the land purchase with the construction financing all in one transaction.  That is the definition of the VA One-Time Close construction product.

Eligible Veterans 

If you are an eligible veteran and cannot find a lender that offers this program, I ask that you reach out to me.  We have done extensive research on the VA One-Time Close Construction loan program and have contact information for approximately 10+ CP licensed loan officers representing (5) companies for 50 state coverage.  Each company has supplied me their underwriting guidelines and approved states. 

We provide information and connect consumers to qualified One-Time Close lenders to raise awareness about this loan product and to help consumers receive higher quality service. We are not paid for endorsing or recommending the lenders or loan originators and do not otherwise benefit from doing so. Consumers should shop for mortgage services and compare their options. 

The bottom line is that I believe the market for this product will become more popular as the eligible Veteran home buyer learns they have a $0 down option for a new construction and more mortgage professionals start offering this product.

Comments (1)

Richard Weeks
Dallas, TX
REALTOR®, Broker

Great information, thanks for sharing.  I hope you have a great day.

Jan 14, 2021 03:05 AM