One of the most common questions about VA loan benefit involves the purchasing of land. The answer to this question is “somehow.” This is because you have to show commitment to develop the piece of land that you want to purchase. This means that you have to get into a contract to prove that you require land to put a house on it. Most of the VA mortgages are set for condominiums and single family residences. However, the VA program is more flexible and not limited to only these types of properties.
For you to be eligible for VA financing, the property must be occupied by a veteran for some time. This doesn’t mean that the house has to be complete by the time of closing. VA laws allow you to purchase a piece of land and then construct your home. The type of home you construct can be a new one, a mobile home, a pre-fab or original construction.
The actual process of putting a house on a piece of land is trickier than it may seem. For new constructions, prefabs, modular and mobile homes, you will be required to go through a lot of red tape. This includes approval from VA officials through VA inspectors. This process is not only time consuming but also expensive, and most financiers tend not to get involved in such a process. In case you want to install a mobile home, it should have a permanent foundation.
To qualify for a VA loan to purchase land, the land can either have a house situated on it or you plan to have your home constructed there. However, you cannot use a VA loan to purchase land and wait for a long time before you construct your house. This means you cannot use the piece of land that you have acquired using your VA loan for commercial purposes.
Documents You Will Need if You Want to Construct a Prefab or Manufactured Home
- The specifications of the foundation of the house and a plan similar to that of conventional homes.
- You may also be required to have details of the line piers if you plan on constructing a double-wide home.
- A plot of the foundation indicating the location of the supporting piers. Include all drawings of the anchor of the foundation.
- Prepare a floor plan of the unit and the exterior elevation. It is also advisable to have photographs or drawings of the front and rear parts of the home unless the property is located on the site that is going to be appraised or if the appraiser can access the unit. You can get these documents in the manufacturer’s installation manual.
- If the state requires that the underside of the property be enclosed, you will need to have all the details of the perimeter enclosure to indicate that you comply with the legal requirements as stated by the authorities.
- Because site conditions differ from one location to another, provide any revision information on the manufacturer’s installation manual to comply with the local housing requirements.
- Provide any other construction exhibits for other on-site improvements including decks, garages, enclosed patios and carports to get enough financing.
Keep in mind that your home should comply with the set minimum habitability requirements as stated by the state laws, including things like eating and sleeping areas, permanent cooking, plumbing and septic requirements. Therefore, if the home hasn’t been constructed yet, submit all the construction plans for your VA loan to be approved. You will also need to construct your home according to the building plans you submit.
Additional Requirements by Individual VA Lenders
Individual lenders may have different guidelines compared to federal requirements to approve your VA loan. These requirements are based on their own risk assessment and lending criteria, and some of them include:
- The builder you choose should provide a 1-year warranty on the newly constructed house.
- You cannot also construct your VA home on land that is not suitable or safe for a home.
It is possible to purchase land using your VA loan and then construct a home. However, take your time when shopping around for lenders to finance you. Keep in mind that you will find many willing lenders to finance the construction of a modular home than a prefabricated house. This is because prefabs depreciate much faster and this is the reason why most lenders are reluctant to finance them.