Buying a New Construction Home With a VA Loan: A Guide for Military Families and Veterans

• New construction homes offer modern benefits, but require careful planning.
• VA loans can be used for new builds, with different requirements depending on the home type.
• PCS timelines and contracts matter more in new construction, aligning the build with orders.

Choosing where to live can be one of the most stressful parts of PCSing. New construction homes can be an attractive option for military and veteran homebuyers, offering modern features, energy efficiency, control over design elements, and, in some cases, move-in-ready homes.

Military and veteran homebuyers can use a VA loan to buy or build a new construction home, including developer-built homes and custom construction-to-permanent loans. However, VA construction loans have different rules, inspections, timelines, and documentation requirements than standard VA purchases—and misunderstandings can delay or derail a PCS move.

If buying a new construction home is an option for you, consider this guide your one-stop resource. Below, we discuss your options when buying a new-build home, including the benefits of buying a new construction home, potential disadvantages, VA loan options, questions to ask, and more.

Military homebuyers have two options when building a home: custom-built homes (or semi-custom homes) or developer spec homes.

Custom and semi-custom builds require the homebuyer to own or purchase a plot of land, design the home in conjunction with an architect or custom home builder, and then build a house based on that design. This process is lengthy and expensive, sometimes taking upwards of a year or more to complete. While some military families might consider this option upon retirement from the service, it’s often not feasible while on active duty.

More commonly, homebuyers purchase new-build homes in neighborhoods developed by homebuilders. These neighborhoods often offer a few floor plan options and are built to builder specifications.

Homebuyers can sometimes purchase developer-spec homes that are nearly complete or move-in ready, reducing the time needed before closing. Depending on how close the home is to completion, homebuyers can customize many features of a developer-spec home, including flooring, light fixtures, appliances, paint colors, and even basement finishes and garage sizes.

To use a VA loan for new construction, borrowers typically must:

• Be eligible for VA home loan benefits and obtain a Certificate of Eligibility (COE).
• Work with a VA-approved lender experienced in construction financing.
• Ensure the home meets VA Minimum Property Requirements (MPRs).
• Provide approved construction plans and specifications (for proposed builds).
• Obtain a final compliance inspection and certificate of occupancy.
• Close on either a construction-to-permanent loan or a permanent VA mortgage after completion.

There’s nothing quite like moving into a brand-new house. The benefits of buying a new construction home are abundant:

• Being the first owner to live in a home allows you to make it your own from the start
• Avoiding costly repairs from aging appliances or systems
• Avoiding changes to past owners’ design choices
• Brand-new materials, modern designs, and floor plan choices
• Customization options and tailored design choices that fit your style
• Energy efficiency and lower utility bills
• No bidding wars, major inspection concerns, or repair requests

However, there are some drawbacks to purchasing a new-build home:

• Potential delays and wait times to move in
• Additional upfront costs for landscaping, fencing, decking or patio, and upgrades
• Less development in and around the neighborhood
• Limited negotiation and flexibility on pricing
• Risk of delayed military PCS, changes in orders, or construction delays

Military families considering buying a new construction home should carefully weigh the pros and cons and talk with an experienced real estate agent and a VA-approved lender before making a decision.

Military and veteran homebuyers should ask a few essential questions before committing to a new construction home.

Not all new home builders are created equal. Before purchasing a house from a developer, research the company. Are they reputable and dependable? Do they have consistent positive customer reviews? Are they well-established and in compliance with all necessary insurance and bonding requirements?

Most new-build homes come with a builder’s warranty, which covers items like materials, craftsmanship, systems like HVAC and plumbing, and the overall construction. Clarify what the builder’s warranty covers and how long it lasts.

Interested homebuyers can often tour model homes in new development neighborhoods. However, these homes almost always feature high-end finishes and upgrades not included in the initial price.

Before signing a purchase agreement (the legally binding document between builder and buyer), ensure you understand what is and isn’t included in the quoted price. Even upgrades like flooring, appliances, doors, and fixtures can add thousands to the final price.

Construction times can vary wildly, depending on location, weather conditions, size of the home, the builder, access to building materials, and other factors. Developer-spec homes can take as few as four months to complete, while custom-built homes can take a year or more. Many builders include a clause in the purchase agreement that specifically covers construction delays, meaning you won’t be able to back out of the contract, even if construction takes months longer than planned.

To lock in your interest rate, discuss your options with your lender. Some offer long-term rate locks to accommodate construction time. It’s also a good idea to ask about float down options that lower your interest rate should mortgage rates drop before closing.

Buying a home is always a risk for military families, but buying a new construction home presents additional risks. New-build homes can take several months to complete, so military buyers might be tempted to sign a purchase agreement as soon as they receive PCS orders.

However, these purchase agreements often heavily favor the builder. If your orders change or get canceled after signing a purchase agreement, you could potentially forfeit a large earnest payment, upgrade deposits, or your entire contract. Reading the purchase agreement carefully before signing is essential, along with considering the potential implications if your PCS orders change.

Additionally, construction delays are always a possibility. Most purchase agreements limit your ability to back out of a contract due to construction delays, potentially leaving you scrambling to find alternate housing if your home isn’t finished on time.

You’re generally not required to use a builder’s preferred or affiliated lender.

Under the Real Estate Settlement Procedures Act (RESPA), builders can offer incentives for using their lender, but they must disclose affiliated business arrangements, and they generally can’t make the sale contingent on using a specific lender.

You should research lenders and choose one that understands your homebuying needs and is familiar with military and veteran homebuying options.

Military and veteran homebuyers can use their VA benefits to build a custom home or purchase a developer-spec home, though the process differs between the two. Buying a house built by a developer is a simpler and more straightforward process than securing a loan for a custom build.

Using a VA loan for a new construction home, whether a custom build or a developer spec, is a great option. VA loan features include lower interest rates, no required down payment, and no private mortgage insurance (PMI), potentially saving borrowers thousands over the life of their loan.

As of VA Circular 26-25-1, builders do not need a VA-issued Builder Identification Number for VA-guaranteed loans on new or proposed construction. (This Builder ID change does not apply to Specially Adapted Housing (SAH) grants or Native American Direct Loans (NADL).)

Typically, VA new construction loans fall under three major categories:

1. Complete or near complete new builds. These loans often feel like a normal home purchase. However, the appraisal still has to confirm the home meets VA Minimum Property Requirements. Any required repairs or conditions must be satisfied before closing.
2. Proposed or under construction home. This scenario may apply if you are under contract but construction is not complete. The VA will require construction exhibits and specifications, along with a final compliance inspection after completion, in addition to local code inspections. In this case, the initial appraisal is based on plans and specs, and then those assumptions are verified once the home is complete.
3. True custom builds. This scenario applies if you are financing land or site work, construction, and a permanent mortgage either with a one time close or a two time close. With a two time close, the construction loan itself is typically not the VA loan. The VA guaranty comes with the permanent mortgage, not the construction loan.

Using a VA loan to purchase a new-build home from a developer is a relatively straightforward process, particularly if the home is complete or nearing completion. The VA homebuying process for a developer-spec home is very similar to purchasing a pre-existing home.

Before final approval, the VA requires all new construction homes to meet strict inspection and safety standards, known as the VA’s Minimum Property Requirements (MPRs). The lender/appraiser will require any safety issues to be corrected. The VA will require a clear final compliance inspection report before it will formally issue the loan guaranty.

If the local authority doesn’t issue a certificate of occupancy (or equivalent), VA guidance allows alternate evidence such as inspection reports or a written statement from the local authority confirming satisfactory completion.

Eligible borrowers can also use their VA benefits to build a custom home, though the process is a bit more complicated.

For custom-built homes, the VA financing process generally follows of of these two tracks:

1. One-time close (construction-to-permanent): A single loan disbursement covers both the build and the permanent VA mortgage. The VA will not issue the loan guaranty certificate until it receives a clear final compliance inspection report.
2. Two-time close: There are two separate disbursals: One short-term construction loan, then a separate disbursal on the permanent VA mortgage after the home is complete. In this structure, the construction loan is not the VA loan—the VA guaranty comes with the permanent mortgage.

In both cases, construction funds are typically released from an escrow/draw account in stages. Lenders generally require documentation, including draw requests, invoices, and lien waivers, as applicable, as well as and borrower approval for disbursements.

Ask whether the rate lock covers the full build period, what triggers extensions, and whether the lock terms change if the loan becomes a two-time close.

Whether you are building a fully custom home or purchasing a new build from a developer, the process generally follows the same path.

Step 1: Set Your Budget and Get Preapproved
Start by speaking with a VA approved lender who can help you obtain your Certificate of Eligibility and determine how much home you can afford. If you are building a custom or semi custom home, ask about construction to permanent financing options. Understanding your loan structure early helps prevent delays later in the process. Getting preapproved before visiting builders also strengthens your negotiating position.

Step 2: Choose Your Builder and Community
Once your financing plan is in place, begin researching builders and new construction communities near your duty station. Look for a strong local reputation, clear warranty coverage, and positive buyer reviews. Touring model homes, either in person or virtually, allows you to evaluate build quality, layout, and finishes. Military buyers should also consider commute time to base and long term rental potential, since homes located near installations are often more attractive to future military renters and buyers.

Step 3: Select Your Lot and Floor Plan
In a developer community, you will typically choose from pre designed floor plans, many of which have model homes available to tour. With custom or semi custom builds, you may work from architectural plans or modify an existing layout. When choosing a lot, think carefully about resale value and location factors such as proximity to base, traffic flow, nearby power lines, flood zones, or whether the home sits on a cul de sac or corner lot. Some developers restrict identical models from being built next to each other, which can limit availability. If you are purchasing a condo, confirm early that the entire project is VA approved. If it is not approved, the appraisal and closing process can be delayed, so have your lender verify the project’s VA eligibility before making large deposits or commitments.

Step 4: Review and Sign the Builder Contract
Builder contracts are often written to favor the builder, so read every detail carefully. Make sure you understand what is included in the base price, the cost of upgrades, the estimated construction timeline, warranty coverage, and your rights if delays occur. Many buyers choose to work with a real estate agent experienced in new construction or a real estate attorney to help review the agreement and negotiate incentives such as closing cost credits or design upgrades.

Step 5: Monitor Construction and Complete Inspections
Watching your home come together can be exciting, and many builders offer walkthroughs at various stages of construction. Local inspectors will review major milestones such as the foundation, framing, electrical, plumbing, and final systems checks. Once construction is complete, the home must pass a final inspection and receive a certificate of occupancy. Even though municipal inspections occur, it is still wise to hire an independent home inspector before closing to identify any issues that should be addressed before you take possession.

Step 6: Final Walkthrough and Closing
Shortly before closing, you will complete a final walkthrough to ensure all agreed upon repairs and finishes are complete. At the closing table, you will sign your loan and title documents, review warranty and HOA information if applicable, pay any remaining funds due, and receive the keys to your new home.

It’s easy to get excited about a new construction home, but that excitement sometimes leads to common mistakes.

Even brand-new homes can have defects. The builder will have inspectors examine the property at various stages of construction, but it’s wise to hire an independent contractor who will work for you and ensure the home is safe.

Comparing and researching builders could save you headaches and hassle down the road. Check customer reviews, compare builder warranties, and choose a reputable builder who best meets your needs.

It’s also vital to read all contracts carefully and to have a real estate agent or an attorney review them. Misunderstanding your purchase agreement could have devastating consequences.

Few things during the home construction process are as exciting as choosing customized finishes. However, remember that every upgrade is an additional expense, and those upgrades can add up quickly.

Overcustomization can also hurt your resale value. Those expensive upgrades could outprice your home in the neighborhood, making it difficult to sell later. While it’s tempting to pick unique finishes that show your personal style, buyers might not appreciate them.

Military homebuyers should purchase new construction homes with renting or resale in mind.

The price listed on your purchase agreement doesn’t include everything. You will also need to account for closing costs, which typically range from 2% to 5% of the home’s total price (not including your down payment), depending on your loan, location, and any seller/builder credits.

Your lender will provide you with estimated costs a few weeks before closing, then a final total a day or two before closing.

Other additional expenses to consider include HOA fees, landscaping costs, and any upgrades not included in your initial purchase agreement. VA borrowers generally may finance only the VA funding fee into the loan amount. Other closing costs are typically paid at closing

New construction homes take months to build (upwards of a year or more for custom-built homes) and are often delayed because of worker or material shortages, weather, or other complications. For military families trying to work around a PCS timeline, these delays could mean costly long-term hotel stays, month-to-month leases, and storage costs while waiting.

To avoid delays, consider buying a home that is complete or nearing completion, or plan for the possibility that your new-build home won’t be ready by the target date.

Military homebuyers should always purchase a home with resale potential in mind. Many factors can impact your home’s resale value, including neighborhood location, school districts, commute times, and resale demand. Before buying a new construction home, consider whether it is likely to hold its value or become a desirable rental property in the future.

Buying a new construction home can be a great option for military and veteran homebuyers. New-build homes offer control over design choices and layout, limit repairs and maintenance issues, and offer energy-efficient solutions, among other benefits. However, buying a new construction home requires patience and preparation.

Before jumping into a contract with a builder, carefully weigh the pros and cons, speak with a real estate agent experienced in new construction homes, and talk with a reputable VA-approved lender to verify your eligibility.

Finally, consider your PCS timeline and how it aligns with new home construction, and have a backup plan in case of delays.

Ready to explore verified listings or builder partnerships near your next duty station? Visit AHRN to find trusted homes and local experts.