The Lowdown on the VA Construction Loan...

How Do Construction Loans Work?

Overall Process:

• Builder Approval 
• Project Approval (appraisal, plans & specs, costs from builder)
• Borrower Credit Approval
• Initial Draw at Close (up to 50K) to get project started and/or reimburse for any materials already purchased

Construction Period

• Post close welcome call from construction management company
• Inspections done as work is put in place, then checks for draws issued to builder and borrower
• Once work is done, loan is modified into a standard 30 year fixed loan at present market rates (vs. the interest only loan in place during construction). Borrower is able to pay down balance on converted loan in the event other property they owned has been sold in the meantime. *NO CLOSING COSTS*

Specialized Features

• Stalled projects
• Modular construction
• Major renovations (projects beyond scope of renovation programs)