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It's easy to forget that a house in the suburbs is not the only option a first-time home buyer has with a VA home loan. Learn what other land purchases a VA loan can buy

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Not available in AZ, IL, MN, NV, or NY

VA Loan Articles

News, updates, and explanations to keep you informed.

VA Loan Rules for Land Purchases

It's easy to forget that a house in the suburbs is not the only option a first-time home buyer has with a VA home loan. There are plenty of options available and the Department of Veterans Affairs has anticipated many of them when it comes to purchasing property and choosing options.

For example, did you know VA will approve home loans for qualified borrowers who want one custom-built? A construction loan has rules and procedures especially for the issues related to having a new home built from scratch as opposed to existing construction homes.

VA rules say "eligible purposes" for a VA home loan include the ability to "purchase or construct a residence, including a condominium or cooperative unit, to be owned and occupied by the veteran as a home".

There are plenty of other options. VA mortgage terms may also include money for the purchase of land where "the residence is situated or will be situated." Borrowers may choose to borrow money for a new construction home, or choose a manufactured house or mobile home AND the land required for the new home.

For mobile homes, the VA requires the mobile home to be considered "real property" which means there must be a permanent foundation. A mobile home or manufactured house can't be unattached to the permanent foundation, and other requirements apply including issued related to builder's warranties or guarantees for the foundation.

Some borrowers already own land and don't want to purchase more. VA rules address these concerns, too. "...Loans may also be guaranteed for the construction of a residence on land already owned by the veteran (a portion of the loan may be used to refinance a purchase money mortgage or sales contract for the purchase of the land, subject to reasonable value requirements)."

In these cases, construction is limited to properties with no more than four family units and a single business-use unit. The VA makes one exception in the case of "certain joint loans". When applying for a VA loan under those circumstances, ask your lender what the rules and restrictions are for joint loans for your individual needs. The VA considers exceptions and unusual situations on a case-by-case basis.