Do I make mortgage payments during construction on a VA loan?

Many VA one-time close programs include an interest reserve built into the loan that pre-funds interest payments during construction, so you do not have to make out-of-pocket payments while the home is being built. Regular principal and interest payments begin after the Certificate of Occupancy is issued and the loan converts to permanent.

VA One-Time Close Construction Loans — Redding, CA

$0 Down. Build the Home You've Always Wanted.

Q: What is a VA one-time close construction loan?

A VA one-time close construction loan combines land purchase, construction financing, and the permanent mortgage into one loan with one closing. Eligible veterans can build a new home with zero down payment and no PMI. The loan locks your rate at closing and automatically converts to a permanent VA mortgage when construction is complete — no second application or requalification required.

Q: Can I build a home with no down payment using a VA loan?

Yes. Veterans with full VA entitlement can finance 100% of land, construction costs, and the permanent loan with zero down payment. If you already own land, its equity can reduce your loan balance. Full entitlement applies to first-time VA users and veterans who have fully restored their entitlement.

Q: What credit score do I need for a VA construction loan?

VA sets no official minimum, but VA one-time close construction loans carry a lender overlay. Most lenders require 680 or higher for VA construction loans, compared to 620 for standard VA purchases. This higher threshold reflects the added complexity and risk of construction financing.

Q: Can I be my own general contractor on a VA construction loan?

No. Owner-builder arrangements are not permitted unless you hold a licensed general contractor's license. You must use a licensed, insured, and lender-approved general contractor. Per VA Circular 26-25-01 effective March 2025, builder acceptance requirements are set by the lender.

Q: What types of homes can I build with a VA construction loan?

VA construction loans are available for site-built homes, modular homes, hybrid modular, log homes, barndominiums, and in some cases manufactured homes on permanent foundations. ADUs alongside a primary residence and 2-4 unit owner-occupied properties may also be eligible depending on the lender.

The VA one-time close construction loan lets eligible veterans, active duty service members, and surviving spouses build a brand-new home with zero down payment, no PMI, and a single closing. Pete Metz at Von Mortgage is one of the few lenders in Shasta County who offers this program — and he's helped veterans use it to build exactly the home they envisioned.

Schedule Your Free Consultation! Apply Now

$0 Down Payment Required

1 Closing — Not Two

No PMI Ever

680+ Credit Score Typical

The Basics

What Is a VA One-Time Close Construction Loan?

A VA one-time close construction loan — also called a VA construction-to-permanent loan — is a single mortgage that covers the purchase of land, the cost of construction, and the permanent mortgage, all in one loan with one closing. Eligible veterans and service members can build a brand-new home from the ground up with zero down payment and no private mortgage insurance.

The "one-time close" distinction is critical. Traditional construction financing requires two separate loans — a construction loan to fund the build, then a new permanent mortgage once the home is complete. That means two applications, two sets of closing costs, two appraisals, and re-qualifying for financing after construction. The VA one-time close eliminates all of that — you close once, lock your rate upfront, and your loan automatically converts to a permanent mortgage when the Certificate of Occupancy is issued.

This is a specialized product that not all lenders offer. Von Mortgage is one of the few lenders in the Redding area who can structure and close a VA one-time close construction loan — and Pete has the experience to guide you through a process that has more moving parts than a standard purchase.

Von Mortgage One-Time Close

One application & one closing
Rate locked at closing
No re-qualification after build
One set of closing costs
No payments during construction*
Converts automatically to permanent loan

Traditional Two-Close

Two separate loan applications
Rate not set until permanent close
Must re-qualify after construction
Two sets of closing costs
Payments may begin during build
Requires second appraisal at completion

Bottom line: The VA one-time close saves money, reduces risk, and eliminates the stress of financing twice. For eligible veterans who want to build in Shasta County, it's the most powerful construction financing tool available. *Some lenders offer an interest reserve — call Pete to confirm current terms.

Why Veterans Choose VA Construction

The Benefits of a VA One-Time Close Construction Loan

Every benefit of the standard VA loan — plus the ability to build exactly the home you want with zero down and a single closing.

100% Financing — Land & Construction

Veterans with full entitlement can finance 100% of the land purchase, construction costs, and permanent loan — all with zero down payment. If you already own the land, its equity can be applied toward the loan, potentially reducing your loan balance from day one.

No PMI — Ever

VA construction loans carry zero private mortgage insurance — not during construction, not after conversion to the permanent loan. On a $500,000 build, conventional construction financing could cost you $200–$500 per month in PMI. With VA, that number is always zero.

One Closing — Lock Your Rate Upfront

Close once, lock your interest rate at the start of construction, and never requalify. With a two-close construction loan, your permanent rate isn't set until the build is complete — meaning you're exposed to rate increases for the entire construction period. The one-time close eliminates that risk entirely.

No Payments During Construction

Many VA one-time close programs include an interest reserve that covers interest-only payments during the construction period — meaning you don't have to make mortgage payments while your home is being built. You start making regular principal and interest payments after the Certificate of Occupancy is issued.

Flexible Property Types

VA construction loans cover a wide range of property types: site-built homes, modular homes, hybrid modular, log homes, barndominiums, and in some cases manufactured homes on permanent foundations. ADUs built alongside a primary residence may also be eligible. Call Pete to confirm what your build qualifies for.

No Loan Limit With Full Entitlement

Just like a standard VA purchase, veterans with full entitlement have no loan limit on a VA construction loan. You can finance any build amount with zero down as long as your income and credit support the loan. Most lenders offer up to $1,500,000 on VA one-time close construction loans.

Funding Fee Can Be Waived

The VA funding fee (2.15% first use, 3.3% subsequent use) can be rolled into the loan — no out-of-pocket cost at closing. And just like a standard VA loan, the fee is completely waived for veterans with any service-connected disability rating, saving thousands on a construction loan.

Land Equity Counts as Down Payment

Already own the lot you want to build on? The equity in your land can be applied toward your VA construction loan — effectively functioning as a down payment even though VA doesn't require one. This can reduce your overall loan balance and lower your monthly payment from day one.

Build to Your Exact Specifications

Unlike buying an existing home, VA construction financing lets you build exactly what you want — the floor plan, finishes, layout, energy efficiency features, and accessibility modifications that matter to you. For veterans with specific needs or preferences, this is a level of control no resale home can offer.

The Process

How a VA One-Time Close Construction Loan Works

More moving parts than a standard purchase — but one closing, one rate lock, and Pete guides you through every step.

Confirm Eligibility & Get Pre-Approved

We start by confirming your VA eligibility and pulling your Certificate of Eligibility. Then we review your income, credit, and entitlement to determine your maximum loan amount. Construction loans typically require a 680+ credit score and 6+ months of cash reserves — I'll tell you exactly where you stand and what, if anything, needs to be in place before we move forward. This call is free and takes 15–20 minutes.

Select Your Land & Builder

You'll need a licensed, insured, and lender-approved general contractor to use a VA construction loan — you cannot serve as your own builder. If you already have a builder in mind, we'll walk through the approval requirements together. The land can be purchased as part of the loan or brought in as existing equity if you already own it. I'll confirm whether your lot and builder meet VA and lender guidelines before you commit.

Submit Plans & Get VA Appraisal

The VA appraisal on a construction loan is done based on the plans and specifications — not a physical inspection of the home. The appraiser reviews the blueprints, site plan, and construction contract to determine the projected value of the completed home. This appraisal establishes the basis for your loan amount and confirms that the planned build meets VA's Minimum Property Requirements before construction begins.

Close Once — Lock Your Rate & Fund the Build

This is the only closing. You sign your loan documents, lock your permanent interest rate, and the construction funds are placed into an escrow draw account. From this point, your builder draws funds from the account as construction milestones are completed — with your written approval required before each draw is released. Most build terms run 6–12 months depending on project size and complexity.

Construction & Inspections

During the build, the lender conducts draw inspections to verify progress before each payment is released to the builder. A contingency reserve is typically built into the loan to cover unexpected cost overruns. You and I stay in communication throughout this phase — if anything comes up, you have a direct line to Pete rather than a call center.

Certificate of Occupancy — Your Loan Converts

When construction is complete and the Certificate of Occupancy is issued, your loan automatically converts to a permanent VA mortgage at the rate you locked at closing. No second appraisal. No re-qualifying. No second closing. Your first regular principal and interest payment is typically due 30–60 days after conversion. Welcome home — you built this.

How They Compare

VA One-Time Close vs Your Other Options

For eligible veterans, VA one-time close wins on almost every metric. Here's the honest comparison against conventional construction and the traditional two-close path.

	VA One-Time Close	Conventional Construction	VA Two-Close
Down Payment	✓ $0 (full entitlement)	10–20% typical	$0 on permanent loan
Number of Closings	✓ One closing only	Two closings	Two closings
Rate Lock	✓ Locked at first closing	Set at permanent closing	Set at permanent closing
Re-Qualify After Build	✓ No — automatic conversion	Yes — full requalification	Yes — full VA requalification
Monthly MI / PMI	✓ None — ever	PMI until 20% equity	None — ever
Closing Costs	✓ One set of closing costs	Two sets of closing costs	Two sets of closing costs
Rate Risk During Build	✓ None — rate already locked	Exposed to rate changes	Exposed to rate changes
Payments During Build	✓ Often deferred via interest reserve	Interest-only during build	Interest-only during build
Credit Score Typical	680+ (construction overlay)	700+	620+ (each loan separately)
Land Equity Applies	✓ Yes — reduces loan balance	Yes	Yes (construction phase only)
Best For	✓ Eligible veterans wanting simplicity & savings	Non-veterans or buyers needing more builder flexibility	Veterans needing wider builder/lender options

Guidelines reflect 2025 lender requirements. VA construction loan availability varies by lender — Von Mortgage is one of the few Shasta County lenders actively closing this product. Call Pete to confirm current terms.

Do You Qualify?

VA Construction Loan Requirements

Construction loans have a few additional requirements beyond a standard VA purchase. Here's what you need to have in place.

VA Eligibility

COE Required

Same eligibility as a standard VA loan — veteran, active duty, National Guard/Reserve, or surviving spouse. Certificate of Eligibility required. Pete pulls this electronically for most veterans in minutes.

Credit Score

680+ Typical

Construction loans carry a lender overlay above the standard VA 620 minimum. Most lenders, including Von Mortgage, require 680+ for VA one-time close construction. A higher score also improves your rate on the permanent loan.

Cash Reserves

6+ Months PITI

Construction loans require more reserves than standard purchases — typically 6 or more months of projected mortgage payments in verified savings or liquid assets after closing costs.

Income & DTI

41% Guideline + Residual Income

Same VA DTI guidelines as a standard purchase — 41% guideline, not a hard cap, with residual income as the primary affordability test. Income must be stable, documented, and likely to continue through the construction period.

Builder Requirements

Licensed & Lender-Approved

You must use a licensed, insured general contractor approved by the lender. Owner-builder arrangements are not permitted unless you hold a general contractor license. Per VA Circular 26-25-01 (effective March 2025), builder acceptance requirements are set by the lender.

Build Term

6–12 Months Typical

Most VA one-time close programs allow 6, 9, or 12-month construction periods. The term must be realistic for your build scope. Extensions may be available depending on lender guidelines and circumstances.

Property Type

Primary Residence Only

VA construction loans are for primary residences only. Site-built, modular, log homes, barndominiums, and in some cases manufactured homes on permanent foundations. 2–4 unit properties may be eligible if you occupy one unit.

VA Funding Fee

2.15% First Use / 3.3% Subsequent

Same as a standard VA purchase loan. Can be rolled into the loan balance. Waived entirely for veterans with any service-connected disability rating, Purple Heart recipients, and eligible surviving spouses receiving DIC.

Guidelines vary by lender and scenario. Final approval is subject to full underwriting review. This page is informational, not a commitment to lend. Call Pete directly at (530) 227-2476 for your specific situation.

Frequently Asked Questions

Questions Veterans Ask About VA Construction Loans

What is a VA one-time close construction loan?

A VA one-time close construction loan is a single mortgage that combines land purchase, construction financing, and the permanent mortgage into one loan with one closing. Eligible veterans can build a brand-new home with zero down payment, no PMI, and a rate locked at the start of construction. When the home is complete and the Certificate of Occupancy is issued, the loan automatically converts to a permanent VA mortgage — no second application, no second appraisal, no re-qualifying.

Can I build a home with no down payment using a VA loan?

Yes. Veterans with full VA entitlement can finance 100% of the land purchase, construction costs, and permanent loan with zero down payment. If you already own land, its equity can be applied toward the loan — reducing your overall balance from day one. Full entitlement applies to first-time VA loan users and veterans who have paid off prior VA loans and restored their entitlement.

What credit score do I need for a VA construction loan?

While the VA sets no official minimum credit score, VA one-time close construction loans carry a lender overlay — most lenders require 680 or higher, compared to 620 for a standard VA purchase. This is because construction loans carry more complexity and risk than purchase loans. Von Mortgage's current requirement is 680+. If your score is between 620 and 680, call Pete — there may be a path forward depending on the strength of the rest of your file, or we can put together a plan to get your score where it needs to be.

Can I be my own general contractor on a VA construction loan?

No — owner-builder arrangements are not permitted on VA one-time close construction loans unless you hold a licensed general contractor's license. You must use a licensed, insured, and lender-approved general contractor. If you have a specific builder in mind, we can run through the approval requirements together before you commit. Per VA Circular 26-25-01 (effective March 31, 2025), builder acceptance requirements are set by the lender — Pete will walk your builder through exactly what's needed.

Do I make mortgage payments during construction?

Many VA one-time close programs include an interest reserve built into the loan — this reserve pre-funds interest payments during the construction period so you don't have to make out-of-pocket payments while your home is being built. Including an interest reserve does increase your final loan balance slightly, but it eliminates the financial strain of carrying both rent or an existing mortgage payment and construction loan payments simultaneously. Call Pete to confirm the current interest reserve structure available on your loan.

What types of homes can I build with a VA construction loan?

VA construction loans are quite flexible on property type. Eligible builds include traditional site-built homes, modular homes, hybrid modular, log homes, barndominiums, and in some cases manufactured homes on permanent foundations. ADUs built alongside a primary residence may also be eligible depending on the lender. 2–4 unit properties may qualify if you occupy one unit as your primary residence. The home must meet VA's Minimum Property Requirements once construction is complete.

How long does VA construction loan approval and the build take?

The approval and closing process for a VA construction loan typically takes 45–60 days from application to closing, given the additional requirements around builder approval, plans review, and the VA appraisal based on specifications. Build terms typically run 6, 9, or 12 months depending on project scope. Once the Certificate of Occupancy is issued, the loan converts to permanent within a few business days. Total timeline from application to moving in is typically 8–14 months depending on build complexity.

Is the VA funding fee waived on construction loans?

The same funding fee rules apply to VA construction loans as standard VA purchase loans. First-time use with zero down: 2.15%. Subsequent use: 3.3%. The fee can be rolled into the loan so there's no out-of-pocket cost at closing. And the same exemptions apply — the funding fee is completely waived for any veteran with a service-connected disability rating at any percentage, Purple Heart recipients, and eligible surviving spouses receiving DIC. If your disability claim is pending at closing, you pay the fee upfront and receive a full refund when your rating is approved.

Ready to Build?

Let's Talk About Building Your Home With Your VA Benefit

VA construction loans have more moving parts than a standard purchase — the earlier you start the conversation, the smoother the process. A free 15-minute call with Pete covers your eligibility, credit position, builder requirements, and what zero-down construction financing looks like on your specific build budget. No pressure. No commitment. Just straight answers from a local lender who's done this before.