Building Your Dream Home with a VA Two-Time Close Construction Loan

For many veterans, active-duty service members and their families, the idea of homeownership isn’t just about buying a house. It’s about building a place that finally feels like home. If you’ve spent years moving from one apartment or rental to another, living in spaces that never quite felt your own, you might be dreaming of something more permanent, personal and more you.  

So why not build it? 

If you’re a military member, veteran or eligible surviving spouse, the Veterans Affairs (VA) loan program includes the VA two-time close construction loan. This loan is specifically designed to help you build your own home with the same terms as a traditional VA mortgage and a few unique advantages. 

Let’s break it down.

What Is a VA Two-Time Close Construction Loan?

A VA two-time close construction loan is a specialized loan option designed for eligible veterans, active-duty service members and certain military spouses who want to build a new home. Unlike a traditional VA home loan used to purchase an existing property, this loan supports the construction process, making homeownership more accessible to those who wish to customize their living space from the ground up.

How It Works:

The term “two-time close” means the loan process happens in two separate phases. First, the borrower secures a short-term construction loan to finance the building of the home. Once construction is complete, a second closing occurs, where the loan converts into a traditional VA mortgage. This permanent VA loan pays off the construction financing and becomes the borrower’s long-term mortgage.

Why Consider Building Instead of Buying?

The housing market is tight, and many available homes might not suit your needs, especially if you’re looking for a long-term residence or a forever home. If you’re moving frequently due to military assignments, you’ve likely had your fair share of temporary living situations. Apartments, condos and base housing all serve their purpose, but they don’t always feel like yours. 

With a VA two-time close construction loan, you get to choose: 

• The layout and design of your home 

• The location and size of the lot 

• The features that matter to your family 

Instead of settling for what’s available, you can build something that fits your lifestyle.

Who Is Eligible?

Eligibility for a VA two-time close construction loan follows the same basic guidelines as a standard VA loan: 

• You must be an eligible veteran, active-duty service member, National Guard or Reserve member or a qualifying surviving spouse. 

• You’ll need a valid Certificate of Eligibility (COE) from the VA. 

• You must plan to occupy the home as your primary residence. 

• You’ll need to meet the lender’s income, credit and underwriting requirements (these can vary by lender). 

One thing to note: not all lenders offer VA construction loans. It’s important to work with a lender, like The Federal Savings Bank, who has experience with this type of loan and can guide you through the process with confidence and clarity.

What Are the Advantages?

There are several reasons why VA two-time close construction loans stand out, especially for military families: 

• No Down Payment – Just like traditional VA loans, many qualified borrowers can finance 100% of the cost. 

• No Private Mortgage Insurance (PMI) – A huge savings over time compared to conventional construction loans. 

• Lower Interest Rates – VA loans tend to offer more competitive interest rates. 

Perhaps most importantly, it gives you more control over your living situation, something that can be hard to come by with a military lifestyle.

What’s the Process Like?

While the idea of building a home might seem overwhelming, the VA two-time close construction loan process is structured to help. 

Here’s a simplified look at the steps involved:

Step 1: Pre-Qualification and VA Eligibility

The first step is determining your VA loan eligibility, which involves obtaining your COE. Your lender will also review your income, credit profile and financial readiness to ensure you meet the program’s requirements.

Step 2: Construction Loan Approval

Once pre-qualified, you’ll secure a short-term construction loan. This loan finances the costs associated with building your home, including materials, labor, permits and inspections. You’ll also need to work with an approved builder experienced with VA construction loans, as they must meet VA guidelines.

Step 3: Construction Phase

During this phase, your home is built in accordance with the agreed-upon plans. The lender releases funds in stages, known as “draws,” as construction milestones are completed. Inspections occur throughout the process to ensure the work meets VA standards and building codes.

Step 4: Second Closing – Permanent VA Loan

Once construction is complete and the home passes final inspections, the second phase begins. You’ll close on a permanent VA mortgage, which pays off the construction loan. This loan becomes your long-term mortgage.

Will a VA Two-Time Close Construction Loan Work for You?

A VA two-time close construction loan can be appealing for veterans who want the freedom to build their ideal home, have the patience for a multi-step loan process and meet VA and lender requirements. If that sounds like you, this loan option can turn your vision of homeownership into reality, all while taking advantage of the significant advantages earned through your service. 

Building a home is a big step, but it doesn’t have to be a confusing or intimidating one. With a VA two-time close construction loan, you have access to a tool that can make that dream a reality, while honoring the service and sacrifice that makes you eligible in the first place. 

If you’re ready to stop renting and start building, this could be your path to a home that’s not just a place to live but a place to belong.