You’re here because you want to know definitively: “Can you purchase land with a VA loan?“
The short answer is “YES,” you can use a VA loan to purchase land, but there are some important conditions and limitations to be aware of, which we’ll cover in this blog post.
The VA allows veterans to use their VA loan to buy land and construct a new home on the property at the same time.
However, there are restrictions placed on the way the funds can be allocated.
VA loans must be used for eligible purchases, which includes the purchase or construct a residence, including a condominium or cooperative unit, to be owned and occupied by the veteran as a home.
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How Can You Purchase Land With a VA Loan?
According to VA loan guidelines, eligible borrowers can use a VA loan to buy land and property together, but not land by itself.
That means you can’t buy a piece of land with your VA loan and sit on it.
You can use your VA loan to buy land directly if you also have plans to build on the property right away.
You can apply for a combined purchase and construction loan through a VA-approved lender like District Lending.
You’ll need to submit formal construction plans and, upon completion, have the finished property inspected.
Additionally, your construction plans must meet the following criteria:
- You must work with a VA-approved builder with valid VA identification.
- You cannot build a home with more than four units. Each unit must have its own utility connections, and you must occupy one of the units as your primary residence.
- Your property must be built on and affixed to a permanent foundation.
- Your property must conform to the VA’s minimum property requirements. It must also meet federal and local building requirements.
- Your land cannot be in a flood or noise zone, near a landfill, or in an area vulnerable to major natural disasters like landslides or earthquakes.
Can I Use My VA Loan to Buy Land?
Yes, you can use your VA loan to buy land; however, there are some important conditions and limitations to be aware of:
- Construction Intent: The primary purpose of using a VA loan to purchase land is for building a home on that land. VA loans are not typically used for vacant land purchases without the intention of constructing a home within a reasonable timeframe.
- Eligibility: To use a VA loan to buy land and build a home, you must meet the eligibility requirements for a VA loan. This typically involves being an eligible veteran, active-duty service member, member of the National Guard or Reserves, or a surviving spouse of a service member who died in the line of duty or because of a service-connected disability.
- Entitlement: Your VA loan entitlement limits the total amount of the loan you can obtain without a down payment. This limit can vary depending on your location and whether you have used your VA loan entitlement before.
- Construction Plans: When you use a VA loan for land and construction, you will need to have approved construction plans and obtain necessary permits. The VA lender will need to review and approve these plans.
- Construction Timeline: The construction must typically start within a certain timeframe after the land purchase, usually within one year. The VA wants to ensure that the land purchase is not speculative and that the primary purpose is to build a home.
- Loan Limits: VA loan limits vary by county, and there may be a maximum loan amount that you can borrow. Be sure to check the loan limits in your area.
- Appraisal and Valuation: The land you intend to purchase will need to be appraised, and the VA lender will consider the appraised value when determining the loan amount. The appraisal must also consider the future value of the completed home.
It’s essential to work with a VA-approved lender who is experienced with VA land and construction loans, as the process can be more complex than a traditional VA home loan.
District Lending can guide you through the requirements and ensure that you meet all the necessary criteria for using a VA loan to purchase land and build a home.
Conclusion & Wrap-Up
In conclusion, purchasing land with a VA loan is indeed possible, but it comes with specific conditions and limitations designed to ensure that the primary purpose is to construct a home on the property.
Veterans and eligible individuals can use a VA loan to buy both land and property together, provided they have approved construction plans, intend to build on the land immediately, and meet various eligibility criteria.
While these requirements may seem stringent, they are in place to safeguard the intent of VA loans and ensure that they are used for their intended purpose of helping veterans secure a home.
To navigate the complexities of VA land and construction loans, it is crucial to collaborate with a knowledgeable VA-approved lender like District Lending, who can guide you through the process and help you fulfill all the necessary criteria for purchasing land and building your dream home with a VA loan.
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About the Author
Brian Reese is a senior advisor and co-owner at District Lending. He is one of the world’s leading experts in veteran benefits, having helped millions of veterans secure their financial future since 2013. Brian is the founder VA Claims Insider, an education-based Coaching & Consulting company whose mission is to educate and empower veterans to get the VA disability benefits they’ve earned for their honorable service. A former active-duty air force officer, Brian deployed to Afghanistan in support of Operation Enduring Freedom. He is a distinguished graduate of management of the United States Air Force Academy and earned his MBA as a National Honor Scholar from the Spears School of Business at Oklahoma State University.
In Brian’s Words:
“As a military veteran, I’ve made it my life’s mission to help people live happier and wealthier lives. District Lending brings this mission to life. We believe in integrity, honesty, and transparency, which is why you’ll see our rates right on our website. You’ll find lower rates and zero lending fees, which means you can buy your dream home for less. The savings are passed on to you — the way it should be.”
– Brian Reese, Advisor and Co-Owner, District Lending
