Can I use a VA Loan for Vacant Land?

no va loan on vacant landThe VA Home Loan is incredibly beneficial to qualified military members. Since congress originally created the GI Bill, the VA loan program has facilitated mortgages for some 18 million-service members who in many cases would not have otherwise qualified for a loan. Today the popularity of the loan continues to increase. This past year mortgages purchased with the VA loan are up nearly 8 percent from a decade ago. Furthermore, veterans despite only making up 9 percent of the population equal 10 percent of the housing market. These numbers represent a pressing need for lenders, borrowers and everyone in between to understand every facet of this entitlement program. Among the many misconceptions that exist about the VA home loan is whether or not it can be used to purchase vacant land?

The answer is no, the VA home loan cannot be used to purchase vacant land. As per the US Department of Veteran Affairs regulations, the VA loan can only be used for an existing dwelling. This dwelling must be inspected and appraised prior to the consummation of the loan. Safety and habitability is of paramount importance to the VA. This loan can only be used on property that can immediately function as a primary residence. All properties must have proper water drainage systems, habitable roofs, structural soundness and utilities up to code.

The minimum property requirements negate the purchase of vacant farmland and heavy duty “fixer-uppers.” Again, and this cannot be stated enough, the VA wants to ensure that loans used by veterans fund sanitary and safe living spaces.

Most vacant land loans require a down payment; VA loans do not call for a down payment. VA home loans can be used for construction however; in this scenario, the land must be sold with the completed home or the VA will not offer a construction loan. For this type of loan there must be an initial land purchase before the construction may begin. Furthermore, the construction must be limited to “customer preference items” E.G. fixtures, appliances, equipment, floor tiling/covering and interior wall finishes. Also, the borrower cannot make payments on a construction loan until the construction is complete.

Applicants interested in the VA Home Loan are encouraged to contact VA Home Loan Centers Today.

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