GO849
New Member

Has anyone gone through USAA or any other lender for a VA Construction loan to build a new home? Any suggestions on what to look for when going through the process?

22 REPLIES

I engaged USAA but they informed me they did not do construction loans. I worked with a local bank for that. Finding a bank was difficult particularly since we were working as our own general contractors. It took about 3 months to secure the loan once we had the bank. A complete budget and timeline and countless documents were required.... Down to plumbing and electrical fixtures, floors,... They pay out to our subcontractors or to us via a monthly invoice process. We compile to them and submit and via a title company checks are issued (they do not provide any funds upfront). Lien waivers are required by everyone involved on every payment. Stuff we had done before the loan we had to go back and get lien waivers.... Additionally they required (and we had to pay for) inspections along the way. We are now getting close (yay!) to finishing the house and are working to convert the construction loan to a USAA mortgage.
construction loans are a no-go... especially with building.. an existing home is okay but building has been tough. USAA don't give them.
I did the same thing but actually had a builder, but construction loan was in my name. I applied to USAA for a mortgage in April 2012 as a VA loan. They were great in getting it going but dropped the ball and left me hanging. They are two big and the left hand doesn't know what the right hand is doing. I was going to bust thru my interest rate lock date and told them I would have to re lock since they required occupancy before closing and that was delayed a month due to subcontractor and weather. They called me and basically told me they would park the loan until I got closer to the date. I even had their appraiser in the house to do preliminary appraisal. When I finally called them back after 30 days and asked them about status they said they had closed the loan out and I had to reapply, now with a 90 day waiting period for closing. That pushed me thru the construction loan expiration and requires me to refinance that for $10,000 for a new loan origination. I would say don't bother with USAA for mortgages on new construction if you aren't buying out right from a builder as they consider it a refinance not a new home purchase even though its never been lived in. Their right hand and left hand don't know whats going on. I'm going to my local credit union or bank, and actually you can do better on the internet thru Zillow. USAA is great on insurance but not mortgages.
OK sounds pretty standard, What percentage did they require you to put in on your construction Loan? which Bank would actually do the construction Loan?
If you are having a house bulit you can get a preapproval from USAA. You will go through the normal qualifcation process and they will give you a commitment letter for your bulider. They will work with your builder and schedule an appraisal once it is 95% complete. You will have a update a few (2 or 3) documents with USSA within 30 days of closing. I am currently going through the process. They provided me with a commitment letter and my builder (a local custom home builder) starts building my home next week. It will take about 30-45 days to receive a commitment letter. As for what to look for, once you receive a loan processor keep in with him/her until you receive the commitment letter. I recommend email or calling once or twice per week.
Highlighted

I asked an expert here at USAA to send along any comments he had on this topic and here is what he had to say... 

 

1. You will need to ensure the builder is VA approved, if not, getting them approved is a simple and fast process. We can help! Unfortunately this is not true if the project is a condo.

 

2. If the builder is building a neighborhood and an HOA is formed, ask if the the voting rights have been released to the association. If not, it could pose a problem for loan approval.

 

3. Its important to note the home must be 100% complete in order to close on the loan. Escrow holdbacks to complete unfinished items are generally unacceptable"

 

 

I hope this information helps!

I don't understand how one person could receive a "we don't do construction loans" answer from USAA and another person is already close to building a home with them. I'm pretty sure they also told me that they don't do construction loans. Is it based on City/State?

Samaileko,

 

I think (I am not an expert in this area) that the discrepancy arises depending on the type of loan.

 

Here are some details an expert as USAA provided:

 

Typical Construction Loan - The builder draws funds as needed during the various stages of construction ie. Pouring the slab, framing, drywall etc - The borrower only pays interest on the drawn amount - The bank requires inspections prior to each new draw to ensure the previous work has been completed - Upon completion, a new, permanent loan will be facilitated and a separate closing will be required

 

New Construction Loan - There are no draws, the builder pays for construction - If a conventional loan is used, the initial appraisal is based on the plans and specs provided by the builder and final inspection will be performed to ensure completion -

 

If a VA loan is used, the appraisal takes place once the home is 95% complete and a final inspection will be performed to ensure completion.

 

I encourage anyone with specific questions and concerns to call and talk to an expert! 1-877-314-2255

They will be able to answer any specific questions and provide you with the most up to date and relevant information!

I've been told the same thing--they don't do construction loans.