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How to Get a VA Land Loan
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If you’ve served in the military and have found the perfect plot of land to build your dream home, a VA land loan may help you finance the project. But there is a catch: The U.S. Department of Veterans Affairs (VA) will only guarantee a VA loan to buy land if it’s combined with a VA loan to build a house.
What is a VA land loan?
The VA itself doesn’t offer VA land loans, but VA construction lenders offer them as a part of VA new construction loans. You can also use a VA land loan to buy a lot for a manufactured home. However, the total loan amount must include the cost of permanently attaching the home to the lot.
Getting a VA land loan with a VA construction loan
A VA construction loan is a short-term mortgage that allows you to roll in the costs of building a home and the land purchase into one mortgage. If your home blueprints are set and you have a builder ready to break ground, buying land with a VA construction loan may be the next logical step.
Getting a VA land loan for a manufactured home purchase
A manufactured home is a low-cost alternative to a site-built home. Military borrowers can use a VA loan to buy a manufactured home, along with a plot of land. However, the VA will guarantee the VA land loan only if the total loan amount covers the permanent installation of the manufactured home onto the land you’re buying.
Getting a VA land loan with a manufactured home refinance
If you already own a manufactured home but not the land it sits on, you can refinance your mortgage with a VA land loan to buy a lot. The total loan amount must pay off any current loan balance on the home, and it combines the purchase price of the land and the cost of moving and permanently attaching the manufactured home to the land.
How much can I borrow with a VA land loan?
Military borrowers have more borrowing power than ever in 2020. The Blue Water Navy Vietnam Veterans Act of 2019 allows VA borrowers to take out a VA loan with no down payment to buy, build or refinance a home above the $765,600 conforming loan limit for high-cost areas.
One caveat: VA construction lenders may set their own guidelines, so check with your loan officer if you’re building a home in a high-cost area.
Land requirements for a VA land loan
The VA sets specific standards for land purchased with a VA loan, mostly to ensure military borrowers live in properties that are safe and habitable.
To get a VA land loan, the following conditions typically must be met:
- The land must be accessible with a public or private street and have backyard access. If you’re buying unimproved land, there needs to be a straight path to the front and back of the home without crossing over a neighbor’s property.
- The land must have a private road that’s maintained. If the roads on the land aren’t maintained by the local government, a recorded agreement is required to explain how the roads will be kept up.
- The easements must run with the land. An easement is a legal right to the use of land. If an easement “runs with the land,” that means it can be transferred to a new owner. Find out which easements exist for land access, utilities, building restrictions and water. For example, the owner of a large parcel of land may split the property and sell individual parcels/lots, but add an easement restricting new homes to one-story layouts to preserve a scenic view. If your dream home is two stories, though, you’ll need to pick a different plot of land.
- The land must be stable enough to support the home. Check for reports about sinkholes or soil stability problems in the area. Issues with the land’s stability may explain why a piece of land has been on the market for a long time.
- The land must be eligible for flood insurance if it’s within a flood plain. Land near lakes, rivers or coastal areas may be prone to flooding. If the land isn’t eligible for flood insurance, the VA won’t guarantee the loan.
- The land must provide a safe water supply and a safe method for sewage disposal. The VA has strict water quality requirements if the land isn’t connected to a public water source. Any onsite septic system needs to meet VA minimum property requirements as well.
- The appraiser must consider the home-value impact of a land’s proximity to an airport. Special conditions may apply if your land or any portion of the land is located near an airport because of noise issues.
- The land must be free of any environmental hazards. If the property is located near an abandoned industrial or manufacturing site, the VA will pay extra attention to potential hazards. These include oil and gas wells, chemical contaminants or underground storage tanks.
How much land can I buy with a VA land loan?
The VA doesn’t set a limit on how many acres of land you can buy. However, VA-approved lenders may cap the total acreage based on their own guidelines. Ask your loan officer about any restrictions if your sights are set on a large swath of land.