Frequently Asked Questions

The loan itself is the same, it's still your typical 100% financing VA loan with the same guidelines for credit score and income. The difference is a VA construction loan is used to build a single-family home on an undeveloped piece of land, while a traditional VA loan is used to buy an existing home.

Noso Funding only offers a VA one-time close, which in my opinion is the superior program. There is only one closing, which happens upfront. That means one set of closing costs, one appraisal, and one trip through underwriting. A one-time close prevents the unknown from impacting your loan over the next 12 months, job loss, credit changes, rate shifts, because you're already closed. Most two-time closes aren't even a true VA product. It's typically a conventional short-term construction loan with monthly payments that eventually needs to be closed out by a VA cash-out refinance, which can be very problematic if the loan-to-value is above 90%.

No. The VA gives lenders the choice to collect interest through monthly payments or build the interest into the budget and the loan. We build the interest into the budget just like you would for materials or labor. When the loan closes, the interest is placed into a subsidy account and each month the payment is pulled from there automatically. You do not make monthly interest payments with our VA one-time close product. Please remember that not all lenders treat this the same way. Most collect monthly payments from you.

The builder's profit is already built into the total construction cost. They pull their profit from draws as construction progresses. The one exception is the first draw. That money goes exclusively to labor and materials, no profit pulled from it.

Noso has a standard automated draw schedule calculated based on the total construction cost and project timeline, determined during pre-qualification. The builder can follow our schedule or use their own, but their schedule can't exceed our requirements, they can do fewer draws but not more. The first draw is capped at 10% of the project cost and is given to the builder at closing so they can start work immediately. The key rule is the money can never get ahead of the work. Read the full guide to how construction draws work.

Every draw is verified before any money moves. Your builder uploads photos of the completed work through a link from the lender's inspection partner. The inspection partner reviews the photos against the budget line items and signs off, and only then does the lender release funds. No separate site visit is needed for routine draws. Read the full guide to how construction draws work.

It depends on where you are. If you do not own land, your first step is reading the VA Construction Roadmap for non-landowners. We require it. Most questions are answered there, and we do not do 45 minute how does this work calls in its place. That may sound rigid, but most people who do not own land do not end up moving forward with this program, and the roadmap is how you find that out early instead of late. If you own land, understand the program, and have a realistic budget from a builder, go straight to the application: Start your secure application. If your price expectations may be off, get numbers from a builder first. Everyone's road is a little different, but it never starts with a phone call about how the program works.

You have to complete an online application to determine eligibility for mortgage financing, and the builder must complete a questionnaire before being accepted into our construction program. Both need to be approved before moving forward.

On VA there is no hard cutoff for debt-to-income ratio because VA uses residual income to qualify. That means if you meet residual income requirements with a 65% DTI, the automated underwriting system may still approve you. We go down to a 580 credit score, but the automated underwriting system rarely approves at that level.

There is no down payment on our VA construction loan. If you are talking with a lender who is requiring a down payment, it is not a VA loan.

The VA funding fee is a one-time fee that helps fund the VA loan program so it can continue to operate for future veterans. It applies to veterans who are not receiving disability compensation of 10% or higher. Veterans with a service-connected disability rating of 10% or more are exempt from the funding fee. The amount of the funding fee is based on your loan-to-value ratio.

Yes. Final plans must include all elevations (north, south, east, and west) along with the floor plan, foundation plan, and wall section plan. These are required by the VA and needed for the appraiser.

The lender requires that the builder has been in business for at least 2 years and has completed a minimum of 5 ground-up construction projects. Ground-up means building a single-family home on an undeveloped piece of land. A garage extension or a shed does not count. The builder must also have a Paydex score of 65 or higher through Dun & Bradstreet. Read the full guide to how builder acceptance works.

Yes. The appraisal determines if your project's total cost aligns with current market value. The lender only lends on the appraised value.

Not technically required by the lender, but it would be a horrible mistake not to get one. Land sellers dump unbuildable land on buyers who don't do their homework. Always hire a soil scientist and bypass the county, a soil scientist is higher credentialed than what the county can provide. Don't go the cheap route with the county only.

Yes. VA guidelines require a survey or plot map for the appraiser.

No. All work must be completed by the builder.

While the VA technically allows it, no lender will allow owner-build. So in practice, no.

Costs vary widely by builder and location. You can reduce cost with a production builder and standard materials, or spend more with a custom builder for higher quality. Balance quality, cost, and location, but never compromise experience for price.

If you own land with equity, closing costs can often be covered by a builder credit structured into the loan. If you are buying land and building at the same time, plan on $5,000 to $10,000 in cash at closing, depending on construction cost, interest rate, and credit. That covers closing costs only. There is no down payment. For exact figures, complete a loan application.

Yes. What matters is your remaining entitlement. When you use a VA loan, a portion of your entitlement is tied to that property. If that loan is still active, your remaining entitlement determines how large your next VA loan can be without a down payment, that's calculated during pre-approval. If your remaining entitlement is limited, the VA allows a second loan but you may need a down payment to cover the gap. Many veterans sell their current primary residence to restore full entitlement before building, maximizing their benefit and avoiding a large down payment.

We need a completed loan application to provide this information. Start your pre-approval here: Start your secure application

Your interest rate is determined by your credit score. We cannot discuss a specific rate without a completed loan application. Start your pre-approval here: Start your secure application

Most lenders close a few of these per year. Noso lives in this space. We understand builder acceptance, draw schedules, entitlement, and how to structure deals so they actually close. With construction loans, the difference isn't rate, it's execution. One mistake can delay your build or kill the deal entirely. No one in the VA construction loan space has the volume and consistency of Google reviews that Noso does. The track record speaks for itself.

Closing costs can be covered by a builder credit. You cannot roll closing costs into the loan. They can only be paid through a builder credit.

Your total acquisition cost is the cost of land, the cost to build, a 5% builder contingency for cost overruns, your interest rate reserve, your construction draw fees, and your title date down fee. All of that together makes up your total acquisition cost.

Land value has two impacts on your VA construction loan. First, if you're not exempt from the funding fee, having equity in your land that translates to equity on your appraisal will result in a lower funding fee. Second, if there is equity in your land and it transfers over to the appraisal, you can use that equity to cover closing costs through a builder credit.

On a VA construction loan, we build an interest reserve into your budget the same way you build in windows, cabinets, or a lumber package. It is calculated from three things: your total acquisition cost, the number of months your builder states it will take to build, and the construction interest rate at the time, which is market dependent. When the loan closes, the reserve is pulled out and placed in a subsidy account. Each month when a payment is due, it is drawn from that account instead of from you. The VA gives lenders two choices, collect interest from the borrower monthly or build it into the loan. We build it in. If the build runs past the months the reserve was sized for, the reserve runs out and you make the interest payments until the home is complete.

A builder contingency is 5% of your construction cost. It's put in place by the lender to protect you from cost overruns. For example, if your kitchen cabinets are budgeted at $30,000 but the actual cost comes in at $40,000, that $10,000 difference gets pulled from the contingency instead of the builder coming to you for the money out of pocket. Don't let any lender who skips the contingency tell you that's a good thing, it's there to protect you. If the builder doesn't use any of the contingency funds, it gets reduced from your total loan amount when construction is completed and the loan modification takes place.

Since a VA construction loan is 100% financing, your builder needs to have their numbers dialed in tight. While there is a 5% contingency built into the loan to protect you from cost overruns, that's a safety net, not a cushion for sloppy budgeting. A good builder should know their costs well enough that the only reason numbers come in off is something unexpected that neither the builder nor the client could have anticipated.

The appraisal is one of the most important documents in your VA construction loan. It tells us whether your total project cost is supported by the current market value, and ultimately whether we can close the loan. Most of the time, projects meet their appraised value. Occasionally, you'll run into situations where a client is over-improving for the area, or a builder is charging more than the local market can support. Either scenario can create an appraisal gap that puts the deal at risk.

First we file a reconsideration of value directly with the VA and fight the number. I have won these. If we lose and the project is short, there are a few ways forward. You can walk away, though almost nobody does after putting this much time in. The builder can reduce their profit. You can trim amenities now and add them back during the build using contingency funds, as long as there are no cost overruns. You can also choose not to pad the interest reserve, which lowers the loan amount, but it means that if the builder runs past the stated build time, the interest payments become yours.

A construction draw is how your builder gets paid for completed work during the build. Draws are issued for finished work only, never for work planned or in progress. The process: your builder completes a draw request form, with help from our construction coordinator if they need it. We send it to the lender's draw team, who orders the inspection. The inspection company sends your builder a link. The builder goes to the job site, takes photos of the completed work, and uploads them. The inspection company reviews the photos to confirm the work matches what was budgeted and signs off. The lender then releases the funds to the builder. Read the full guide to how construction draws work.

Five business days from the time your builder uploads the photos. The delays we see are almost always on the builder's end: an incomplete form, or photos that do not clearly show the work being claimed. Our construction coordinator walks the builder through the form so it is right the first time. Read the full guide to how construction draws work.

The modification is the step that converts your loan from its construction phase into the permanent loan. When your home is complete, the lender balances out your budget. Any contingency funds that were not spent are removed from the loan amount. That is also when you find out whether you get a rate modification. The rate you locked cannot go up. If the market is lower at that point, the lender modifies it down and charges one eighth of a point for the modification. If the market is not lower, you keep the rate you locked. Go in with the right expectation: a VA One-Time Close is the highest risk product in the VA lineup and that risk is priced in. You are not going to see a modified rate that matches a VA purchase rate.

Before the loan closes, so you close knowing your rate. A rate can be locked any time after the loan is disclosed to you, but I choose to lock once two things are back: the appraisal and title insurance. If the appraisal comes in short and we need a reconsideration of value with the VA, that can take longer than a 30 day lock allows. Title is the same story. Land transferred within a family is often done incorrectly and the abstractor has to do research before issuing insurance. Locking after both are clear means the lock does not expire while we wait. The rate you lock is yours for the life of the loan and it cannot go up. At modification, when the home is complete, the lender reviews it against the market, and if the market is lower your rate comes down.

There is nothing to choose from. The modification is handled by the lender's construction team when the budget is balanced out at completion. Your locked rate cannot go up. If the market is lower that day, it is modified down. If not, you keep your lock.

A title date down is when the title status changes from construction to permanent. When your loan first closes, it's recorded in a construction status. Once the project is completed, the title company that closed your loan issues a title date down, officially changing the status from construction to permanent.

The VA funding fee is a one-time fee charged on VA loans that helps fund the VA loan program so it can continue to operate for future veterans. It applies to veterans who are not receiving disability compensation of 10% or higher. Veterans with a service-connected disability rating of 10% or more are exempt from the funding fee. The amount of the funding fee is based on your loan-to-value ratio.

The VA funding fee is calculated as a percentage of your total loan amount, not the purchase price. The percentage depends on whether it's your first time using your VA loan benefit and how much down payment you're putting down. For purchase and construction loans: first-time use with no down payment is 2.15%, first-time use with 5% to 9% down is 1.5%, and first-time use with 10% or more down is 1.25%. For subsequent use with no down payment, the fee jumps to 3.3%, but drops to 1.5% with 5% to 9% down and 1.25% with 10% or more down. The funding fee can be paid in cash at closing or financed into the loan. It is the only closing cost that can be financed into a VA loan.

You are exempt from paying the VA funding fee if you receive VA disability compensation for a service-connected disability rated at 10% or higher, if you are eligible to receive VA disability compensation but are receiving retirement or active-duty pay instead, if you are a Purple Heart recipient currently serving on active duty, or if you are a surviving spouse receiving Dependency and Indemnity Compensation (DIC). If you are later awarded a retroactive disability rating dated before your loan closing date, you may be eligible for a full refund of the funding fee you paid, but you have to initiate that process yourself, as the VA does not automatically issue refunds.

Yes. The VA funding fee can be financed into the loan. In fact, most VA borrowers choose to finance it rather than pay it out of pocket at closing. It is the only closing cost that can be financed into a VA loan. Keep in mind that financing the fee increases your total loan amount, which means you'll pay interest on it over the life of the loan.

A one-time close means you close before construction starts. Everything is based on your specs and plans, the appraisal is done upfront, and there's one underwriting process and one set of closing costs. A two-time close means you first close on a short-term construction loan, typically a conventional adjustable rate, and then close a second loan to pay off the first one when construction is complete. That means two sets of closing costs, two appraisals, and two separate underwriting processes. In my opinion, a one-time close is the safer route because it removes the unknown of what can happen over the next 10 to 12 months of construction. What if someone loses their job? What if a credit score drops? What if home values decline and the second closing falls apart? A one-time close locks everything in upfront and takes that risk off the table.

The VA does recognize a two-time close structure, under VA Circular 26-18-7, but in it the construction loan is not VA guaranteed. The first loan is a conventional construction loan, usually adjustable rate, which means conventional guidelines on credit score, down payment, and debt to income. Your VA benefit comes in at the second closing to take out the permanent loan, assuming you still qualify when the time comes. In practice I have never seen a lender actively offer a VA two-time close, and no veteran has ever brought me one. What gets offered is a conventional construction loan followed by a VA loan later. Read how to tell the two apart.

The lender requires that the builder has been in business for at least 2 years and has completed a minimum of 5 ground-up construction projects. Ground-up means building a single-family home on an undeveloped piece of land. A garage extension or a shed does not count. The builder must also have a Paydex score of 65 or higher through Dun & Bradstreet, which reflects their business credit and payment history. Read the full guide to how builder acceptance works.

If your builder doesn't meet the lender's requirements, the lender will not accept them into the construction program and you'll need to find another builder. In my opinion, if a builder can't meet these requirements, 2 years in business, 5 completed ground-up homes, and a Paydex score of 65, that's not a builder you want managing a 10 to 12 month construction project with your VA benefit on the line. These aren't unreasonable thresholds. They exist to protect you, and any experienced builder doing this work consistently will clear them without issue. Read the full guide to how builder acceptance works.

If the builder completes the questionnaire accurately and provides all the necessary documentation upfront, the lender's review typically takes 1 to 3 business days. Where delays happen is when the builder submits incomplete paperwork or doesn't respond quickly to follow-up requests. The smoother your builder handles the acceptance process, the faster we can move forward, and honestly, how a builder handles this step tells you a lot about how they'll handle the rest of the build. Read the full guide to how builder acceptance works.

The builder must provide the following documents to be accepted into the lender's construction program: a general contractor's license, liability insurance reflecting a minimum of $1,000,000 in coverage, workers' compensation insurance if they have employees, a copy of their driver's license, a completed builder questionnaire, and a W-9 using the current IRS revision dated March 2024. Submitting outdated forms or missing documents will delay acceptance, so make sure your builder has everything ready to go before submitting. Read the full guide to how builder acceptance works.

Twelve months, split as 11 months for construction and the final month for the reinspection, budget balance, and loan modification. Your builder controls the construction schedule, so a builder who manages their timeline and communicates is critical.

Nothing catastrophic. There is no requalification at any point on a VA One-Time Close, unlike conventional construction loans. Before construction begins your builder signs a memorandum of understanding requiring them to tell us if they are falling behind the 11 month schedule. The real consequence of running long is the interest reserve. It is sized to the months your builder stated, and if the build outlasts it, you make the interest payments until the home is complete and the loan is modified.

Once the certificate of occupancy comes in, several things happen to close out your project. You will need a homeowner's insurance policy in place. The title company issues a title date down changing the status from construction to permanent. The lender's construction team balances out the budget, removing any unspent contingency, and orders the appraisal reinspection. The appraiser goes back to the home, adds completed photos to the report, and provides a completion report. The lender then sends you the modification agreement. One detail about the final draw: if the builder is owed $100,000 when the CO comes in, the lender releases $80,000 and holds back $20,000. The holdback is a flat $20,000 regardless of project size, and it is released when you sign the modification agreement after the reinspection. It exists to protect you. If the builder changed the bedroom count, altered a bathroom layout, or deviated from the approved plans, they have skin in the game to correct it before the final funds are released.

The VA requires that your builder deliver a 100% complete, turnkey home. That means everything must be finished before you can close out the project, no unfinished rooms, no missing fixtures, no incomplete work. A common one that catches people off guard is landscaping: even if you don't want to invest in a full landscape package, the VA requires at minimum grass seed and straw. Appliances must also be installed in the home. And all work must be completed by the builder, no part of the project can be left for you to finish on your own.

Before you buy land, or if you already own it, you need to get a soil scientist out to the property. The soil test results will determine where your well and septic can be placed, and whether the land can support them at all. This is not optional. As part of the closeout process when construction is completed, you'll also need a well water test to confirm the water meets safety standards before the project can be finalized.

Yes, you can build on family land or gifted land. In fact, most of our clients do. The key requirement is that the land must be titled in your name. As long as the title is clean and in your name, it doesn't matter whether you purchased the land, inherited it, or received it as a gift.

Every change order must be approved by the lender's construction team. That language is in the VA addendum you and your builder sign before closing. A change that seems minor to you can cause the appraisal reinspection to fail, and a failed reinspection stops the modification to your permanent loan, which is catastrophic for the transaction. Never make changes without consulting the lender first.

Yes, you can absolutely buy land and build at the same time with a VA one-time close construction loan. However, there is a specific protocol that must be followed. Before you even think about putting an offer on land, you need three things already in place: you must be pre-approved, your builder must be accepted into the construction program, and you must have your blueprints and final plans completed. Do not go under contract on land without these steps done first. If everything is lined up, great, but if it's not, you're going to need at least a three-month closing period to get it all in order, and that can create problems with your land contract.

Yes, you can have multiple VA loans at the same time. However, your second VA loan will most likely be capped based on your remaining entitlement, which is shown on the entitlement chart on your Certificate of Eligibility. We'll figure out exactly what you qualify for during pre-approval. Keep in mind that if this is a subsequent use of your VA benefit, your funding fee also increases, from 2.15% to 3.3% with no down payment. Many veterans choose to sell their current property first to restore full entitlement and avoid both the cap and the higher fee.

Yes. VA loans are for primary residences only. You must intend to occupy the home as your primary residence within 60 days of the project being completed. You cannot use a VA construction loan to build a rental property, vacation home, or investment property.

Noso Funding operates in Georgia, North Carolina, South Carolina, and Tennessee.

Modular homes, yes. Manufactured homes, no. Barndominiums, metal buildings, shop garages, and outbuildings are all allowed. Whether they work is decided by the appraisal, and you do not know until you get there. One warning on barndominiums: they are not the shortcut people expect. We have never seen a 4,000 square foot barndominium appraise or sell for a fraction of what a stick built home costs. They cost as much, and often more.

We get your Certificate of Eligibility for you through the VA portal when you complete your loan application. It's the first step in our process, you don't need to track it down yourself.