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 10% of the construction cost, max $50,000, 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.

The builder has options for verifying completed work - they can have a formal inspection, or they can upload photos or video of the completed work to speed up draw processing.

Your next step depends on where you are in the process. If we haven't spoken yet, the best thing to do is get on my calendar so I can learn about your project and make sure we're a good fit: Schedule a call with Ricky. If you've already spoken with me and you're ready to move forward, you can start the pre-approval process right here: Start your secure application

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.

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 structuring a builder credit into the loan. If you're purchasing land and financing construction simultaneously, you'll most likely need cash at closing. For exact figures, complete a loan application with Ricky Young.

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 create an interest rate reserve that's built into your budget just like you'd build in windows, kitchen cabinets, sheetrock, or a lumber package. The interest rate reserve is calculated based on your interest rate, how many months it will take to build your home, and your total cost. When the loan closes, the interest rate reserve is pulled out and placed in a subsidy account. Each month when you get a mortgage statement and your payment is due, instead of making a payment, the money is pulled from your subsidy account - that's where your payment comes from. The VA gives lenders two choices: collect an interest payment from the borrower on a monthly basis, or build the interest into the loan, pull it out at closing, place it in a subsidy account, and have payments made for you each month.

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.

We can do a reconsideration of value directly with the VA and fight the appraiser's valuation. I've had success fighting appraisal values directly with the VA. However, if we lose the reconsideration of value, the veteran and the builder typically have to redo their numbers, or the veteran has to bring cash to the table, or sometimes unfortunately the deal dies.

A construction draw is how your builder gets paid for completed work during the build. Draws are only issued for work that's been finished - not work that's planned or in progress. A third-party inspector goes to the job site, verifies the completed work, and signs off on it. The cost of the work must line up with what the builder originally put on the budget before funds are released.

For the draw process to move quickly, timing matters. The builder should order the inspection so the inspector arrives right as the work is being completed. When everything lines up, the draw can be processed and funds released within 2 to 3 business days.

The interest rate you close on at the start is a construction interest rate. When construction of your home is completed, one of the final steps is the loan modification. Our construction specialist team checks with the capital markets team at the time your home is finished, and that's when your permanent interest rate is determined - the rate you'll carry for the life of the loan.

No. You cannot lock your permanent interest rate before construction is completed. The rate you lock upfront before closing is your construction interest rate - that covers you during the build. Your permanent rate is determined when construction is finished and the loan modification takes place as part of closing out the project.

There are no options to choose from. Your permanent rate at modification is solely based on the market the day your project is being closed out by the construction specialist.

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.

There is no such thing as a VA two-time close construction loan. The first loan in a two-time close is always a conventional adjustable-rate construction loan, which means you'll be held to conventional lending guidelines - including credit score requirements, down payment, and debt-to-income ratios. Your VA benefit can only be used on the second closing to take out the permanent loan, and that's assuming you still qualify when the time comes.

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.

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.

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.

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.

The VA typically wants construction loans completed within 12 months - that means construction finished, the loan modified, and the package ready to send to the VA. Some projects do run over 12 months, but we aim to have construction completed in 11 months, leaving that final month for the re-inspection, appraisal update, and loan modification. Your builder controls the construction timeline, so having a builder who can manage their schedule and stay on track is critical.

Before construction begins, your builder signs a memorandum of understanding that requires them to notify us if they're falling behind the 11-month construction timeline. If the build does go past that mark, nothing catastrophic happens - unlike conventional construction loans, the VA does not require a re-qualification at 12 months. That said, staying on schedule matters. The goal is always to have construction wrapped up by month 11 so we have time to complete the re-inspection, appraisal update, and loan modification within that 12-month window.

Once the certificate of occupancy comes in, several things happen to close out your project. You'll need to get a homeowner's insurance policy in place. The title company will issue a title date down changing the status from construction to permanent. The construction specialist will balance out the budget, and the appraisal re-inspection will be ordered - the appraiser goes back to the home, adds completed photos to the report, and provides the lender with a completion report. The lender will then send you a modification agreement with your permanent interest rate. Here's an important detail about the final draw: if the builder is owed, say, $100,000 when the CO comes in, the lender will release $80,000 and hold back $20,000 until the appraisal re-inspection is completed. That holdback exists to protect you. If the builder didn't follow the specs and plans - changed the bedroom count, altered the bathroom layout, or deviated from what was approved - 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.

Before closing, both you and your builder will sign a document requiring that all change orders be approved by the lender. This means you cannot make any changes to the plans or specs without consulting the lender first. Even a change that seems minor to you could lower the appraised value or alter the terms of your loan. Never make changes without lender approval - it can put the entire project at risk.

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.

We offer VA construction loans on modular homes, but not manufactured homes.

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.