Buying land opens the door to many opportunities. You can build your dream house, create a getaway for your family, or even start a business — all on your own terms. If you’re a veteran or military member, you might even get to use your VA loan entitlement to pay for it.
Maybe.
While you can use a VA loan to finance a land purchase, it can be challenging, and there are some strict restrictions you’ll need to meet first. For one, you’ll need a plan for what you’ll build on the property. Beyond that, the property (and how you use it) will need to meet certain requirements.
Summary:
- VA loans can be used to buy land, but only if you build a property on it.
- You’ll also need to live in the property, and it must meet the VA’s minimum property requirements.
- Finding VA loans to buy both land and build a home can be challenging, as few lenders offer them.
- Fortunately, there are a few alternative financing approaches you can explore.
How to buy land with a VA loan
To buy land with a VA loan, you’ll need to use the loan to purchase both the plot of land and the property you’ll build on it. You cannot use a VA loan to just buy land and leave it undeveloped. VA loans are strictly for primary residences, so you must plan to build a home on the land in order to use this type of financing.
Another option is to use a different financing method to buy the land and then use your VA loan entitlement to finance the construction of the house. You could also use another loan to buy the land and build your home. Then, at a later date, refinance the entire property using a VA loan. We’ll go into these alternatives more later.
Requirements for VA loan land purchases
The biggest requirement, if you’re using a VA loan to buy land, is that you’ll need to build a property on it immediately with a VA-approved builder — and plan to live in it as your primary residence for at least one year.
The home must also meet the VA’s minimum property requirements as well, which include:
- Working electric, heating, and cooling systems
- Adequate roofing that will last the foreseeable future
- A clean, continuous water supply and sanitary facilities
- Safe and sanitary sewage disposal
- No lead-based paint, wood-destroying insects, fungus, or dry rot
- Access from an all-weather public or private street
- Properly vented and accessible attics and crawl spaces
Your lender will order a VA appraisal to confirm the property meets these requirements before closing on your loan.
These types of loans aren’t common
Only certain lenders are authorized to offer VA loans, and even among these companies, most don’t offer VA construction loans — loans you can use to both buy land and construct a property. For this reason, you may have trouble finding one of these loans.
There are some smaller regional lenders that offer them. Examples include Hurst VA Mortgage, SoCal VA Homes, and Florida Mortgage Firm.
Take the Guesswork out of Finding a VA Lender
Check your VA Home Loan eligibility and get personalized rates. Answer a few questions and we’ll connect you with a trusted VA lender to answer any questions you have about the VA loan program.
Alternatives to a VA land loan
If you’re unable to find a VA loan to use for both the land and home construction, there are other alternatives.
First, you could purchase the land using another type of loan. Then, use a VA construction loan to finance the building of the property. Again, VA construction loans are uncommon, so this may still be a hard strategy to make work.
Another option is to buy land and build a house with different financing, and then, later on, refinance into a VA loan. With this method, you could consider loan options such as:
- FHA loans: The Federal Housing Administration loan program can be used to finance the construction of a house as well as the land you’re building on. These require just 3.5% down.
- Conventional loans: You can also use a conventional loan to buy land and build a home. These can be short-term — funding only through the construction period — or construction-to-permanent, meaning they transition into a long-term conventional loan once the home is done.
- Construction and land loans: Some lenders offer proprietary construction and land loans you can use to buy land and build on it. Look to community banks and credit unions in your area if you’re considering this option.
- Home equity loans: If you have an existing property, you may be able to borrow against the equity you have in it and use that to buy land or build a property. It can also serve as the down payment on your next mortgage.
The right approach depends on your goals and your location. Reach out to a mortgage professional if you’re not sure how to finance your land purchase — and make sure they’re approved to offer VA loans. They’ll be able to best advise you on how to use your VA loan entitlement wisely.
More Reading
VA Loan Eligibility Requirements
How to Get a VA Loan Certificate of Eligibility
2024 VA Loan Limits by County – How Much House Can You Buy?
VA Renovation & Home Improvement Loans
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