You can build a house with a VA loan and put nothing down. The program is called a VA one-time close, it covers the land purchase and the construction in a single loan that converts to a permanent mortgage when the home is finished, and almost nobody uses it. Not because veterans don't want to build — because finding a lender and a builder willing to do it is the hard part. Whether you should fight that fight or take the easier two-loan route depends on two things: how much cash you have, and how flexible your builder is.
How the One-Time Close Actually Works
One closing, one set of closing costs, one rate locked before ground breaks. The loan funds the land (or pays off a land loan you already have), pays the builder in scheduled draws as construction progresses, and converts to a standard 30-year VA mortgage at completion. With full entitlement there's no VA loan limit, so the program scales to California build costs — an $800,000 land-plus-build project in Riverside County works the same way a $400,000 one does in Bakersfield.
You typically make no mortgage payments during construction. Interest accrues during the build and is handled within the loan structure, which matters enormously if you're paying rent while you wait. When the certificate of occupancy is issued, the loan modifies into its permanent phase and regular payments begin. No second appraisal, no requalification, no second set of fees.
The mechanics during the build look like this: the lender approves a draw schedule tied to construction milestones — foundation, framing, rough-in, drywall, completion is a typical pattern. At each milestone, an inspector verifies the work, and the lender releases that draw to the builder. The inspections protect you as much as the lender; a builder who can't pass a draw inspection is a builder you want to discover at the framing stage, not at closing.
What It Takes to Qualify
The borrower side looks like any VA loan: Certificate of Eligibility, residual income, credit per the lender's overlay (620-660 is the realistic floor for construction, even though the VA itself sets no minimum). The project side is where the requirements stack up: