New Construction & the VA Loan
If you are shopping for new construction properties and find a newly built, never occupied house.
When the property is new, whether single family, multi-family, or a condo, what will the Veterans
Administration require? Why will this new construction property possibly be more complex, than
say an average lived in property?
The home buying process is usually a buyer and seller. With new construction it can be
the buyer, and sometimes multiple sellers & builders. This may bog down the paperwork
process, as the sellers huddle up to make decisions. Now add in the lender, attornies, and the
The absolute first thing to check is the road public or private. (The VA has lossened thier private road rules in 2022) Private roads might
require a private road agreement, if the new construction shares driveway access from the
house to the main street. The VA wants to ensure that the roads will be maintained. If there is
shared access the VA will require the neighbors sharing the private road from the new
construction to the main street, to sign a Private Road Agreement. This agreement will break
down responsibilities and expenses (should there be any).
A Home Owner Association, might
need to be established, to represent the owners on the road. (HOA) Ask your agent to look into
it. The builder and seller will know, if the road is private or public, as they will have to apply for
town permits, and conduct a survey, before building.
Pest inspections and pest treatment. Most home inspectors in Massachusetts do a
complimentary pest inspection. A pest inspection is required for any VA loan product property.
With new construction, the VA wants to know what treatment was done to the property. This will
include chemical composition, and areas treated. Also, the VA will ask if the materials of the
property are pest resistant, such as pressure treated lumber.
Builder VA ID. If they do not already have one, the builder will need to apply for this VA
identification number. This involves sending a packet of documents to the builder to fill out.
These documents include a letter, on the company letterhead. Sometimes builders operate
under multiple LLC’s, the VA will & lender will want evidence tying in the ownership to the
builder. Your REALTOR will handle the shuttling of documents from the lender, to the sellers,
and the VA. New construction builder documents are a collection of documents/surveys that
ask the builder various questions about the property. The builder will need to fill out these
(Subject: Instructions for obtaining VA builder acceptance and builder ID number To become an
accepted builder you must complete the following: 1. Builder Information and Certification (must
be completed on Builders Letterhead) 2. VA Form 26-421 (Equal Opportunity Certification) 3.
VA Form 26-8791 (VA Affirmative Marketing Certification)
Other things to be mindful of. Sometimes builders use the cheapest contractors, and
quality can vary. Definitely do a home inspection! However issues can arise at the close, or
after moving in, and it can take time to get the contractors back to the property to fix, and
issues. The VA mandates that the seller/builder do a warranty on the property for a year.
The Sellers’ financial situation can pose issues. The seller can run out of funds. This
can delay projects, and throw off closing timelines. Sellers/builders have high interest short
term loans, the debt service is expensive.
Closing on time. The previously discussed issues, like doing paperwork, finances,
permitting, private roads, ect, all can delay a new construction property.
Appliance allowances. My personal arch-nemesis. Often, builders will allow the buyer
to pick some appliances. Usually a set monetary amount is listed in the purchase and sale.
The buyer can spend their allowance and pick said appliances. Then they are delivered and
installed. An agent has to let the appliance people in and wait around while they install.
Sometimes there are different install windows. It can take 1-6 trips to the property to deal with
this. At 2-4 hours per trip.
Appraisal, unlike standard properties, the appraisal happens at the end of the process,
once the property is done, or very near done. The appraiser will check to make sure the
construction as stated in the purchase is done. Also, septic installs, appliance installs, and any
other construction elements need to be done.
Condos vs single & multi-families and new construction. Condos with new
construction, have the added element of having to be approved by the VA regional counsel, and
need to get on the VA condo approved list. However, condos are generally uniform, and
builders have a chance to ‘refine’ their construction methods, and generally run into less
construction delays, than say single family properties. For condos and their VA approval
process, please see my other guide on the VA Condo approval process
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