The VA currently offers lenders the ability to originate “consumer construction loans” to veterans, however, the VA states in the announcement that “the brevity of VA guidance has kept many lenders from offering the product.” On Friday April 6th, the VA replaced Chapter 7 Topic 2 (7-13) of the VA Lender’s Handbook in an attempt to provide clarification and guidance.
Some of the more interesting highlights in the changes include builder vs borrower paid costs, contingency fund requirements, lender change order acceptance, inspection requirements and project management.
The VA construction to permanent loan program will continue to provide the loan guarantee after the home is completed and prohibit the sale or securitization until said time.
The update does not specify an effective date or mandatory implementation date. To learn more about the program updates and receive a comparison analysis of the changes register below.