Yes. You can use a VA-backed loan to buy a new construction home in San Antonio, New Braunfels, Boerne, or anywhere around JBSA, and VA lists “build a new home” as an approved use. The home still has to appraise at or above the price for a no-down-payment loan, meet VA’s minimum property requirements, and come with a builder warranty that VA requires on new and proposed construction. Here’s what changes when the home is new, and what to ask the builder before you sign.
Brock Bremmer | U.S. Air Force Reserves Veteran | Real Estate Agent | eXp Realty | San Antonio Metro Area
New Construction and VA Buyer Specialist
Also see: VA Loan Guide for San Antonio | New Construction Inspections | Builder Lenders vs Outside Lenders
What Counts as “New Construction” to VA?
VA’s appraisal rules sort homes into a few groups, and the group affects the paperwork:
- New construction: A finished home that’s less than one year old and has never been occupied. Think of a move-in-ready home a builder finished before it sold
- Proposed or under construction: A home appraised from the plans and specifications before it’s finished. That’s the usual case when you sign on a lot and pick a floor plan
- Existing construction: A home complete for more than a year, or one that’s already been lived in
What Warranty Does VA Require From the Builder?
This is the part most buyers don’t hear about. From VA’s Lenders Handbook, Chapter 10:
- Finished new construction: The builder must give you either a 1-year warranty on VA Form 26-1859, Warranty of Completion of Construction, or a 10-year insurance-backed warranty
- Proposed construction where the local authority inspects: A 1-year warranty on VA Form 26-1859
- Proposed construction where the local authority doesn’t inspect: Both the 1-year warranty and a 10-year insurance-backed warranty
- Proof of completion: VA accepts a certificate of occupancy when the local authority does foundation, framing, and final inspections. Without local inspections, the lender has to certify the home is complete and meets VA’s minimum property requirements
That local-inspection question matters around San Antonio, because many new communities sit outside city limits. Ask the builder early which warranty package your lot will get. VA also notes its help with construction complaints is limited to defects reported during that required 1-year warranty period.
How Does the VA Appraisal Work on a New Build?
A VA-assigned appraiser gives an opinion of value, issued to your lender as a Notice of Value. The maximum VA loan is the lower of the price or the appraised value. If a new home appraises below the contract price, VA lists three options:
- Ask for a Reconsideration of Value: Your agent can send the lender valid sales data supporting a higher value
- Renegotiate: Ask the builder to lower the price to the appraised value
- Pay the difference: Bring the gap in cash at closing
VA also says your sales contract should include the “VA escape clause,” which lets you void the contract if the home doesn’t appraise for the price. Make sure a builder’s own contract has it too.
Can the Builder Pay My Closing Costs on a VA Loan?
Yes, within limits. VA doesn’t cap credits for normal closing costs. It does cap “seller’s concessions” at 4% of the home’s reasonable value. VA counts things like paying your funding fee, paying off your debts, or prepaying hazard insurance as concessions.
Builder incentives often get advertised as a flat dollar figure. Ask how the builder splits it between closing costs, a rate buydown, and upgrades, and whether it requires the builder’s preferred lender. Then have your lender check the total against VA’s limits. On a VA purchase loan, the funding fee is the only charge you can roll into the loan. Everything else gets paid at closing.
What Does a VA Loan Cost on a $400,000 New Build?
Here’s a simple example using VA’s funding fee chart (effective April 7, 2023) for a first-time user with no down payment:
| Item | Amount |
| Contract price and appraised value | $400,000 |
| Down payment | $0 |
| Funding fee, first use, under 5% down (2.15%) | $8,600 |
| Loan amount if the fee is financed | $408,600 |
| 4% seller concession limit | $16,000 |
- Subsequent use: The fee is 3.3% with less than 5% down, 1.5% with 5% or more, and 1.25% with 10% or more
- Exemptions: Veterans receiving VA compensation for a service-connected disability, among others listed by VA, don’t pay the funding fee
- Lender fees: VA notes many lenders charge VA borrowers a 1% origination fee, and some fees are negotiable. Compare Loan Estimates
Rates, approval, and payments come from your lender, not VA. Get your Certificate of Eligibility early, especially if you’re timing a closing around PCS orders.
Can I Build on My Own Lot With a VA Loan?
VA also backs construction/permanent loans, where one loan covers the build and then converts to your mortgage. Fewer lenders offer them than standard purchase loans, so start that search early. If you’re buying from a production builder in a master-planned community, a regular VA purchase loan is the simpler path.
Frequently Asked Questions: VA Loans on New Construction
Do I need a down payment to use a VA loan on a new construction home?
Usually not. VA says a VA-backed purchase loan often requires no down payment as long as the price isn’t higher than the appraised value. Your lender still has to approve you based on credit, income, debts, and assets.
Does a VA appraisal replace a home inspection on a new build?
No. VA says its appraisers are not home inspectors and strongly recommends a separate inspection. On a new build, phase inspections during construction can catch problems before drywall and closing.
Ready to Buy a New Home With Your VA Loan?
Brock Bremmer with eXp Realty is a U.S. Air Force Reserves veteran who has helped buyers and sellers close 120+ homes across the San Antonio metro. He helps VA buyers compare builders and incentives, check warranty and appraisal terms in builder contracts, line up independent inspections, and coordinate with VA lenders around PCS timelines.
- 📞 Call or text: 210-501-5088
- 📧 Email: [email protected]
- 📅 Schedule a free consultation
Also see: Using Your VA Loan Again | PCS to San Antonio | Buying Near JBSA-Lackland | VA Loans in New Braunfels | Meyer Ranch Buyer’s Guide
Sources: VA, purchase loan; VA, funding fee and closing costs; VA, buying a home with a VA-backed loan; VA, entitlement and limits; VA Lenders Handbook, Chapter 10, Topic 15; VA 2023 appraisal training (Chapter 10 property types); 38 CFR 36.4367; VA Form 26-1859; VA, resolving a builder dispute.