Can You Build a Modular or Manufactured Home with a VA Loan?

If you're a veteran or active-duty service member looking to build an affordable and comfortable home, you may have wondered: Can you build a modular or manufactured home with a VA loan? The answer is yes, but there are important distinctions and requirements you need to know before starting your homebuilding journey.

In this guide, we’ll explain how the VA loan program works with modular and manufactured homes, what the eligibility requirements are, and tips to navigate the process smoothly.

Understanding VA Loans for Home Construction

The VA loan, backed by the U.S. Department of Veterans Affairs, offers qualified military borrowers a chance to finance a home with zero down payment, competitive interest rates, and no private mortgage insurance (PMI). While it's traditionally used to buy existing homes, the VA loan can also be used to build a home including certain types of modular and manufactured homes.

However, building a home especially a manufactured or modular one with a VA loan comes with some additional rules and steps.

What’s the Difference between Modular and Manufactured Homes?

Before diving into VA loan eligibility, it’s important to understand the distinction between modular and manufactured homes:

Modular Homes

• Constructed in sections in a factory and assembled on-site.
• Must conform to local and state building codes.
• Often indistinguishable from site-built homes.
• Typically placed on a permanent foundation.

Manufactured Homes

• Built entirely in a factory and transported to the site.
• Must meet HUD (Department of Housing and Urban Development) building codes.
• May be single-wide, double-wide, or triple-wide units.
• Can be placed on permanent or non-permanent foundations (VA loans require a permanent one).

Can You Build a Modular Home with a VA Loan?

Yes, you can build a modular home using a VA construction loan, as long as it meets VA and local building requirements. Since modular homes are considered similar to traditional site-built homes in terms of construction standards, the VA views them more favorably.

Key Requirements:

• The modular home must be affixed to a permanent foundation.
• It must meet all local and state building codes.
• The builder must be VA-approved.
• The VA will require inspections during construction.
• The home must be used as your primary residence.

Can You Build a Manufactured Home with a VA Loan?

Yes, but with more limitations. Manufactured homes can be financed with a VA loan, but the process is more restrictive compared to modular homes.

Requirements for Manufactured Homes:

• Must be built after June 15, 1976, in compliance with HUD code.
• Must be double-wide or larger in most cases.
• Must be placed on a permanent foundation.
• The home must be titled as real property (not personal property).
• The lender must be willing to finance manufactured home construction, which not all VA-approved lenders do.

VA Construction Loan for Modular or Manufactured Homes

The most common way to build a modular or manufactured home with a VA loan is through a VA construction-to-permanent loan. This type of loan allows you to finance both the construction and the mortgage in a single loan process, simplifying the steps and costs.

Steps in the Process:

1. Get Pre-Qualified: Work with a VA-approved lender who handles construction loans.
2. Choose a Builder: The builder must be VA-approved and familiar with modular or manufactured homes.
3. Submit Plans and Specs: Your lender and the VA must review the building plans.
4. Appraisal and Approval: The VA will appraise the home based on completed value.
5. Construction Phase: The lender disburses funds in draws as construction progresses.
6. Permanent Loan Phase: Once construction is complete, the loan converts to a standard VA mortgage.

Challenges You Might Face

While the VA allows construction of modular and manufactured homes, there are a few challenges you may encounter:

• Limited Lender Availability: Not all VA lenders offer construction loans, especially for manufactured homes.
• Stricter Requirements: Manufactured homes must meet specific HUD and VA guidelines.
• Longer Approval Times: Construction loans require additional steps like plan approval, builder certification, and staged inspections.
• Land Requirements: You must either own the land or purchase it as part of the loan. The land must be suitable and zoned for residential use.

Tips for Success

If you’re considering building a modular or manufactured home using your VA loan benefits, here are some practical tips:

• Find an experienced VA construction lender: Not all lenders support VA construction loans, and even fewer handle modular/manufactured home financing.
• Choose a VA-approved builder: This is mandatory, and the builder must meet VA’s criteria.
• Ensure the home is on a permanent foundation: A non-permanent foundation disqualifies your eligibility.
• Check local zoning and regulations: Make sure your property is zoned for the type of home you’re building.
• Be ready for extra paperwork: Construction loans involve more documentation, including blueprints, permits, and cost breakdowns.

Final Thoughts

Yes, you can build a modular or manufactured home with a VA loan, but it requires careful planning and working with the right professionals. While modular homes are generally easier to finance through the VA due to their construction standards, manufactured homes come with more restrictions but are still an option.

By understanding the VA’s requirements and choosing the right lender and builder, you can use your well-earned VA benefits to build a home that’s affordable, energy-efficient, and built to last. Whether you choose modular or manufactured, your dream of homeownership is well within reach.