VA Construction Loan Lenders: How to Choose One in Maine

I started in 2004 and I'm still here. A lot of veterans call me after three or four lenders told them the same thing: "We do VA, just not construction." That's not a VA rule. VA guarantees loans to build a home. The problem is the lenders.

Why most VA construction loan lenders say no

Before VA updated its construction guidance in 2018 (Circular 26-18-7), many lenders stayed away from VA construction loans. Even now, a construction loan is more work than a purchase. In my experience, lenders say no because of:

Draws. The lender has to manage money going out to the builder in stages, and get your written approval before each draw.
Builder risk. The lender has to vet and approve your builder, and stay with the file if the build runs late.
Appraisal on plans. The home is appraised as it will be when finished, not as it stands.
Time. A purchase closes and it's done. A construction loan is open for months.

Most shops would rather not carry that. So they say no, or they push you into a two-time close: a short-term construction loan, then a second closing, which usually means a second round of closing costs, and a second time qualifying.

How I close it as one loan

With a VA one-time close construction loan, the construction and permanent financing close together before ground breaks. The builder is paid in draws as the house goes up. When the home passes final inspection and meets VA minimum property requirements, the loan is already your permanent mortgage. No second closing.

The loan can cover the contract to build, plus the lot at cost if you bought it within a year, or at value if you've owned it longer or it was gifted to you free of liens. Interest and contingency reserves and permits can go in too. VA allows no down payment as long as the price isn't higher than the appraised value, with no monthly mortgage insurance. A funding fee applies unless you're exempt. Not everyone will qualify.

Questions to ask any VA construction lender

Is it truly one-time close? Ask whether you'll sign once, or whether there's a second closing at the end.
Who approves my builder, and how long does it take? Get the builder's paperwork started early.
How are draws handled? Ask how many draws, who inspects, and how fast the builder gets paid. Slow draws stall builds.
Do you have your own requirements on top of VA's? Some lenders add their own rules on construction loans. Get them in writing up front.
What happens if the build runs long? Ask about interest reserves and extensions before you need them.
Have you closed one in Maine? Wells, septic, frost and private roads are normal here. You want someone who's seen them.

Red flags

"We'll do it, but you'll need to refinance into VA after it's built." That's a two-time close, not one.
"Your builder needs a VA builder ID." VA dropped that in March 2025. Builders still need Maine and local licensing, bonding and insurance.
Nobody can explain the draw schedule.
The lender wants to finance a camp or a rental. VA is primary residence only.
Vague answers on extra lender requirements until after you've paid for an appraisal.

Maine first

Most of my VA construction calls come from Maine: veterans with family land, a wooded lot, or a camp road they want to build on. Read more on one-time close construction loans in Maine and VA loans in Maine. I'm licensed for residential home loans in Maine and Florida only, and VA construction is for a primary home only, a house you'll live in. If you're building outside Maine or Florida, I'm not the right fit. Building in Florida? See one-time close construction loans in Florida.

Who I am

Residential home loans in Maine and Florida. DSCR loans on investment and rental properties in 38 states.

Text me at (207) 615-7770 with your town and whether you have land, or use the contact form. I'll tell you straight whether your build fits.

Travis Penny, NMLS 1649161 | Vision Mortgage, NMLS 1286953. Subject to credit approval, income, property and program guidelines. Not all applicants qualify. Programs and guidelines can change without notice. Equal Housing Opportunity.

FAQ

Why won't my VA lender do a construction loan?

Most VA lenders only do purchases and refinances on finished homes. In my experience, lenders say no because construction means draws, builder approval and a loan that stays open for months, and many shops won't take that on. VA allows it. The lender chooses not to.

What's the difference between one-time close and two-time close?

One-time close puts the build and the permanent mortgage in one loan with one closing. Two-time close means a construction loan first, then a second closing, which usually means a second round of closing costs, and a second time qualifying.

Can I use a VA construction loan on land I already own in Maine?

Yes. Land you've owned for more than a year can count at its value, and land bought within a year counts at cost. Any lien on the lot gets paid off at closing.

Does my builder need to be VA approved?

VA no longer requires a builder ID. Your builder has to meet Maine and local licensing, bonding and insurance rules, and the lender has to approve them.

Is there a down payment on a VA construction loan?

VA allows no down payment when the price doesn't exceed the appraised value. Some lenders set their own requirements on construction loans. Not everyone will qualify.

Can I build a second home or camp with a VA construction loan?

No. VA loans are for a home you'll live in as your primary residence.