To build, buy, or refinance. Call our experts at: phone icon1-844-422-3622

AAFMAA Mortgage Services

Military Construction Loans from AMS


Limited-Time Rate-Lock

Concerned about interest rates? Your timing couldn’t be better! Right now, we’re offering a four- to-nine-month rate lock on our construction loan products, giving you more time to build your home. There’s no upfront fees or add ons with this extended rate lock option and you’ll have a one-time float-down option if rates do drop. Call 844-422-3622 for more information.

Military Construction Loans from AMS

If you’re an active-duty servicemember or a Veteran who plans to build your own home, get to know our VA construction financing. 

VA construction loans offer some of the same advantages as VA-backed purchase and refi loans, such as not having to take out private mortgage insurance (PMI). However, on permanent financing with a VA Home Loan, depending on your circumstance, you may have to pay a funding fee. For regular military borrowers with no down payment, the funding fee is 2.3%. The fee increases to 3.6% for borrowers with previous VA Loans. For those with a down payment of 5% to 9%, the funding fee is 1.65%. 

Any loans with a down payment of 10% or higher will include a funding fee of 1.4%. However, there’s no funding fee for those receiving VA disability or qualified surviving spouses. For construction loans not guaranteed by the VA, there is no VA funding fee, but other fees may apply and you should ask your lender for details./p>

Related: VA Funding Fee Reduced for Certain VA Loans

VA construction financing is not available through all VA-approved lenders. “It’s a specialty product that requires quite a bit of oversight and paperwork,” explains Mark Wendler, manager of the AAFMAA Mortgage Services LLC (AMS) office in Denver.

“First, you’ll need to qualify for the loan and prove that you’re an eligible servicemember or Veteran. You'll need to provide a certificate of eligibility (COE),” he notes. You’re generally eligible for a COE if you’ve served at least 90 days of active military service or completed six years of honorable service. Find specific eligibility requirements here.

Additionally, you must:

  • Find a properly licensed and insured VA-approved builder.
  • Submit a complete set of plans from the builder when you apply for the loan.
  • Have the plans for the home appraised by an appraiser who is familiar with VA construction loan guidelines.
  • Provide any additional documentation about the materials to be used (as needed).

To help secure your construction loan, you’ll want to get pre-approved for it. “This is an essential step because it gives you an idea of the type of house you can afford to build, and shows your builder that you’re committed to seeing this process through,” says David Lang, an AMS Military Mortgage Advisor in the Denver office.

Unlike a typical mortgage, you won’t receive the funds immediately upon closing, Lang points out. Instead, the funds will be dispersed depending on your project’s timeline, with the remainder held in an escrow account to be withdrawn on an as-needed basis.

“The good news is these loans can be closed as fast as 30 days. They also offer a lot of flexibility that meet the needs of someone just purchasing land and planning to build someday, as well as to Members who've already found a builder and are looking to break ground,” adds Wender.

Construction Financing from AMS

AMS proudly offers four construction loan products. Here’s the breakdown of our three most popular — one is sure to best fit your home construction needs!

1. Construction Advantage 80SM Loan

If you already own a lot or you’re buying a piece of property to build on, the Construction Advantage 80 Loan provides financing for the home construction.

This product offers flexible terms and competitive rates — including up to seven draws to pay your builder as construction is completed and verified. Plus, you only pay interest payments during the term of the loan, usually 12 to 18 months. “Once the home is completed, AMS can help you obtain a permanent mortgage from a wide range of options including VA, FHA, and conventional loan products,” Wendler says

This loan is only available for your primary residence, and you’ll need a minimum credit score of 680. You can borrow up to 80% loan-to-value (based on estimated appraised value of land and home) for loan amounts of $200,000 to $2 million.

2. Construction Advantage 95SM Loan

Our Construction Advantage 95 Loan will finance purchasing buildable property or you can purchase a lot from a builder selling the lot as part of the construction contract — and best of all your loan can be processed and approved in 30 days. “You can work with any builder you choose,” notes Lang. “However, we will require certain information and documents from your builder as part of the loan approval process. The builder is then paid based on completion of progress with an inspection at every draw stage of the loan,” he says.

To qualify you’ll need a minimum credit score of 680. This product lets you borrow up to 95% loan-to-value (based on estimated appraised value of land and home) for loan amounts from $200,000 to $2 million. This loan is only for primary residences.

3. Land Advantage LoanSM

Our Land Advantage Loan allows servicemembers and Veterans to finance the purchase of a plot of land up to 20 acres to build a primary residence. You’ll need a credit score of at least 680 and be able to put 25% down.

The land must be zoned for residential use, accessible (with a road on at least one side), and meet the minimum water and sewage requirements. Says Lang: “When you’re ready to build, you’d get a construction loan like those listed above to pay off the land loan. Typically borrowers pay interest-only payments during construction. When the house is complete, the construction loan would be converted into permanent financing.”

Advantage: AMS

One feature of using AMS for a construction loan is that when determining your loan-to-value ratio (LTV), AMS uses the appraised value of the home, including the equity in the lot, whereas other lenders might only use the cost of the home. If the home appraises for more than the cost, that overage can be used by the homeowner as part, or all, of their down payment, reducing their out-of-pocket costs.

We’re Here to Help

Whether you’re thinking about buying, ready to start home-shopping in earnest, or considering a refinance, an AMS Military Mortgage Advisor will be happy to provide you with an honest and fair comparison of your mortgage options, including a wide range of affordable mortgages designed to meet your needs.

Ensuring AAFMAA Members obtain the best mortgage possible is our mission. Get your free mortgage assessment today or give us a call at 844-422-3622!