How Can a Builder Become Approved to Build for a VA Loan?

The Department of Veterans Affairs, or VA, doesn't "approve" builders that are paid with VA loans. Yet participating builders must obtain a VA builder ID number. To obtain a number, the builder registers with the VA; the process takes two or three days. To locate a local VA Regional Loan Center at which to register, visit the Department of Veterans Affairs website.

Process

Registering for a VA builder ID number involves submitting three documents to the local VA Regional Loan Center. All of the forms are available online at the Department of Veterans Affairs website. The documents include the builder information and certification, as well as Form 26-421 — the Equal Employment Opportunity Certification — and VA Form 8791, or VA Affirmative Marketing Certification.

Documents

The builder information and certification is an affidavit that the builder prints on his business letterhead. It discloses the principles in the business and accepts the VA requirements involving fairness. The affidavit must include a list of all persons with a controlling or propriety interest in the construction company, including principle shareholders and board members. The VA requires that the builder keep this information updated. With forms 26-421 and 8791, the builder acknowledges and agrees to the terms regarding the VA standards for equal employment opportunity and affirmative marketing.

VA Loan

The Department of Veterans Affairs doesn't fund a VA loan; it insures the loan, making it possible for qualifying applicants to obtain a home loan for little or no down payment. This is similar to private mortgage insurance, which insures a portion of the loan amount in lieu of a larger down payment. Those eligible for VA loans include qualifying veterans, spouses of military personnel missing in action, and unmarried widows and widowers of qualifying veterans killed while in the service.

Construction Loan

The VA guarantees a loan used to finance the construction of a new home when using a contractor registered with the VA. Prior to the start of construction, the loan closes, with funds put into escrow to pay out to the builder during construction. Registering with the VA doesn't guarantee the contractor will perform to the borrower's satisfaction.

Suspension

If a builder on a home constructed with a VA loan refuses to correct a defect, the VA doesn't have the authority to force the builder to make the repair. However, the VA has the authority to suspend the builder from the program, preventing him from working on future VA loan-funded projects.

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