Take Out Loans
The VLB cannot lend interim construction money to build a home. However, a veteran may obtain interim financing from another source to build, and upon completion, finance up to $417,000 of the home through the VLB. This is known as a take-out loan.
A take-out loan may be made to finance a home that qualifies as new construction under the following conditions:
- The VLB home loan must be used to pay off the construction loan (interim financing).
- The term of the interim loan cannot exceed 24 months, and the original indebtedness must have taken place within 24 months of the closing date of the VLB home loan.
IMPORTANT: Please note the following:
- A veteran may occupy the newly constructed residence during the term of the interim loan and still qualify for a take-out loan.
- Two-to-four family units are not eligible for take-out loans.
- All new construction homes must meet:
- The Environmental Protection Agency's (EPA) guidelines for ENERGY STAR® qualified homes, and must be ENERGY STAR® labeled and certified; OR
- A HERS Index Score of 75 or less following the RESNET National Home Energy Rating Standards and must have an energy rating Certificate that documents the HERS Index score of 75 or less.