Government-Backed Financing

VA Construction Loan: Steel Building Financing Guide

The gold standard for eligible veterans — zero down, no PMI, lowest rates. Finding lenders who offer VA construction loans for steel buildings is the main challenge.

Good for Steel BuildingsBest for: Veterans and active-duty service members building a steel home who want the best loan terms

Min Down Payment

Typical Rates

5.25–6.25%

Max Term

30 years

Min Credit Score

620

Program Overview

VA home loans are backed by the Department of Veterans Affairs and offer the most favorable terms of any mortgage program — zero down payment, no PMI, competitive rates, and limited closing costs. VA construction loans allow veterans to build a custom home, though few lenders offer this product.

How It Works

The VA guarantees a portion of the loan, protecting the lender. VA construction loans can be structured as single-close (construction + permanent in one loan) or two-close. The Two-Step Strategy is often recommended for steel buildings: build with a conventional construction loan, then refinance into a VA permanent loan or VA IRRRL.

Administered By

Department of Veterans Affairs (VA)

Program Types

VA Construction LoanVA Purchase LoanVA IRRRL (Streamline Refinance)VA Cash-Out Refinance

Eligibility Requirements

Credit Score

620+ (lender minimum)

VA itself has no minimum credit score requirement. However, most lenders require 620+. Some specialty lenders go as low as 580.

Down Payment

No down payment required for veterans with full entitlement. A down payment can reduce the VA funding fee.

Income

No maximum limit

VA does not impose income limits. Qualification is based on DTI ratios and residual income — the amount left after all obligations.

Occupancy

Primary residence only

Must intend to occupy the home as your primary residence within 60 days of completion.

Eligible Property Types

primary residence

Eligible Building Types

barndominiumresidential

Additional Requirements

Service Requirement

Veteran, active duty, Guard/Reserve, or surviving spouse

Generally requires 90 days active wartime service, 181 days peacetime, or 6 years Guard/Reserve. Surviving spouses of veterans who died in service or from service-connected disability also eligible.

Certificate of Eligibility (COE)

Required

Must obtain a COE from the VA proving entitlement. Lenders can often pull this electronically.

DTI / Residual Income

41% DTI standard

41% back-end DTI is the guideline, but can be exceeded with sufficient residual income. Residual income requirements vary by region and family size.

Step-by-Step Process

Obtain Certificate of Eligibility

1–5 days

Request your COE from the VA to confirm your entitlement. Your lender can often pull this electronically.

Apply online at va.gov or have your lender pull it

Keep your DD-214 discharge papers accessible

Find a VA Construction Lender

1–4 weeks

Locate a lender that offers VA construction loans. This is the hardest step — very few lenders offer this product, especially for steel buildings.

Consider the Two-Step Strategy if no VA construction lenders are available

Nationwide lenders like Veterans United or NBKC may offer construction

Select Builder & Plans

2–6 weeks

Choose a VA-registered builder and finalize construction plans. Builder must be licensed, insured, and registered with the VA.

Builder must be VA-registered — verify with your lender

Plans must meet VA Minimum Property Requirements (MPRs)

Submit Application

1–2 weeks

Complete the full loan application with construction plans, builder contract, COE, and all financial documentation.

Include detailed specs showing the home meets VA MPRs

Provide comparable sales data for the appraiser

VA Appraisal & Underwriting

3–6 weeks

VA assigns an approved appraiser to review the plans and determine value. Underwriting reviews all documentation for VA compliance.

VA appraisals are ordered through the VA system — lenders cannot choose the appraiser

Tidewater process allows you to provide additional comps if appraisal is low

Construction Phase

4–12 months

After closing, construction begins with disbursements through a draw schedule. Inspections at each milestone.

VA may require additional inspections beyond lender requirements

Maintain close communication with builder and lender

Final Inspection & Move-In

2–4 weeks

After construction completion, final inspection confirms VA MPRs are met. Loan converts to permanent VA mortgage.

Must move in within 60 days of completion

Final VA appraisal confirms completed value

Financial Details

Down Payment

0% — no down payment required with full entitlement. Down payment can reduce the funding fee.

Interest Rates

VA rates are typically 0.5–1.0% lower than conventional rates. Approximately 5.25–6.25% as of 2026.

Loan Terms

30-year and 15-year fixed rate options. ARMs also available.

Fees

VA Funding Fee: First use — 2.15% (0% down), 1.5% (5%+ down), 1.25% (10%+ down). Subsequent use — 3.3% (0% down). Fee is waived for veterans with service-connected disability.

Insurance

No PMI or mortgage insurance of any kind. The VA funding fee is a one-time charge, not ongoing insurance.

Closing Costs

VA limits certain closing costs. Seller can pay all closing costs plus up to 4% in concessions. No prepayment penalty ever.

Loan Limits

No loan limit for veterans with full entitlement (after 2020 Blue Water Navy Act). Veterans with reduced entitlement follow county conforming limits.

Other Costs

VA Funding Fee can be financed into the loan. Exempt for disabled veterans, surviving spouses, and Purple Heart recipients on active duty.

Steel Building Considerations

VA loans can finance steel-frame homes and barndominiums, but finding lenders who offer VA construction loans for steel buildings is extremely difficult. The Two-Step Strategy is often the most practical approach.

Common Challenges

Very few lenders offer VA construction loans at all — even fewer for steel buildings
VA Minimum Property Requirements (MPRs) may require design modifications
VA-assigned appraisers may not have barndominium experience
Builder must be VA-registered, limiting your choices

Tips for Approval

Consider the Two-Step Strategy: build with conventional/portfolio, then refinance into VA
VA IRRRL (Interest Rate Reduction Refinance Loan) makes the refinance step simple and low-cost
Design the home to clearly meet VA MPRs — safety, soundness, and sanitary standards
Work with a lender who has specifically closed VA loans for steel-frame homes
The Two-Step approach often results in better overall terms than forcing a VA construction loan

Lender Advice

If you cannot find a VA construction lender for your steel building, use the Two-Step Strategy: 1) Build with a conventional or portfolio construction loan, 2) After completion, refinance into a VA purchase loan or VA IRRRL. This approach is used by the majority of veterans building barndominiums.

Pros & Cons

Advantages

Zero down payment
No down payment required — the most generous zero-down program available.
No PMI — ever
Unlike FHA and conventional, VA loans never require mortgage insurance at any LTV.
Lowest interest rates
VA rates are typically 0.5–1.0% lower than comparable conventional rates.
No loan limits
With full entitlement, there is no maximum loan amount — borrow what you can afford.
Limited closing costs
VA restricts what lenders can charge. Seller can pay all closing costs plus 4% concessions.
No prepayment penalty
Pay off or refinance your VA loan at any time with no penalty.
Funding fee waiver for disabled vets
Veterans with service-connected disability pay zero funding fee — significant savings.
IRRRL streamline refinance
VA's Interest Rate Reduction Refinance Loan makes refinancing fast and low-cost.

Disadvantages

Very limited construction lenders
Finding a lender that offers VA construction loans for steel buildings is extremely difficult.
VA funding fee
2.15% first use / 3.3% subsequent use with 0% down. Can add $6,000–10,000+ to loan cost.
Primary residence only
Cannot be used for investment properties, vacation homes, or commercial buildings.
Builder must be VA-registered
Limits your choice of contractors to those registered with the VA system.
VA appraisal requirements
VA-assigned appraisers and MPRs add complexity and potential delays.
Occupancy requirement
Must move into the home within 60 days of completion — no flexibility.
COE required
Must obtain a Certificate of Eligibility, which can take time for some service histories.
Entitlement is limited
If you have a prior VA loan, your remaining entitlement may be reduced.

Common Pitfalls

Searching endlessly for a VA construction lender

Very few lenders offer VA construction loans, and even fewer will do steel-frame. Spending months searching wastes time.

How to avoid: If you can't find a VA construction lender within 2–3 weeks, pivot to the Two-Step Strategy: build with conventional/portfolio, then VA refinance after completion.

Not understanding the Two-Step Strategy

Many veterans don't realize they can build with a different loan type and then refinance into VA — they think it's VA or nothing.

How to avoid: The Two-Step Strategy (build conventional, refinance VA) is how most veteran-built barndominiums are financed. Plan for it from the start.

Forgetting the funding fee adds up

The VA funding fee of 2.15–3.3% is a one-time charge but can be substantial. On a $400,000 loan, that's $8,600–13,200.

How to avoid: Check if you're exempt (service-connected disability waives the fee entirely). If not, factor it into your budget. It can be financed into the loan.

Assuming all veterans qualify

Service requirements vary — not all military service qualifies, and some veterans have used their entitlement on prior loans.

How to avoid: Get your COE first to confirm your eligibility and remaining entitlement. Apply at va.gov or have your lender pull it electronically.

Required Documents

Certificate of Eligibility (COE)Required

VA document confirming your entitlement. Lender can often pull electronically.

DD-214 (discharge papers)Required

Proof of military service and discharge status. Active duty members provide a statement of service.

Government-issued photo IDRequired

Valid driver's license, passport, or military ID

Income documentationRequired

Pay stubs (30 days), W-2s (2 years), tax returns (2 years). Active duty: LES (Leave and Earnings Statement)

Bank statementsRequired

Most recent 2 months of all accounts

Construction plans & specificationsRequired

Complete plans showing VA MPR compliance, with engineer stamp

Builder contract & VA registrationRequired

Signed contract with VA-registered builder including cost breakdown

Land documentationRequired

Deed if owned, purchase agreement if buying, survey and legal description

VA disability rating (if applicable)Optional

Documentation of service-connected disability for funding fee exemption

Residual income worksheetRequired

Lender will calculate to ensure sufficient residual income by region and family size

Frequently Asked Questions

Can veterans build a barndominium with a VA loan?

Yes, VA does not prohibit steel-frame or barndominium-style homes. The challenge is finding a lender who offers VA construction loans for steel buildings. The Two-Step Strategy (build conventional, refinance into VA) is the most common approach.

What is the Two-Step Strategy?

Build your steel home using a conventional or portfolio construction loan, then refinance into a VA permanent loan after construction is complete. The VA IRRRL (Interest Rate Reduction Refinance Loan) makes this refinance simple with minimal documentation and no appraisal in many cases.

Is there really no PMI on VA loans?

Correct — VA loans never require PMI or mortgage insurance at any loan-to-value ratio. The VA funding fee is a one-time charge (not ongoing insurance), and it can be financed into the loan.

What is the VA funding fee?

A one-time fee paid to the VA: 2.15% first use (0% down), 1.5% (5%+ down), 1.25% (10%+ down). Subsequent use: 3.3% (0% down). Veterans with service-connected disability are fully exempt.

Is there a VA loan limit?

For veterans with full entitlement, there is no loan limit (since the Blue Water Navy Act of 2019). You can borrow as much as a lender will approve based on your income and credit.

Can I be my own builder with a VA loan?

Generally no — VA requires a licensed, insured, VA-registered contractor. Owner-builder arrangements are not typically permitted for VA construction loans.

How do I get my Certificate of Eligibility?

Apply online at va.gov, have your lender request it electronically (fastest method), or mail VA Form 26-1880 to the VA Regional Loan Center. Most lenders can pull your COE instantly.

Do I have to move in right away?

Yes — VA requires you to occupy the home as your primary residence within 60 days of completion. There is limited flexibility for military PCS situations.

Can surviving spouses get VA loans?

Yes — unremarried surviving spouses of veterans who died in service or from a service-connected disability are eligible for VA loans with the same benefits, including a waived funding fee.

What are VA Minimum Property Requirements?

VA MPRs ensure the property is safe, structurally sound, and sanitary. Steel-frame homes can meet all MPRs with proper engineering and design. Key requirements include adequate roofing, mechanical systems, safe water, and structural adequacy.

Official Sources & Resources

Verify the information above directly from these official sources. Rates, terms, and eligibility requirements change frequently — always confirm with the lender or program administrator.

VA Home LoansOfficial VA home loan program overview

VA Purchase LoanVA purchase and construction loan details

How to Apply for VA LoanStep-by-step VA loan application guide

VA Eligibility RequirementsService requirements and eligibility criteria

VA Funding Fee & Closing CostsCurrent funding fee rates and cost details

NerdWallet VA Loan GuideComprehensive consumer guide to VA loans

Bankrate VA LoansVA loan rates and program comparison

Military.com VA LoansMilitary-focused VA loan resource

In This Guide

Disclaimer: This guide is for informational purposes only and does not constitute financial, legal, or professional advice. Interest rates, loan terms, eligibility requirements, and program details change frequently. Always verify current information with the lender or program administrator before making financial decisions. Homestead Steel Structures & Design is not a lender, financial advisor, or mortgage broker. Last updated February 2026.

Ready to Finance Your Steel Building?

We help connect you with lenders experienced in steel building and barndominium financing — so you can focus on your build, not the paperwork.

Get Your Free Quote Explore Building Series

Government-Backed Financing

VA Construction Loan: Steel Building Financing Guide

The gold standard for eligible veterans — zero down, no PMI, lowest rates. Finding lenders who offer VA construction loans for steel buildings is the main challenge.

Good for Steel BuildingsBest for: Veterans and active-duty service members building a steel home who want the best loan terms

Min Down Payment

Typical Rates

5.25–6.25%

Max Term

30 years

Min Credit Score

620

Program Overview

How It Works

Administered By

Department of Veterans Affairs (VA)

Program Types

VA Construction LoanVA Purchase LoanVA IRRRL (Streamline Refinance)VA Cash-Out Refinance

Eligibility Requirements

Credit Score

620+ (lender minimum)

VA itself has no minimum credit score requirement. However, most lenders require 620+. Some specialty lenders go as low as 580.

Down Payment

No down payment required for veterans with full entitlement. A down payment can reduce the VA funding fee.

Income

No maximum limit

VA does not impose income limits. Qualification is based on DTI ratios and residual income — the amount left after all obligations.

Occupancy

Primary residence only

Must intend to occupy the home as your primary residence within 60 days of completion.

Eligible Property Types

primary residence

Eligible Building Types

barndominiumresidential

Additional Requirements

Service Requirement

Veteran, active duty, Guard/Reserve, or surviving spouse

Generally requires 90 days active wartime service, 181 days peacetime, or 6 years Guard/Reserve. Surviving spouses of veterans who died in service or from service-connected disability also eligible.

Certificate of Eligibility (COE)

Required

Must obtain a COE from the VA proving entitlement. Lenders can often pull this electronically.

DTI / Residual Income

41% DTI standard

41% back-end DTI is the guideline, but can be exceeded with sufficient residual income. Residual income requirements vary by region and family size.

Step-by-Step Process

Obtain Certificate of Eligibility

1–5 days

Request your COE from the VA to confirm your entitlement. Your lender can often pull this electronically.

Apply online at va.gov or have your lender pull it

Keep your DD-214 discharge papers accessible

Find a VA Construction Lender

1–4 weeks

Locate a lender that offers VA construction loans. This is the hardest step — very few lenders offer this product, especially for steel buildings.

Consider the Two-Step Strategy if no VA construction lenders are available

Nationwide lenders like Veterans United or NBKC may offer construction

Select Builder & Plans

2–6 weeks

Choose a VA-registered builder and finalize construction plans. Builder must be licensed, insured, and registered with the VA.

Builder must be VA-registered — verify with your lender

Plans must meet VA Minimum Property Requirements (MPRs)

Submit Application

1–2 weeks

Complete the full loan application with construction plans, builder contract, COE, and all financial documentation.

Include detailed specs showing the home meets VA MPRs

Provide comparable sales data for the appraiser

VA Appraisal & Underwriting

3–6 weeks

VA assigns an approved appraiser to review the plans and determine value. Underwriting reviews all documentation for VA compliance.

VA appraisals are ordered through the VA system — lenders cannot choose the appraiser

Tidewater process allows you to provide additional comps if appraisal is low

Construction Phase

4–12 months

After closing, construction begins with disbursements through a draw schedule. Inspections at each milestone.

VA may require additional inspections beyond lender requirements

Maintain close communication with builder and lender

Final Inspection & Move-In

2–4 weeks

After construction completion, final inspection confirms VA MPRs are met. Loan converts to permanent VA mortgage.

Must move in within 60 days of completion

Final VA appraisal confirms completed value

Financial Details

Down Payment

0% — no down payment required with full entitlement. Down payment can reduce the funding fee.

Interest Rates

VA rates are typically 0.5–1.0% lower than conventional rates. Approximately 5.25–6.25% as of 2026.

Loan Terms

30-year and 15-year fixed rate options. ARMs also available.

Fees

VA Funding Fee: First use — 2.15% (0% down), 1.5% (5%+ down), 1.25% (10%+ down). Subsequent use — 3.3% (0% down). Fee is waived for veterans with service-connected disability.

Insurance

No PMI or mortgage insurance of any kind. The VA funding fee is a one-time charge, not ongoing insurance.

Closing Costs

VA limits certain closing costs. Seller can pay all closing costs plus up to 4% in concessions. No prepayment penalty ever.

Loan Limits

No loan limit for veterans with full entitlement (after 2020 Blue Water Navy Act). Veterans with reduced entitlement follow county conforming limits.

Other Costs

VA Funding Fee can be financed into the loan. Exempt for disabled veterans, surviving spouses, and Purple Heart recipients on active duty.

Steel Building Considerations

Common Challenges

Very few lenders offer VA construction loans at all — even fewer for steel buildings
VA Minimum Property Requirements (MPRs) may require design modifications
VA-assigned appraisers may not have barndominium experience
Builder must be VA-registered, limiting your choices

Tips for Approval

Consider the Two-Step Strategy: build with conventional/portfolio, then refinance into VA
VA IRRRL (Interest Rate Reduction Refinance Loan) makes the refinance step simple and low-cost
Design the home to clearly meet VA MPRs — safety, soundness, and sanitary standards
Work with a lender who has specifically closed VA loans for steel-frame homes
The Two-Step approach often results in better overall terms than forcing a VA construction loan

Lender Advice

Pros & Cons

Advantages

Zero down payment
No down payment required — the most generous zero-down program available.
No PMI — ever
Unlike FHA and conventional, VA loans never require mortgage insurance at any LTV.
Lowest interest rates
VA rates are typically 0.5–1.0% lower than comparable conventional rates.
No loan limits
With full entitlement, there is no maximum loan amount — borrow what you can afford.
Limited closing costs
VA restricts what lenders can charge. Seller can pay all closing costs plus 4% concessions.
No prepayment penalty
Pay off or refinance your VA loan at any time with no penalty.
Funding fee waiver for disabled vets
Veterans with service-connected disability pay zero funding fee — significant savings.
IRRRL streamline refinance
VA's Interest Rate Reduction Refinance Loan makes refinancing fast and low-cost.

Disadvantages

Very limited construction lenders
Finding a lender that offers VA construction loans for steel buildings is extremely difficult.
VA funding fee
2.15% first use / 3.3% subsequent use with 0% down. Can add $6,000–10,000+ to loan cost.
Primary residence only
Cannot be used for investment properties, vacation homes, or commercial buildings.
Builder must be VA-registered
Limits your choice of contractors to those registered with the VA system.
VA appraisal requirements
VA-assigned appraisers and MPRs add complexity and potential delays.
Occupancy requirement
Must move into the home within 60 days of completion — no flexibility.
COE required
Must obtain a Certificate of Eligibility, which can take time for some service histories.
Entitlement is limited
If you have a prior VA loan, your remaining entitlement may be reduced.

Common Pitfalls

Searching endlessly for a VA construction lender

Very few lenders offer VA construction loans, and even fewer will do steel-frame. Spending months searching wastes time.

How to avoid: If you can't find a VA construction lender within 2–3 weeks, pivot to the Two-Step Strategy: build with conventional/portfolio, then VA refinance after completion.

Not understanding the Two-Step Strategy

Many veterans don't realize they can build with a different loan type and then refinance into VA — they think it's VA or nothing.

How to avoid: The Two-Step Strategy (build conventional, refinance VA) is how most veteran-built barndominiums are financed. Plan for it from the start.

Forgetting the funding fee adds up

The VA funding fee of 2.15–3.3% is a one-time charge but can be substantial. On a $400,000 loan, that's $8,600–13,200.

How to avoid: Check if you're exempt (service-connected disability waives the fee entirely). If not, factor it into your budget. It can be financed into the loan.

Assuming all veterans qualify

Service requirements vary — not all military service qualifies, and some veterans have used their entitlement on prior loans.

How to avoid: Get your COE first to confirm your eligibility and remaining entitlement. Apply at va.gov or have your lender pull it electronically.

Required Documents

Certificate of Eligibility (COE)Required

VA document confirming your entitlement. Lender can often pull electronically.

DD-214 (discharge papers)Required

Proof of military service and discharge status. Active duty members provide a statement of service.

Government-issued photo IDRequired

Valid driver's license, passport, or military ID

Income documentationRequired

Pay stubs (30 days), W-2s (2 years), tax returns (2 years). Active duty: LES (Leave and Earnings Statement)

Bank statementsRequired

Most recent 2 months of all accounts

Construction plans & specificationsRequired

Complete plans showing VA MPR compliance, with engineer stamp

Builder contract & VA registrationRequired

Signed contract with VA-registered builder including cost breakdown

Land documentationRequired

Deed if owned, purchase agreement if buying, survey and legal description

VA disability rating (if applicable)Optional

Documentation of service-connected disability for funding fee exemption

Residual income worksheetRequired

Lender will calculate to ensure sufficient residual income by region and family size

Frequently Asked Questions

Can veterans build a barndominium with a VA loan?

What is the Two-Step Strategy?

Is there really no PMI on VA loans?

Correct — VA loans never require PMI or mortgage insurance at any loan-to-value ratio. The VA funding fee is a one-time charge (not ongoing insurance), and it can be financed into the loan.

What is the VA funding fee?

A one-time fee paid to the VA: 2.15% first use (0% down), 1.5% (5%+ down), 1.25% (10%+ down). Subsequent use: 3.3% (0% down). Veterans with service-connected disability are fully exempt.

Is there a VA loan limit?

For veterans with full entitlement, there is no loan limit (since the Blue Water Navy Act of 2019). You can borrow as much as a lender will approve based on your income and credit.

Can I be my own builder with a VA loan?

Generally no — VA requires a licensed, insured, VA-registered contractor. Owner-builder arrangements are not typically permitted for VA construction loans.

How do I get my Certificate of Eligibility?

Apply online at va.gov, have your lender request it electronically (fastest method), or mail VA Form 26-1880 to the VA Regional Loan Center. Most lenders can pull your COE instantly.

Do I have to move in right away?

Yes — VA requires you to occupy the home as your primary residence within 60 days of completion. There is limited flexibility for military PCS situations.

Can surviving spouses get VA loans?

Yes — unremarried surviving spouses of veterans who died in service or from a service-connected disability are eligible for VA loans with the same benefits, including a waived funding fee.

What are VA Minimum Property Requirements?

Official Sources & Resources

Verify the information above directly from these official sources. Rates, terms, and eligibility requirements change frequently — always confirm with the lender or program administrator.

VA Home LoansOfficial VA home loan program overview

VA Purchase LoanVA purchase and construction loan details

How to Apply for VA LoanStep-by-step VA loan application guide

VA Eligibility RequirementsService requirements and eligibility criteria

VA Funding Fee & Closing CostsCurrent funding fee rates and cost details

NerdWallet VA Loan GuideComprehensive consumer guide to VA loans

Bankrate VA LoansVA loan rates and program comparison

Military.com VA LoansMilitary-focused VA loan resource

In This Guide

Ready to Finance Your Steel Building?

We help connect you with lenders experienced in steel building and barndominium financing — so you can focus on your build, not the paperwork.

Get Your Free Quote Explore Building Series