One table to see which construction program may fit your build.
Choosing a construction loan starts with who you are and what you are building. Ken Clark Jr., Certified Mortgage Advisor with PRMG, compares VA, FHA, USDA, conventional, jumbo, and investor construction financing side by side so you can see the tradeoffs before your first call.
Short answer: the biggest differences are down payment, who can use the program, occupancy, mortgage insurance, and what you pay during construction.
| VA | FHA | USDA | Conventional | Jumbo | Investor ground-up | |
|---|---|---|---|---|---|---|
| Who it is for | Eligible veterans, service members, surviving spouses | Buyers with smaller down payments | Income-eligible buyers in eligible rural areas | Stronger credit; primary or second home | Loan amounts above conforming limits | Investors and builders (business purpose) |
| Typical minimum down | 0% with full entitlement | 3.5% | 0% | About 10% | Larger; varies | Commonly 15%+ of cost |
| Occupancy | Primary, 1 unit | Primary, 1 unit | Primary, 1 unit | Primary or second home, 1 unit | Varies by program | Non-owner-occupied |
| Credit (commonly) | Around 620+ | Around 620+ | Around 650+ | Around 680+ | Stronger | Varies; experience matters |
| Payments during build | None in most cases (builder pays interim interest) | None in most cases (builder pays interim interest) | Payment reserve funded at closing | Interest only on drawn funds | Varies by program | Interest on drawn funds |
| Mortgage insurance or fees | VA funding fee unless exempt; no monthly MI | Upfront and annual FHA MI | Upfront and annual guarantee fee | PMI below 20% equity, cancellable | Typically none | N/A |
| Loan limits | Entitlement and program limits | FHA county limits | Program limits | Conforming and high-balance | Above conforming | From about $75K to several million |
| Construction term | About 9 months, up to 12 case by case | About 9 months, up to 12 case by case | About 9 months, up to 12 case by case | 6, 9, or 12 months | Varies | 12 to 24 months |
| Guide | VA construction | FHA construction | USDA construction | Conventional construction | Jumbo construction | Builder and investor |
Typical ranges for eligible borrowers, subject to underwriting and program guidelines. Investor loans are business-purpose loans, not consumer mortgages.
Short answer: if you are VA-eligible with full entitlement, VA usually wins: no down payment, no monthly mortgage insurance, and VA residual income underwriting. FHA is the go-to when you are not VA-eligible and want a low down payment.
Both are one-time close, primary-residence, one-unit programs, and in most cases neither requires payments during construction because the builder pays the interim interest. Both commonly start around 620 credit with an automated approval. VA requires the builder to hold a VA builder ID in addition to builder registration. FHA has upfront and annual mortgage insurance and FHA county loan limits; VA has a funding fee unless you are exempt. Program deep dives: VA construction and FHA construction. For regular purchases, see VA vs FHA.
Short answer: when the lot is in a USDA-eligible rural area and household income is within the county limit. USDA may allow up to 100 percent financing for non-veterans.
A payment reserve is commonly funded at closing to cover payments during construction, and credit minimums commonly run around 650. Check the address on the USDA eligibility map. See USDA construction.
Short answer: for second homes, borrowers with strong credit and land equity, and some barndominium plans. Conventional mortgage insurance can be avoided at 20 percent equity or cancelled later.
You pay interest only on drawn funds during construction, the rate is locked up front with a possible float-down, and the loan converts by modification. The loan amount cannot increase after closing. See conventional construction.
Short answer: a jumbo construction loan may fit when the loan amount exceeds the conforming or high-balance limit, which for 2026 is $832,750 in most counties and up to $1,249,125 in high-cost areas.
Expect a larger down payment and reserves. See jumbo construction.
Short answer: consumer one-time close programs do not allow spec homes. Investor ground-up loans are business-purpose loans that commonly finance up to about 85 percent of cost, capped around 70 to 75 percent of completed value, for 12 to 24 months.
Lenders commonly look for 2 or more completed ground-up projects, and some require reserves covering several months of interest. See builder construction loans and fix and flip loans. For long-term rentals after completion, see DSCR loans.
Educational illustration only. Not an actual client, loan offer, or commitment to lend.
A veteran with full entitlement is building a $480,000 home in Placer County on a lot being purchased at closing. With VA one-time close, the buyer may finance up to 100 percent, pays the VA funding fee unless exempt, and in most cases makes no payments during construction. With FHA, the same buyer would put down at least 3.5 percent and pay FHA mortgage insurance. With conventional, they would put down about 10 percent and pay interest on drawn funds during the build. For this buyer, VA likely offers the lowest cash to close, subject to underwriting.
Where available: PRMG construction programs are available in every state where PRMG is licensed, which is all states except New York, including California and New Jersey, subject to eligibility and program guidelines. In California, building permits are typically required before a one-time close loan closes.
Answered by Ken Clark Jr., Certified Mortgage Advisor. Program availability and requirements vary and are subject to change.
For eligible veterans with full entitlement, VA is usually stronger: no down payment and no monthly mortgage insurance. FHA fits buyers who are not VA-eligible and want 3.5 percent down.
In most cases, no. The builder typically pays interim interest, built into the contract price.
VA for eligible veterans with full entitlement and USDA for eligible buyers in eligible rural areas may allow up to 100 percent financing.
Conventional one-time close allows second homes. VA, FHA, and USDA require a primary residence.
It varies: commonly around 620 for FHA and VA with an automated approval, around 650 for USDA, around 680 for conventional, and higher for manufactured homes.
A jumbo construction loan may fit for eligible borrowers when the loan amount exceeds the conforming or high-balance limit.
No. Spec homes are not eligible on consumer programs. Investor ground-up loans are business-purpose options.
Yes. Owner-builder projects are not eligible on consumer one-time close programs, and the builder completes builder registration.
Yes. VA requires the builder to have a VA builder ID in addition to builder registration.
Yes. PRMG programs are available in every state where PRMG is licensed, all states except New York, subject to eligibility and program guidelines.
Often yes. Owned land equity may count toward the down payment, depending on the program.
Guidelines change. Verify current program requirements with Ken Clark Jr. before relying on them for a transaction.
Disclaimer: This content is for educational purposes only and is not a commitment to lend, a guarantee of approval, or a rate quote. Loan programs, down payment requirements, terms, and eligibility depend on borrower, property, project, builder, and program qualifications, are subject to underwriting, and vary by state. Not all applicants or projects will qualify. Builder registration is a documentation review for program eligibility and is not an endorsement of any builder. Equal Housing Opportunity. Paramount Residential Mortgage Group, Inc. (PRMG), NMLS #75243. Ken Clark Jr., NMLS #225375. PRMG is licensed in 49 states, excluding New York.
Certified Mortgage Advisor and Branch Manager at PRMG Mortgage (NMLS #75243). 28 years in mortgage lending. Specializes in FHA, VA, conventional, DPA, jumbo, Non-QM, renovation, and construction financing for buyers and investors in Sacramento, New Jersey, and nationwide. PRMG is licensed in 49 states, excluding New York. Three-time Gold Award winner for Highly Reviewed Mortgage Team in Sacramento (2023, 2024, 2025). NMLS #225375.
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