Deciphering the VA Lender’s Handbook Chapter 12 Part 2
The VA’s MPRs for proposed construction are different depending on whether there is a building code enforced in the area that the home is being built. If the property is located in a jurisdiction that has a state, county, or local building code, then the VA’s MPRs are that the construction must comply with:
- the applicable state, county, or local building code
- 24 Code of Federal Regulations (CFR) 200.926d, Construction Requirements
- 1992 Council of American Building Officials (CABO) Model Energy Code (MEC), and
- additional HUD references (we’ll talk about these in a minute)
In areas where there is not a state, county, or local building code enforced, the VA MPRs are a bit different. They require that the construction comply with the following:
- applicable provisions of the current CABO International One and Two Family Dwelling Code, and any mandatory codes or standards incorporated by reference.
- 24 CFR 200.926d, Construction Requirements
- 24 CFR 200.926e, Supplemental Information for Use with CABO One and Two Family Dwelling Code
- 1992 CABO Model Energy Code (MEC), and
- HUD references
In both types of areas (those with state or local building codes and those without), the VA MPRs include compliance with several HUD references and publications. As you’ve noticed above, understanding the VA MPRs for proposed construction is a very involved process. Since the VA defers to CFR and CABO regulations, and those regulations are wordy and involved, there are few circumstances that reasonably justify going through all of the regulations to understand what’s required – unless you are acting as your own contractor, in which case you are likely already familiar with these codes. In most situations, the extent of your responsibility as the borrower will be to make sure that the contractor you’re working with is aware of the VA’s MPRs and the requirements involved. The builder, lender, and the appraiser should take care of the rest.
As for the HUD regulations, unfortunately, they do not get less involved. The VA’s MPRs include compliance with the following, taken directly from the Handbook:
- HUD engineering bulletins and materials releases that address
- the use of new or unconventional construction methods, or
- materials that have been reviewed and considered suitable from a technical standpoint by HUD, and
- standards and practices recommended in HUD Handbooks
- Handbook 4140.1, Land Planning Principles for Home Mortgage Insurance
- Handbook 4140.2, Land Planning Procedures and Data for Insurance for Home Mortgage Programs, and
- Handbook 4140.3, Land Planning Data Sheet Handbook.
Those HUD handbooks are available online if you are interested in reading up on those requirements. As you read those HUD publications, the VA Lender’s Handbook specifies that you can read all references to “HUD” and “HUD field office” as “VA” and “VA field station” respectively, and that you can read “insured mortgage” as “VA-guaranteed mortgage”. Also, in the HUD handbooks, there will be differentiations made between single-unit homes and multiple-unit properties. As far as the VA’s MPRs are concerned, a property with up to four living units is considered the same as a property with only one living unit.
As you can tell, a lot of knowledge and research goes into building a home, especially one that is going to be paid for with a VA loan. You should take into consideration all of the VA’s MPRs for proposed construction if you are planning on building your home, because there’s a good chance that you would be biting off more than you can chew. Generally speaking, unless you are a professional with years of experience, you probably should go for a new or existing construction rather than using your VA loan benefits to try and build your own house. There are enough pitfalls that it’s very easy for an inexperienced builder to fall into one. If you have your heart set on building your own home with your VA loan benefits, you should seek out a contractor who has built homes for the VA loan program before and is very familiar with the VA’s MPRs.