Financing new construction home (loan, escrow, loan, banks)

[DaMayor73]

New to the forum and have a question. My wife and I are going to buy a home with a builder in a newly created community. In talking with the builder, they require 10% of the final selling price earnest money to begin construction.

I am a vet and I plan on using my VA loan to purchase this new house. According to my research, the VA requires the lender to close on the house prior to the house being built. The money is then held in escrow until the home is finished.

My question is:

1. Is the earnest money negotiable?

2. Since the VA requires the lender to close on the loan prior to the house being built, is earnest money even necessary?

Thanks for you help!

[Airborne_gal]

We bought new construction too, last year. Since we were using a VA loan, the builder only required us to put $2K down to reserve our lot. So yes, EMD is negotiable, but is also necessary to reserve your lot.

[DaMayor73]

Originally Posted by Airborne_gal

We bought new construction too, last year. Since we were using a VA loan, the builder only required us to put $2K down to reserve our lot. So yes, EMD is negotiable, but is also necessary to reserve your lot.

Thanks for your response! One more question. What lender did you go through? My research has shown that there are not many banks out there doing VA loans for new construction. Thanks!