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If you can put some money down, not necessarily 20% you can get a second mortgage to take you to 20% down. This would let you avoid PMI and also give you conventional rates, which can be better than VA rates(not always the case, but conventional rates are usually lower than VA). You would probably find that your monthly payment would be lower going this rout than going the PMI or VA route. New build will change things considerably. Make sure the builder knows that you are going VA. They require more inspections than a typical new build. VA may also require a 10 year warranty if the inspections aren't done.

This is my first time posting here, so if I do something incorrectly, have mercy. I'm a loan officer in Michigan. If you are buying in Michigan I'd be more than happy to help you out. As far as taking the money out of your 401, I'd recommend against it. VA will allow you to finance 100%. They do charge you a 2.15% funding fee, which is also financed, bringing your loan to 102.15% of the purchase price. Putting money down will lower the funding fee, not significantly though. VA will also allow you to ask the seller to pay your closing costs and pre-paids, allowing you to get into a new house for literally 0 out of pocket money. As far as block vs framed, can't help you.