There are some challenges, though — namely, meeting certain property requirements — but it’s not impossible. Are you looking to finance your barndominium or shouse dreams with a VA loan? Here’s what you need to know.
Highlights
- VA loans can be used to finance the construction, purchase, or renovation of barndominiums or shouses.
- Barndominiums combine barn-like structures with living spaces, while shouses blend residential and workshop areas, often offering more affordable housing options than traditional homes.
- To qualify for VA loan financing, the property must meet VA’s minimum property requirements, including working utilities, a safe water supply, and an accessible roadway.
- A VA appraisal is required to ensure the property meets the standards and is fairly valued, with appraisal costs varying by location.
- Barndominiums and shouses generally cost less than traditional homes and may provide additional income opportunities through their multifunctional design.
Barndominium vs. Shouse: What is the difference?
Barndominiums and shouses are very similar. They both utilize unique — and often preexisting — structures to create flexible, comfortable living spaces, usually at a fraction of the cost of traditional homes.
Barndominiums, as the name suggests, combine the traditional farm-style barn with a condominium feel. They can be built from existing barns and then retrofitted with living spaces, such as lofts for sleeping and modern plumbing for bathing, or they can simply be new homes created with a barn-like look and shape.
Shouses are very similar. Named for their unique combo of shop and house, these can take any shape, but typically resemble a large garage or backyard shed often with large windows and doors and plenty of open space to move around in. Owners might use them to both live and work in.
Can You Buy a Barndominium with a VA Loan?
Yes, you can use a VA loan to buy an existing barndominium or shouse, or even a property you intend to convert into one. However, it’s important to keep in mind that the property must meet the VA’s Minimum Property Requirements (MPRs). These include having a working electrical, heating, and cooling system, a reliable roof, safe sewage disposal, and access to clean water. The home must also be free of health hazards, such as lead-based paint or wood-destroying insects, and have safe access via an all-weather road. Essentially, the property needs to meet basic livability standards to qualify for VA financing.
Can You Build a Barndo with a VA Loan?
Yes, you can use a VA loan to build a barndominium from the ground up. However, you’ll need a VA construction loan for this, which can be more challenging to find since not all lenders offer them. Additionally, your new barndominium will still need to meet the VA’s Minimum Property Requirements, just like any other home financed through a VA loan. This means it will need essential systems like electricity and plumbing, a solid roof, and access to clean water and sewage disposal.
VA Appraisal for Barndominiums
Appraisals are an important step in the VA loan process and can present unique challenges when you’re buying or building a barndominium. VA appraisals assess both the value of the property and whether it meets the VA’s property requirements. Only VA-approved appraisers can conduct these evaluations, and your lender will assign one to your project.
Since barndominiums are relatively rare, finding comparable properties for the appraisal can be difficult. This means the process might take longer, and the appraiser may need to dig deeper to accurately determine the value of your home. The appraisal fee varies based on your location and will be included in your closing costs.
Should you use your VA loan entitlement for a barndominium?
Barndominiums have become a popular option for buying or building an affordable and versatile home. They’re typically more affordable than a traditional home and their combination with workspace gives you the option to produce income.
The exact cost of a barndominium or shouse depends on the types of materials used, the layout, the costs of land and labor, whether you’re using an existing property, and more.
According to home services platform Angi, the average barndominium costs $230,000 to build. The median new home price last year, according to the National Association of Home Builders, was nearly $426,000.
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