Tiny homes can be a great choice for those looking for a more minimalistic lifestyle. They can also cut down on housing and electricity costs, resulting in significant savings over time.
Best of all, if you’re a military member or veteran, you can even use your VA loan entitlement to buy or build a tiny home. Though, there are some requirements you (and your property) need to meet to do so.
Are you eyeing the tiny home life? Here’s what to know about using a VA loan to get there.
Summary:
- You can use a VA loan to buy or build a tiny home, but the property must meet certain requirements.
- The home will need to have at least 400 square feet, as well as room for living, sleeping, cooking, and sanitary facilities.
- Your lender will order a VA appraisal to ensure the home meets these and all other minimum property requirements.
- You also must live in the home for at least a year and meet the VA’s military service requirements.
What Qualifies as a Tiny Home?
A tiny home is a property that’s 400 square feet in area or less, according to the International Residential Code. It could be built on a permanent foundation or on wheels and often includes lofted beds and other space-saving features.
Building vs. Buying a Tiny Home With a VA Loan
If you’re a military member, veteran, or the spouse of one, you may be able to use a VA loan to finance your tiny home dreams. If you’ve found an existing tiny home you’d like to purchase, this would require a VA purchase loan, but if you’d like to build your tiny home from the ground up, you need a VA construction loan. These loans aren’t widely offered and can be hard to come by.
Minimum Property Requirements for Tiny Homes
Whether you’re building or purchasing an existing tiny home, the property needs to meet the VA’s minimum property requirements before you’ll be approved for your loan.
Space Requirements
VA rules state that a property must be at least 400 square feet to qualify for VA financing. You’ll need to make sure any tiny home you build or buy meets this minimum requirement. By definition, a tiny home is typically 400 square feet or fewer, which means only the largest tiny homes—those at the upper limit of the definition—will qualify for VA loans. If your tiny home falls below this size, it won’t be eligible for VA financing.
Beyond the square footage, the VA also stipulates that a home must have enough space for living, sleeping, cooking, dining, and sanitary facilities for all its occupants. This may be challenging in a true tiny home.
A Permanent Foundation
Many tiny homeowners like to build their properties on wheels, so they can travel more comfortably. This isn’t an option with VA financing. A property must be built on a permanent foundation in order to qualify.
Land
Many tiny home owners lease the land their home sits on, but this isn’t possible with VA financing. To use a VA loan, you must own the land on which your tiny home sits.
Other Requirements
The VA’s other minimum property requirements include:
- Working electric, heating, and cooling systems
- Adequate roofing to last the foreseeable future
- Clean, continuous water supply and sanitary facilities
- Safe and sanitary sewage disposal
- No lead-based paint, wood-destroying insects, fungus, or dry rot
- Access from an all-weather public or private street
- Properly vented and accessible attics and crawl spaces
You will also need to meet the VA’s military service requirements and occupy the home for at least 12 months.
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Appraisals Can Be More Challenging for Tiny Homes
The VA requires an appraisal of your property too. These are used to gauge the home’s value and ensure the home meets all the VA’s property requirements listed above. Only VA-approved appraisers can conduct these assessments, and they come with a fee you pay at closing. This fee varies based on your location and the size of your property.
Appraisals involve reviewing comparable home sales in the area to ensure the home is fairly priced. For a traditional home, this is usually straightforward. But, for tiny homes, your appraiser may find it difficult to find comparable home sales due to their rarity. So, this may require additional time and effort, and your appraiser may have to look beyond the immediate area to conduct their appraisal.
Buying a Tiny Home: Is it Worth it?
As with anything, buying a tiny home has its pros and cons. On the one hand, you cut down on costs, minimize your life, and lessen your impact on the environment. On the downside, though, it may be hard to use your VA loan entitlement for a true tiny home. Also, in such a small space, you may struggle with storage or even coexisting with kids, partners, and pets.
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