Can You Get a VA Loan for a Tiny House? A Complete Guide

Tiny houses are gaining popularity across America for their affordability sustainability and minimalist lifestyle appeal. But can you get a VA loan to buy one of these pint-sized properties? The answer is complicated. While not explicitly prohibited, tiny houses face challenges meeting VA loan requirements. This guide examines using VA loans for tiny homes.

What are the Main Hurdles for Tiny House VA Loans?

Tiny houses. defined as under 400 square feet. run into a few key obstacles qualifying for VA financing

• Appraisals – Limited comparable sales data makes valuations difficult. Extra work is needed to determine an accurate tiny home value.

• Land ownership – The VA requires borrowers own the land the home sits on. Tiny houses on rented land won’t qualify.

• Permanent foundation – Tiny houses on wheels generally don’t meet the VA’s permanent foundation requirement

• Minimum square footage – At 400 square feet or less, most tiny homes fall below the VA’s minimum area standards.

• Sufficient living space – Tiny footprints may not provide adequate space for sleeping, cooking, dining and sanitation.

While not insurmountable, these factors pose challenges securing VA financing. Success depends greatly on the individual property.

Do VA Minimum Property Requirements Allow Tiny Houses?

The VA has minimum property requirements (MPRs) that all VA-financed homes must comply with. Here’s how common tiny house features stack up:

Permanent Foundation

Tiny houses on foundations can potentially qualify. Those on wheels likely don’t meet VA standards.

Minimum Square Footage

The VA requires at least 400 square feet. The typical tiny home is around 200 square feet.

Adequate Living Space

Tiny houses may fall short on sufficient space for sleeping, cooking, dining, and bathing.

Land Ownership

The VA won’t finance homes on rented land. Tiny house buyers must own the property.

While the MPRs pose hurdles, they don’t explicitly prohibit tiny homes. You’d need a compliant foundation, adequate square footage, and owned land.

What Are the Pros and Cons of Using a VA Loan for a Tiny House?

Pros

• Requires no down payment or PMI with a VA loan
• Low closing costs with a VA loan
• VA loans often have lower rates than conventional loans

Cons

• Tiny houses may not appraise for enough to meet VA minimum values
• Tough to find a lender willing to do a VA loan on a tiny home
• Easier to get conventional financing for larger properties

The VA benefit of no down payment is less valuable since tiny houses cost much less than regular homes. And you sacrifice loan eligibility. Conventional loans are more feasible.

What Steps Are Involved in a Tiny House VA Loan?

Financing a tiny home with a VA loan generally follows these steps:

1. Find VA-approved land to place the home

The property must meet MPRs and local zoning for a tiny house. You’ll need to own the land.

2. Build a permanent foundation

Construct a fixed foundation meeting VA standards and local codes for the tiny house.

3. Complete the home build

Finish constructing the tiny house on the foundation. Get final inspections indicating completion.

4. Request a VA appraisal

The lender orders a VA appraisal to determine value and confirm MPR compliance.

5. Apply for VA loan pre-approval

Submit your VA loan application and necessary documents to get pre-approved.

6. Close on the VA loan

After pre-approval, close on the mortgage and land purchase via a VA construction loan.

The process centers around constructing a fixed-foundation tiny home that can pass VA underwriting and appraisal.

What Are Some Alternatives to Tiny House VA Loans?

If you can’t get a VA loan, a few options exist:

Conventional Loans

Conventional loans are more flexible but require a down payment and PMI.

USDA Loans

For low-income borrowers in rural areas. More lenient but limited availability.

FHA Loans

FHA allows tiny houses but has mortgage insurance premiums.

Construction Loans

Bridge financing to build, then refinance into a VA or conventional loan.

Personal Loans

Borrow a small personal loan, then buy land outright in cash.

Save and Pay Cash

Slowly save up and purchase the tiny house and land with cash.

These options avoid VA red tape but lose the benefit of zero down financing. Shop multiple lenders to find the best fit.

Tips for Increasing Tiny House VA Loan Approval Odds

If you have your heart set on VA financing, a few tips can boost your chances:

• Build on a permanent foundation attached to utilities

• Construct a model over 400 square feet

• Include space for cooking, sleeping, bathing, and storage

• Position on land you’ll own and can prove is zoned for a tiny home

• Offer a larger down payment to offset risk from a low appraisal

• Ask the seller to lower price if the appraisal comes in too low

• Work with lenders experienced in niche and rural property loans

While still difficult, with careful planning it is possible to get a VA loan for a tiny house. But also have a Plan B mortgage option as backup.

Are Tiny Houses a Good Financial Decision with a VA Loan?

Tiny living isn’t for everyone. Consider the pros and cons before pursuing a tiny home with VA financing:

Pros

• Less expensive to build and purchase
• Lower utility bills and taxes
• Creative, eco-friendly housing option

Cons

• Restricted space and storage capacity
• Permits and zoning issues in many areas
• Potential appreciation and resale challenges

The Bottom Line

Tiny houses appeal because of affordability. But limitations exist. Make sure you fully embrace the tiny lifestyle before using your VA benefits to buy one.

Key Takeaways on Using VA Loans for Tiny Houses

While not impossible, financing a tiny home with a VA loan can be difficult:

• Tiny houses must meet all VA minimum property requirements to qualify

• A permanent foundation attached to utilities is typically required

• VA appraisers may struggle valuing tiny homes due to limited sales data

• Getting a lender to do a VA loan on a tiny house can be a challenge

• Consider conventional, FHA, or USDA loans if you can’t make VA financing work

• Change loan expectations or make housing compromises to boost eligibility

For veterans dreaming of tiny living, know that VA financing has limits. But don’t give up too easily! For help assessing your options, talk to a VA loan expert today.