From apartments, condos, manufactured homes, barndominiums, tiny homes, co-ops, and single-family homes — modern real estate has come a long way. But what all is eligible for a VA loan?
The current market offers a wide variety of homes to satisfy any buyer’s needs and desires. But VA loan buyers will need to focus on certain types of properties in order to win final loan approval.
Knowing how VA loans work is the first step toward getting the home of your dreams. What are the VA loan requirements for veterans, and what properties are eligible?
The most common type is a single-family home, but many other types of homes will qualify for a VA loan. This guide is intended to help military homebuyers toward a VA loan approval by looking at what homes are eligible for VA loans.
Multiunit Homes
A duplex, a triplex or a four-plex all qualify for a VA loan. However, the property purchased cannot be used solely for investment or rental purposes. The VA requires the borrower to occupy one of the units as their primary residence.
Airbnbs®
The VA allows homes financed with a VA loan to be turned into Airbnbs. However, this is only allowed if you keep your home and then purchase a new primary residence, or decide to rent it out while deployed.
It is not possible to buy a home with a VA loan for the sole purpose of renting it out as an Airbnb.
Condominiums
Condos are certainly eligible for VA financing. But the entire condo complex must receive VA approval before a buyer can obtain a loan for one particular unit. The same rules apply when buying a townhouse with a VA loan.
Hopefully, the complex you want will have already gone through the VA’s approval process. However, if the condo or townhouse is not on the “approved” list, your lender can request approval directly from the VA. This can be a complicated process, so make sure you’re working with an experienced VA-approved lender.
The VA will look at the condo or townhouse’s organizational documents, title, parking availability and homeowner’s association policies. This may take some time, so it’s important to start the process of purchasing a condo with a VA loan sooner than later.
Manufactured homes
Manufactured homes, better known as mobile homes, are eligible for VA financing. But finding a lender willing to fund a manufactured home purchase can be difficult. Veterans United does currently lend on manufactured housing.
If your buyer is able to find an agreeable lender, the manufactured home must meet the following conditions to earn VA approval:
- Must be properly affixed to a permanent foundation
- Single-wide homes must be at least 400 square feet
- Double-wide homes must be at least 700 square feet
- Homes must have permanent eating, cooking, sleeping and sanitary facilities
Read more: What Can a VA Loan Be Used For?
Modular homes
Prefabricated or modular homes can also be financed through VA loans. These homes are built in sections at a factory and reassembled on-site by a contractor. Since modular homes are more likely to appreciate than manufactured homes, it’s usually a little easier to find an accommodating lender for these homes.
In order to qualify for a VA loan, a modular home must be attached to a permanent foundation. The home must also have been built according to HUD guidelines or receive certification from the state in which it was constructed.
New Construction
Obtaining a VA construction loan is possible, but definitely tricky. Builders, plans and building sites must be VA-approved. Three different inspections are required. Builders must provide at least a one-year warranty on homes that are built. Yikes.
It’s easy to see why most lenders shy away from VA construction loans. New construction loans involve lots of red tape and numerous complications can develop.
If your buyer can’t locate a lender willing to issue a VA construction loan, consider recommending these two alternatives:
- Obtain a conventional (non-VA) construction loan. When the home is complete, refinance the property with a VA loan.
- Find a contractor willing to build a home based on VA loan preapproval status. The buyer waits until the home is complete, then purchases the home with a regular VA loan. Assuming all goes well with the appraisal, the loan moves quickly toward closing.
Barndominiums
A VA loan can also be used to build or buy a barndominium. The barndominium must meet the minimum property and occupancy requirements set by the VA, along with other guidelines.
Building a barndominium with a VA loan can be more difficult than buying an existing one. There are risks associated with new construction, so many VA lenders, including Veterans United, opt not to offer barndominium construction loans.
Tiny Homes
It is possible to purchase a tiny home with a VA loan, but much like barndominiums, they must meet all the MPRs set by the VA. There can be concerns with the amount of liveable space and the foundation the home is built on. However, if you find a tiny home that checks all the minimum property requirement’s boxes, then VA financing is possible.
Vacant land
Vacant land is not eligible for VA financing. You can't use a VA loan to purchase a plot of land, even if you plan to put a home on it in the future.
In order to use a VA loan to purchase land, you must build a primary residence on the property immediately.
Co-ops
Co-ops are not currently eligible for VA loans. VA financing for these shared-ownership properties expired in December 2011, and at the time of this writing, has not been renewed.
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