Can You Use a VA Loan for a Tiny Home?

Tiny homes take downsizing to a whole new level. They’re not for the faint of heart—tapping out at 400 square feet, these pint-size residences are the opposite of spacious. But for those interested in living cheaply and purposefully, they’re a dream come true. Can you, as a veteran, apply for a VA home loan to purchase this kind of property?

The answer is a resounding… maybe. Tiny homes tend to occupy a real estate gray area, especially those that have a set of wheels and can be carted from location to location. This feature inspires some mortgage brokers to designate them as mobile homes, which renders them ineligible for financial support.

Since the VA doesn’t actually issue loans themselves, it’s up to the private lenders that they contract with to determine whether or not they’ll support the purchase of a tiny home. But before you get in touch with your VA-approved lender to find out, it might be worth your while to explore these common reasons why mortgage applications for tiny homes tend to be rejected (at least by conventional lenders).

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Your tiny home isn’t built on a foundation

A residence that doesn’t have a foundation anchoring it permanently to the ground is not considered real estate in the eyes of the VA. From Chapter 10 of their Lender’s Handbook: “To be eligible for a VA loan… a home must be properly affixed to a permanent foundation.”

That means if your tiny home is on wheels, or it isn’t built on a foundation, your chances of getting a mortgage for this property are virtually nonexistent.

It’s worth less than $100,000

This one is pretty tough pill to swallow. Most lenders aren’t going to consider providing mortgages to properties valued at less than $100,000. To put things in perspective, the average cost of a tiny home is $23,000, if it is built by the owner.

The truth is, you’re facing an uphill battle getting financing for your tiny home. But nothing’s impossible. Attitudes toward unconventional homes are changing, and there are new lending groups popping up that acknowledge the unique needs of tiny house buyers.

It’s worth getting in touch with your VA-approved mortgage lender to see. Why not give it a try? Get started with VA loans!