An Overview of Property Types Eligible for VA Loans

The current market offers a wide variety of homes to satisfy any buyer’s needs and desires. However, VA loan buyers will need to focus on certain types of properties 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?

While a single-family home is the most popular option, many other types of homes also qualify for a VA loan. Let’s take a closer look at what homes are eligible for VA loans.

Below, we break down the VA loan rules for each unique property type, including what’s eligible, what’s not and what to expect during the loan process. Be sure to speak with your lender beforehand, as not all lenders will finance every eligible property and have restrictions on what VA loans can be used for.

Single-Family Homes

Single-family homes are the most common property type purchased with a VA loan. These detached residences typically meet all of the VA’s primary requirements, making them one of the most straightforward paths to VA loan approval.

For a single-family home to be eligible, it must meet the following:

• Intend to use the property as your primary residence
• Follow the VA’s Minimum Property Requirements (MPRs), including safety, sanitation and structural integrity
• Be classified as real property, not personal property

If the home is move-in ready and in livable condition, you’ll likely face fewer hurdles during the VA appraisal and approval process. Single-family homes are also ideal for buyers seeking long-term stability and predictable maintenance costs.

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 has already gone through the VA’s approval process. However, if the condo is not on the approved list, your lender can request approval directly from the VA. This can be a complicated process, so make sure to work with an experienced VA-approved lender.

The VA will examine the condo’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 rather than later.

Townhomes

Townhomes can qualify for a VA loan, depending on how the property is legally classified and whether the buyer owns the land beneath it. While townhomes often resemble single-family homes, VA guidelines do not always treat them the same.

If the townhome is classified as fee simple, meaning you own both the home and the land, it’s typically eligible for VA financing without needing condo approval. The VA treats these cases like a detached home.

However, some townhomes are part of a condominium association, even if they don’t appear to be. If that’s the case, the property must be in a VA-approved condo project, or your lender must request VA approval. This process involves reviewing HOA documents, which can take some time.

Since a townhome’s legal classification isn’t always obvious, it’s important to work with a VA-experienced lender who can confirm whether condo approval is required.

Manufactured Homes

Manufactured homes, better known as mobile homes, are eligible for VA financing. However, finding a lender willing to fund a manufactured home purchase can be difficult. Currently, Veterans United does lend on manufactured housing.

If your buyer can 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
• Must have permanent eating, cooking, sleeping and sanitary facilities

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.

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 where it was constructed.

New Construction

Obtaining a VA construction loan is possible, but definitely tricky. While a VA Builder ID is no longer required, plans and building sites must be VA-approved. Also, three different inspections are required, and builders must provide at least a one-year warranty on homes.

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.

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 livable space and the home’s foundation. However, if you find a tiny home that checks all the MPRs, then VA financing is possible.

Barndominiums

A VA loan can also be used to build or buy a barndominium. The barndominium must meet the 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. The risks associated with new construction lead many VA lenders, including Veterans United, to opt not to offer barndominium construction loans.

Airbnbs®

The VA allows homes financed with a VA loan to become 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.

Multi-Family Homes

VA loans can be used to purchase multi-unit properties such as duplexes, triplexes or fourplexes as long as you occupy one of the units as your primary residence. This is a great opportunity for Veterans looking to combine homeownership with rental income.

Rental income from the other units may count toward your income for loan qualification, but this varies by lender and typically requires documented rental history or leases.

Multi-family properties can be a smart wealth-building strategy, but they often come with added complexity during underwriting and appraisal. Not all lenders offer VA loans for multi-family homes, so be sure to work with one experienced in these transactions.

Mixed-Use Properties

A mixed-use property can qualify for a VA loan, but the residential space must be the property’s primary use, the borrower must live in the home and the property cannot have more than four units. These properties combine residential and non-residential space, such as a storefront or workshop with living quarters.

Common examples include a home with a photography studio, a ground-floor retail space with a living area above or a property with a small business office attached. However, not all lenders are comfortable financing mixed-use properties, especially if the commercial aspect is too large or poses appraisal challenges.

Investment and Vacation Properties

VA loans are designed to help Veterans and service members purchase primary residences, so you generally can’t use a VA loan to buy an investment property or vacation home.

If you want to purchase a second home for weekend getaways or a property solely to generate rental income, a VA loan won’t be an option. The program requires that borrowers intend to occupy the home as their primary residence, typically within 60 days of closing.

VA homeowners can convert a property into a rental later on. For example, if you purchased a home with a VA loan, lived in it for a time and then moved due to PCS orders, a job change or upsizing to a new home, you may be able to rent out the original property. In these cases, you're not violating VA occupancy rules because the home was originally purchased as a primary residence.

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 immediately build a primary residence on the property.

Co-ops

Co-ops are not currently eligible for VA loans. VA financing for these shared-ownership properties expired in December 2011 and has not been renewed.

How to Find VA Loan Approved Homes

Now that you understand which property types are eligible, the next step is finding a home that meets both your needs and the VA’s requirements. There’s nothing more frustrating than getting your hopes up for a home, only to discover it doesn’t meet VA MPRs.

That’s why working with a real estate agent who truly understands VA loans is so important. An experienced agent can help you avoid properties that don’t qualify and focus your search on homes that are likely to meet VA standards. They know how to spot red flags early and can guide you through the process with confidence.

If you’re ready to start your home search, consider working with our affiliate realty network, Veterans United Realty. Their agents specialize in helping Veterans use their VA loan benefits and can connect you with homes that match both your lifestyle and VA guidelines.