Can you use a VA loan to finance an accessory dwelling unit (ADU)?

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Hey all you savvy smart intelligent service members and veterans out there for today’s red friday video we’re going to talk about accessory dwelling units or adus for short and we’ll start by going over what they are and why you might want one before transitioning into whether or not you can build or build or finance one with your va benefits hey everybody it’s

Eric with another red friday video i’m wearing red because i love the military i love this country i support our troops this is an outward expression of what we feel here at low via rates and before i forget speaking of red there’s a red subscribe button down here if you’re watching on youtube please subscribe to our channel so that you are one of the first to

See these videos each week they come out let’s talk about adus i’m going to put this here because i’m going to be referring to this word adu often in this video an adu is a small dwelling that is secondary to the main property usually a single family home so they can either be attached to the home or they can be entirely separate buildings they usually include a

Bedroom a bathroom and kitchen or maybe a kitchenette and they also often have their own entrance some common examples of an adu are a granny flat a mother-long apartment perhaps a backyard cottage a man cave we’ve seen those popping up especially in our military community garage apartments or carriage houses now legally an adu is part of the same property as

Your main home together they constitute that single piece of real estate that you’re paying taxes on so while you can rent out the adu you can’t sell it all by itself even if it’s separate building your backyard unless you’re selling it with the primary residence or your home now why would you want an adu well whether it’s attached to your home or it’s a separate

Building in the backyard these can be a great way to earn extra rental income while living in your house it can also help you take care of aging family members while still granting them the privacy and independence that they want now here’s the real question can you use your va loan to purchase a home that has an adu on the location what do you think because

The va yes you can i’m not going to keep you hanging you can definitely use a va loan to purchase a property with an adu because they’re still considered a single property it is not considered an investment property so you can use your va home loan benefits to purchase a home that already has an adu however during the appraisal process there are going to be some

Special things that you’ll need to know first of all the appraiser is going to be required to notify the va that there is an adu the appraiser is also going to have to value the adu separately from the main portion of the property as what we call a line item on the appraisal so it’ll just be noted on there it won’t be calculated as part of the home’s gross living

Area so let’s say you’ve got a 2500 square foot primary residence in an 800 square foot adu you can’t add those two together to up the value of your primary residence so that could affect the valuation of the home second question can you build okay we know you can use a va loan to buy okay we’ll put that here buy but what about building from the ground up can

You use a va loan to build a home build an adu so you already own the home and you want to build an adu if you want to add the adu to your home while using your va loan benefits your best option is to get a va cash out refinance here’s why the va doesn’t have any restrictions on how you can spend the cash that you pull out from your equity when you’re doing a

Cash out refinance so you can use that money let’s say you’ve got a hundred thousand dollars in equity you’re gonna go pull out 75 grand and you’re going to go build your man cave or your mother-in-law apartment or suite out in the backyard va cannot tell you you can’t do that okay because you can do it however you want you can do whatever you want with that

Cash that you pull out from a cash out refinance so i hope you learned something new today i wasn’t even that familiar with adus before i started preparing for this video but we actually have an adu at my house i’m not a veteran you guys know that love you and support you i think it’s awesome that veterans are able to use their hard-earned va home loan benefits

To build or buy homes with adus thanks for watching tune in next week we’ll continue to talk to you guys about lots of important information and we’ll continue helping you become experts on va mortgages

Transcribed from video
Can you use a VA loan to finance an accessory dwelling unit (ADU)? By Low VA Rates