I’m appraising a house right now that is nearly 400 square feet (the size of a 2-car garage). Would this house qualify for FHA financing or is it too small? Put your Jeopardy skills to the test because I have a quiz for you below.
What is the smallest house you can purchase with an FHA loan?
A) 500 sq ft
B) 666 sq ft
C) 300 sq ft
D) 400 sq ft
There is only one correct answer above, and if you guessed “Other” you are correct. Straight from the HUD Handbook, “FHA does not have a minimum square footage requirement for a home to be eligible for FHA financing (except that a manufactured home must have a minimum size of 400 square feet to qualify for FHA financing). FHA only requires that a home be marketable in the area and have adequate space necessary to assure suitable living, sleeping, cooking and dining accommodations and sanitary facilities.” Handbook 4905.1 REV1, Section 2-9
I hope this was helpful. If you’re looking for more information on FHA property or appraisal standards, you can check out other FHA appraisal articles I’ve written.
Bonus Question: Is it possible to get an FHA loan on a hobbit house as pictured above (or any below-grade house)? I’d love to hear your take. The answer will be found in discussion in the comments.