Okay, the sentences in the question should read:
"The house is very good but much too small to accommodate the full family." or
"The house is very good but too small to accommodate the full family." or
"The house is very good but very small [to accommodate the full family].
You can't say 'too much small' or 'very much small', but in your title you're asking about the difference between 'too' and 'very'. see the following examples:
The house is small - just a small house
The house is very small - this emphasises how small it is
The house is too small (for something) - it's small compared to what you want to do with it. It might be large, but not large enough "my biggest garage is still too small for my hovercraft"
The house is much too small (for something) - emphasises the comparison (as opposed to 'a bit too small')
All my examples above deal with modifying the word 'small' which is used here as an adjective to describe the house. The use of 'much' in the title ('too much' and 'very much') is different. Consider "You have taken too much dinner" (more than you can eat - comparative) and "I would appreciate it very much if you would not do that again" (emphasis on 'appreciate it')