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tiny home loans

Tiny Home Loans: How to Qualify

Because tiny homes are generally less expensive than traditional homes, it can be easier to cover more of the cost with your down payment, or even to finance the whole house with cash. But if you don’t have $90,000 burning a hole in your savings account, you’ll probably want to find a tiny home loan.

If you find yourself needing a tiny home loan, there are generally three options: a traditional RV loan, a traditional mortgage, or a customized tiny home loan through your builder. Often, this last choice turns out to be the easiest.

Tiny Home Loans: RV-Style

Some tiny homes are legally recreational vehicles (RVs). These tiny homes have been certified as  “road-worthy” and qualify as possessions instead of real estate. This can be a great option for a tiny home loan if you want your tiny home to be mobile. Lenders have been making RV loans for years; they know the territory and it can be fairly easy to compare rates.

Tiny Home Loans: Mortgage-Style

If, on the other hand, you want your tiny home to be built on a foundation like a regular house, it will be no kind of vehicle and as such will qualify for no kind of vehicle loan, recreational or otherwise.

The natural solution seems to be a traditional mortgage, which does work–sometimes. Your tiny home first has to qualify as “real estate”, which it won’t if it has wheels. It also has to be large enough to be considered a house and meet some other requirements.

If it does meet those requirements, the last question is whether your mortgage will be large enough for the institution to want it. Because they have their own costs of doing business, a $40,000 mortgage is often not attractive for them. In these cases, some creativity can be required to put together a sufficient combination of personal loans, HELOCs, and other financing products.

Tiny Home Loans Through the Builder

Often, the best option for either type of tiny home loan is offered by your builder. Tiny home builders know how hard it can be to find financing for their products, so many of them have partnered with financial institutions to create their own tiny home loans.

Which is Best?

Finding the right tiny home loan can be tricky. Traditional mortgages often don’t work for mobile tiny homes and RV loans never work for non-mobile tiny homes. Luckily, there is an easier option–letting the builder know from the beginning that you’ll need financing and finding it through them.

This provides a great place to start when you go out to compare terms. Click here to get an idea of what the initial screening process can look like when searching for a tiny home loan.