Molli McGee Tiny houses , Tiny house financing
So, you’ve found the perfect tiny house to call home. What happens next?
Tiny home financing
Typically less than 500 square feet, tiny houses cost far less than the average residential home. Despite the tinier price tag, it still may not be possible to pay the total cost all at once. This is where tiny home financing comes in.
Purchasing a residential home typically works by getting a mortgage. Today, buying a tiny house doesn’t work this way for two reasons:
A tiny home doesn’t cost enough to be approved for a mortgage loan.
A mortgage is only approved for a home that is on a permanent foundation (an issue for a tiny house on wheels).
Helpful Terms to Know
Take a look at these commonly used financial terms to better understand your options.
FICO: Fair Issac Corporation. Creates credit scores for use by lenders, and can affect the success of your loan application.
Credit Score: A number used to represent the creditworthiness of an individual. Most credit scores fall between 600 and 750, although some loan providers will accept lower scores.
APR: Annual Percentage Rate. The annual rate charged for accepting a loan.
Ways to Fund Your Tiny House
Get approved for a loan through a tiny house builder or lender. Finance your tiny house either directly through a loan provider, or through a loan provider that is partnered with a tiny home builder.
Apply for a traditional mortgage. If you’re looking to building an accessory dwelling unit (ADU) next to your house, then this might be the best option for you. Your ADU will likely need to be on foundations, as well as meet your local building codes and zoning requirements.
Start an online fundraiser. Before you roll your eyes at this one, keep in mind that financing a chunk of your tiny house is possible through fundraising. It’s not uncommon that people who live in tiny homes work from home. And if you don’t work from home, consider any crafts or skills you could offer. Just asking for money won’t do the trick. The key is to offer your services or crafts for various levels of donations. People will be more inclined to help out if they know it’s not just a handout!
Get a low Interest credit card. Although not the most recommended method of financing, an individual with good credit history might find success with the right terms.
Which Method is Best for me?
The most popular way of financing a tiny house is through a loan provider; whether that means using a loan service that’s partnered with your tiny home builder, or acquiring a personal loan directly from a provider. Let’s take a closer look at the different types of loans you can get through these two options.
Loan Through Your Tiny House Builder
Tiny homes on wheels are often classified similarly to RVs (recreational vehicles) or campervans. If a tiny house on wheels is your ideal type of tiny, then an RV loan through a tiny house builder could be exactly what you’re looking for. In order to qualify for this type of loan, your tiny house must be certified by the Recreational Vehicle Industry Association (RVIA). RVIA ensures that your tiny house on wheels meets specific safety requirements for life on the road. After doing some research on different tiny house builders, you’ll find that some are RVIA certified and some are not. Tiny house builders that are RVIA certified will often have a partnership agreement with a loan company to provide customers with a great option.
Please note: the following loan companies are partnered with tiny house builders to offer RV loans. They also offer personal loans, which can be applied for independently and without going through the builder.
This online consumer lending division offers consumers with excellent credit scores the right to a loan at decent rates. The process is simple: fill out the electronic form to see if you qualify for the loan. You can even receive funds the same day if everything is in order. Lightstream gives tiny home hopefuls the freedom to put their loan toward any type of tiny house.
To Qualify: You must have a good credit score, sufficient income, and assets to support existing debt and requested loan amount.
Loan Amount: from $5,000 - $100,000
APR Rate: from 4.29% with AutoPay (determined by credit profile)
Partners: 84 Lumber Tiny Living
KFG - Koala Financial Group
Koala Financial Group (KFG) offers an easy online application process for a loan to suit any budget. After filling out the online form, your details will be submitted for approval and you can expect a decision within 5-7 days. KFG is a tiny home loans and funding partner of several tiny house builders.
To Qualify: approved credit score combined with annual income (minimum 600 FICO).
Loan Amount: from $20,000 - $150,000 over a minimum 5 year term.
APR Rate: 6% - 15% fixed rates
Partners: Tiny Heirloom, Wind River, Indigo River Tiny Homes, Tiny House Chattanooga
Rock Solid Funding
This financial service provider is a “traditional RV lender,” and specializes in trailer and recreational equipment loans (this includes tiny houses on wheels!). Rock Solid Funding prides themselves on their approval rate, as well as their ability to work with lower credit scores.
Minimum credit score of 575
$2,000 per month gross minimum income for single applicant
$2,500 per month gross minimum income for joint applicant
Loan Amount: minimum of $1000, no maximum
APR Rate: 5.99% - 18.95% depending on credit
Partners: Titan Tiny Homes, Tiny House Chattanooga
This is a viable option for anyone who wants either a tiny house on foundations or to build their own tiny house on wheels. In this case, the amount of money you are able to secure depends greatly on your credit score. A better credit score means you’re more likely to get a lower rate and more favorable terms. A positive of going down the personal loan route is that you often get more flexibility in terms of how the money is used. For instance, it’s possible to use the money for either a tiny house on foundations, on wheels, or even the land it sits on.
Founded by ex-staff members of Google, this lending platform is the first to use artificial intelligence to fully automate the borrowing process. This loan service has one of the industry’s highest consumer ratings for personal loans.
To Qualify: approved credit score.
Loan Amount: from $1,000 - $50,000 (3 & 5 year terms).
APR Rate: 7.98% - 35.99%
This personal loan company makes the process easy by breaking it down in three steps: check your rate, choose loan amount, and get your money deposited. Their friendly service, low fixed rates, and flexible terms make them a top choice amongst loan services.
To Qualify: approved credit score of 600 or better
Loan Amount: from $1,000 - $40,000 (3 & 5 year terms).
APR Rate: 6.95% - 35.89%
A well-established bank that can help you secure a personal loan for your dream tiny house. With customizable repayment options and no additional fees, this loan service is able to tailor a financial plan to suit your needs.
To Qualify: approved credit score of 680 or better
Loan Amount: from $5,000 - $50,000 (3, 4, 5, 6 & 7 year terms).
APR Rate: 5.99% - 18.99%
Secure your tiny house loan easily through Freedom Plus. The online system allows you to see if you qualify in just a few, simple steps. Instead of only offering to individuals with good credit, Freedom Plus also offers to borrowers whose financial situation is stabilized and improving.
To Qualify: approved credit score of 640 or better
Loan Amount: from $10,000 - $35,000 (2, 3, 4, & 5 year terms).
APR Rate: 4.99% - 29.99%
Only interest, no hidden fees. SoFi is a personal loan company that offers low rates, community benefits, and an easy experience. Securing financing for your tiny house is simple, and streamlined with their online vetting system.
To Qualify: responsible financial history
Loan Amount: from $5,000 - $100,000 (3, 5, & 7 year terms).
APR Rate: 6.26% - 14.87%
Table of Comparison
How to Find the Right Financing Option
Work out how much you need, the terms, and the APR rate that works best for you before looking at different loan companies.
Get a quote from various lenders.
Compare! Look carefully at the interest rates, as well as any fees that might pop up.
Do you have financing tips to add? Get in touch! As the tiny house movement grows, so does our list of tiny home financing options. Be sure to check back with us to see the most up-to-date information!