Loans for Tiny Houses
Posted by Frank Gogol in Loans | Updated on October 5, 2022
The tiny house movement is growing day by day, especially as more people are becoming environmentally aware. Now, the size of the market is increasing, because individuals are getting interested in these houses. At the same time, they are not accessible to everyone, mainly because their prices are not exactly pocket-friendly.
Although there are options for tiny house loans, they are not that numerous. Still, if you want to get a tiny house, it’s essential to know where you can get funding from.
In this article, we will talk about tiny house loans and present what choices you have in terms of funding.
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Are There Loans for Tiny Houses?
Normally, you get a mortgage when you buy a house – at least as long as we’re talking about your typical home. But what happens when you are looking at tiny houses instead of standard ones?
Tiny houses are, as their name suggests, very small. They have no more than 600 square feet. Therefore, there are no chances to get a mortgage for them.
There is still hope, though. While a mortgage is not within your range, you can get tiny house loans and purchase the little home you dream of. So, you may still fund your tiny house by taking a loan.
Although tiny houses are not cheap, they are also not as expensive as standard homes. So, you need to borrow less than you would for a normal house. As long as you qualify, you can apply for different types of loans to fund your new tiny home, such as a personal loan, RV loan, home equity loan, or financing through lenders that partner with tiny house builders.
But before you get any of these loans, you must know what type of tiny home you’ll go after. There are different options, such as tiny traditional houses, park models, container homes, and tiny homes on a trailer. Your choice will influence the costs involved.
Best Personal Loans for Tiny Houses
Many individuals who are looking for a tiny house opt for personal loans to finance them. These loans can be obtained not only from a bank or credit union but also from online lenders. Here are some of the best personal loans you can use for tiny homes:
Upgrade is an option for borrowers with a lower credit score. You are only required to have a minimum of 560 in score to qualify. But while that is the case, you will also require strong cash flow to be eligible, and you must have at least 2 years of credit history.
With Upgrade, you can borrow between $1,000 and $50,000. The lender offers multiple rate discounts, as well as longer repayment terms on home improvement loans.
Besides, you also get a nice mobile application that makes it easier to manage your payments.
It is important to know that this lender charges an origination fee. Also, it doesn’t give you the option to pick your payment date.
Marcus by Goldman Sachs
If you have a high credit score, you can go for lenders with better offers, such as Marcus by Goldman Sachs. This lender requests a minimum credit score of 730 and also requires applicants to have a U.S. bank account. On top of that, your Tax ID number or Social Security number must be provided too.
While it’s harder to qualify for this lender, those who do can pick their own loan terms and monthly payments according to their budget. There are rate discounts if you set up autopay, and you also have the opportunity to pre-qualify for a loan with a soft credit check.
Also, no fees are associated with this lender, making it even more convenient. The only downside is that there are no joint loan or co-sign options.
Your dream tiny house may be quite expensive. In this case, you should consider an option like LightStream. This lender offers loan amounts from $5,000 to $100,000 and requires a minimum credit score of 660.
As such, you can use this amount to buy a trailer or land tiny home. If you set up autopay, you get rate discounts, and you don’t have to worry about any fees either. Besides, home improvement loans come with long repayment terms.
However, you must have several credit history years to qualify, and you cannot pre-qualify on their official platform. On top of that, creditors who have debt consolidation loans don’t get direct payment.
SoFi is another great option if you need a higher amount of money to pay for a tiny house. Their loan amounts are between $5,000 and $100,000, and you can even apply for a joint loan if necessary.
No fees are associated with these loans. Setting up autoplay will also grant you a rate discount. To make things better, you get a mobile application to manage the funds, and you also get free career advising and unemployment protection.
Your credit score must be at least 680 to qualify, and you must be a U.S. visa holder, permanent resident, or citizen. You must also be employed and have enough income.
Tiny House Financial Risks
While tiny homes can help protect the environment and can save you some costs when purchasing them, there are also a few downsides. Here are some risks you can expect with these homes:
- You may have a hard time finding appliances that fit the new house
- It’ll be necessary to lease a lot or buy land
- You might have to deal with homeowner’s or construction insurance, RV insurance, permit fees, and property taxes
- If you opt for a tiny house that you can take on the road, you’ll have to handle fees for campgrounds, parking, and fuel
- You’ll need to consider costs for housing repairs and maintenance
- It might be necessary to get propane tanks for tankless water heaters
Tiny House FAQ
Here are some frequently asked questions you may still have about tiny houses:
What is a tiny house?
A tiny house is a house that is smaller than average. It ranges from 100 to 400 square feet, and it can either be an actual house or a mobile house.
Is a tiny house a good investment?
Tiny houses can be a very good investment if you can afford one. Upkeep and utilities will cost less, and it’ll save you from mortgage payments. However, it’s hard to build equity in these homes.
Can I get a mortgage for a tiny home?
No, you cannot get a mortgage for a tiny house. Mortgages are meant for traditional houses. But if you want to reduce the footprint of the house, you can obtain a mortgage for a small house.
Can I get a tiny home financing with bad credit?
Most lenders offer tiny house loans to people with good credit. At the same time, you can also find bad credit loans.
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If you don’t have the budget for a tiny home, you can always consider tiny house loans. Check the options in this article and see which one suits your needs so that you can finance your tiny house.