If you want to buy a tiny house, you’ve likely Googled “How much does a tiny house cost?” And after that, you probably started searching the web for tiny house financing options!
In doing so, you may have discovered that, in most cases, tiny houses don’t qualify for traditional home mortgages. This is because tiny houses are considered personal property and not real estate when they are not permanently affixed to land.
Fortunately, there are a lot of ways.
Here at Mint Tiny House Company, we want to build you the best house ever. And we want to make it attainable by giving you easy-to-understand information about financing for a tiny house.
So if that sounds good, let’s dive into the most common ways people like you are finding the funds. Your tiny house lifestyle is just around the corner!
Personal loans (also called consumer loans) are one of the most straightforward ways to obtain financing for a tiny house.
Personal loans are great because they let you borrow money from a lending entity for a wide range of reasons. You can use personal loans to pay off credit cards, invest in companies, or buy things like a tiny house!
The interest rates for these tiny home loans vary widely (so it pays to shop around!), but personal loans typically offer up to 100k in funds.
At Mint Tiny House Company, we build tiny houses on wheels that are RVIA certified. RVIA certification is tough to get, but we went the extra mile to give you the benefits of this gold-standard certification.
Of course, Mint tiny houses are built to much higher standards than RVs, but RVIA certification is helpful because it allows you to apply for an RV loan!
Unlike personal loans, which can be secured (backed by collateral) or unsecured (not backed by collateral), an RV loan will always be secured.
Put another way, the lender could take your tiny house if you don’t make the payments. So be sure to pay your tiny home loan on time!
For many tiny home buyers, applying for an RV loan can feel daunting, but please don’t let it stress you out. It’s the same process as getting a loan to buy a car!
Whereas a personal loan is a lump sum of funds that must be paid back in full, a line of credit works more like a credit card.
Lines of credit are unsecured, but the interest rate on these loans is often variable, meaning it can change. So be sure to keep that in mind when applying for this type of tiny house loan!
A home equity line of credit is similar to a line of credit, except it is secured by a specific type of collateral: your traditional home.
Home equity lines of credit are often called “HELOCs,” “equity loans,” “home equity installment loans,” or “second mortgages.”
If you own a traditional home, a HELOC can be a handy tool, but remember that your traditional house will be used as collateral. So if you don’t pay your tiny house loan, your lender could repossess your traditional house!
Ah, cash. If you have the cash (or know someone who has the cash!) That is the easiest way to buy a tiny house. Here are a few reasons you might choose this route.
Second, sometimes people want less money in banks, and if that’s you, buying a tiny house with cash allows you to keep a portion of your wealth in a tangible asset.
Third, paying cash means you won’t have a mortgage. And it can put your mind at ease knowing you didn’t take on any additional debt.
Will your tiny house be used as a vacation rental? If so, paying cash ensures your investment will get maximum cash flow from the beginning!
OK, but what if you don’t have cash, don’t qualify for a loan, or have a credit score that’s less than stellar?
If this is you, don’t worry. There is still another way to buy a tiny house.
This means a lender will take a risk and lend to you, but if you don’t (or can’t) make the payments on your tiny house loan, the co-signer will become responsible.
If you plan to go this route, we recommend you do your research first.
Put together a presentation that includes pictures of your Mint tiny house, information about your current financial situation, and how you plan to pay your tiny house loan. Then make your would-be co-signer cookies. Kidding. Actually, not kidding. Cookies are probably a good idea.
Asking someone to co-sign on a tiny home loan can be uncomfortable, but doing so can pay off big time. And we all need help once in a while. What’s important is that you do everything you can to keep your life moving forward. After all, we only get one!
Did you know that we recently released a Tiny Home Financing Guide? If you found this post helpful, be sure to download our Tiny Home Financing Guide for even more detail about getting a loan to buy a tiny house.
Thanks for reading, and we’ll see you next week!
