How to Finance your Tiny House


Buying a new or used tiny home is finally on your list of things to do! A tiny house is something that you’ve been thinking about for some time, and now you’re ready to make it happen.

Now that you have opted to live in a tiny house, it’s time to find out how much money you have available. If you’re looking to buy a tiny house, you’ll need to think about how you’re going to get the money to pay for it.

Have no idea where to begin? It’s all good! Take a look at these recommendations to help you get your finances in order before buying your new modest house.

Examine Your Credit

Improving your credit score should be a must before buying a new house. When you apply for home finance, lenders look at your credit history.

Many people obtain a loan to finance the purchase price of their tiny home, construction costs associated with designing their own home, or a combination of the two. While numerous loan types may be appropriate for your circumstances, each loan application will check your credit score to assess your eligibility for a loan.

Build rather than buy

Tiny homebuyers who can’t find the house of their dreams may want to build one themselves.

While you may have to wait a little longer for a move-in day, a professional builder can assist you in creating a custom home that fits your budget perfectly. Creating a wholly tailored home to your interests will also help you save money on renovations in the long term.

Evaluate Land Expenses

While the purchase price of your tiny house may be reasonable, there is frequently an additional cost for the land your home occupies.

If you wish to purchase land, remember to account for it in your budget so that your loan covers the cost. Owning land also includes property tax payments, which may influence your decision to purchase or lease your land.

Calculate utility costs

Depending on the style of tiny house you purchase, your utility expenses could be significantly different.

Utility hookups are frequently charged in addition to rent when leasing land. If you own land, you can add solar panels to help you live off the grid and save money on utilities.

Because many tiny homes are on wheels, you may also need to factor in towing costs, as well as gas, registration, and licensing fees. These monthly costs add up rapidly, so think carefully about whether parking, towing, or driving your tiny home is the most cost-effective option for your situation.

Loans for Financing Your Tiny Home

After determining how much you can afford, it’s time to visit the bank.

Many lenders are cautious about financing tiny homes with a conventional mortgage, even more so if the new home is mobile. Because the cost of tiny homes varies greatly, there is no one-size-fits-all financing option for all tiny homes. However, numerous loan options may be more suitable for your new home.

Examine your eligibility for an RV loan. RV loans are the closest to a regular mortgage, with more extended payment periods and lower interest rates.

Not eligible for an RV loan? Consider an unsecured personal loan. Personal loans may cover more tiny homes, but their periods and interest rates are frequently shorter. Most require a higher credit score.

Get a Mortgage from Your Builder.

Finding a reliable builder can save you a lot of time when building a bespoke home or buying a new prebuilt tiny home.

If you build instead of buying, your builder may offer financing choices. For example, your builder may be able to offer you a payment plan. Because building a tiny home takes longer than buying one ready-made, you can pay your builder’s invoices instead of taking out a huge loan.

Tiny home builders may also establish connections with banks or offer their own financial services. Remember to enquire about in-house financing if you’re thinking about buying directly from the manufacturer.

Planned payments might save you money on interest and closing fees.

Explore social financing

If you don’t qualify for a loan or other payment plan, other tiny homeowners may be ready to assist you in purchasing the house of your dreams.

The community of tiny dwellings is a tightly knit one. There are peer-to-peer financing options available that may be more reasonable or accessible than a traditional loan. Joining Facebook forums for tiny homes or local groups can assist you in locating potential investors.

It’s also possible to get a loan from a tiny home lending association. Without a bank backing them, they may not be able to give loans large enough to cover the entire cost of your new home. Meanwhile, they can assist you in building a new home or buying a tiny house for less.

Friends and Family’s Assistance

You may not have considered the various fees associated with financing your new tiny home when saving for a down payment. Ask for help from friends and family if other payment methods are unavailable or do not meet your expenses.

For those who don’t have enough credit or have a high enough debt-to-income ratio, cosigning can help. If you fail to make your loan payments, your co-signer becomes the loan’s responsibility. If your co-signer has good credit, the lender may even lower your interest rate.

Consider crowdfunding if you only need a little extra cash to build your dream home. To avoid having to ask one family member for a considerable loan, create a GoFundMe or Indiegogo campaign and share it with your friends and relatives.

Consider Using a Credit Card If Necessary

If you have appropriate credit, you may be able to put the expenditures of your tiny home on a credit card.

Certain tiny homes are affordable enough that the entire purchase can be made on a credit card. However, using a credit card is typically a last resort, as the interest rate on a credit card is far higher than on a loan.

If you believe you will be able to pay off the balance in full within a year or two, consider applying for a credit card that offers zero percent interest for an extended period. In the long term, no interest payments can save you money, but only if you can pay off your credit card within that time frame. Otherwise, when interest is applied, you may end up spending more than you meant.

Take Your Time and Find the Builder You Like

If you’ve identified a builder whose style you admire, you may benefit from saving money before making your purchase.

Finding an excellent tiny home builder or construction company eliminates the need to wait for your ideal used tiny home to become available. It is possible to buy your home when it is more financially practical, knowing exactly how much it will cost and the various options you have to purchase it.