How long can you finance a tiny home?

Personal loans typically have terms of up to 7 years and might fund some or all of your tiny home's costs. Personal loans are a great option to pay off the costs of your tiny home quickly, but keep in mind the monthly payments may be high due to the short loan term. The rate you qualify for will depend on your credit.

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If you can’t get a mortgage on a tiny home through your lender, how else can you finance the miniature home of your dreams? There are a variety of financing options available, so let’s go over the details of each to determine what might be the best fit for you.

Personal Loans

Personal loans are some of the most common ways to secure financing for tiny homes. These loans are usually unsecured, which means they won’t hold anything as collateral in case you default on the loan, though your credit will suffer if you do so. Personal loans typically have terms of up to 7 years and might fund some or all of your tiny home’s costs. Personal loans are a great option to pay off the costs of your tiny home quickly, but keep in mind the monthly payments may be high due to the short loan term. The rate you qualify for will depend on your credit. The annual percentage rate on your personal loan might range from 3% – 36%, and only borrowers with good credit will have access to low interest rates.

RV Loans

If your tiny home wasn’t built on a permanent foundation and is capable of being moved, you might be able to finance it with an RV loan. To get an RV loan, your tiny home will have to be deemed road worthy by the Recreation Vehicle Industry Association (RVIA) and will need to comply with standards set by the U.S. Department of Transportation’s National Highway Traffic Safety Administration. To get an RV loan from some lenders, your tiny home may have to be your primary/permanent residence. One of the perks of an RV loan, though, is that it doesn’t matter that your tiny home isn’t built on a permanent foundation – and you’ll likely have a longer, more manageable loan term than you would with a personal loan, though you may be required to make a down payment. Major banks might offer terms up to 20 years rather than the maximum of around 7 you could get with a personal loan. You’ll likely see rates of around 4.5% – 7.5%, though, which is higher than a typical mortgage loan rate.

Contractor Or Builder Financing

If you’re working with a tiny home contractor or builder, they may be able to help you secure financing for your tiny home. Some companies actually build tiny homes as well as offer loans for them – which they typically do by working with a lender to help buyers secure loans through their business. With this option, however, keep in mind that the loan that might be available to you through a tiny home contractor is likely another type of loan from this list. For example, some companies build tiny homes and then offer RV loan financing for them. These builders are typically RVIA certified and sell their tiny homes as if they were an RV dealership. With that in mind, make sure you research the type of financing offered to you by a tiny home builder or contractor before agreeing to anything – rates and loan terms may vary based on your lender, and you might not always be getting the best deal.

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Additionally, with RV loans, your tiny home will also be the collateral for the loan. That means if you default on your loan, your lender can take possession of the tiny house.

Pay With Cash

Paying for a tiny home upfront in cash is perhaps the most ideal method of financing. If you can pay for your tiny house completely, there will be no need to worry about paying for any sort of loan. While this option definitely isn’t feasible for everyone, it makes the most sense if you’re looking to pay less in the long run and avoid the potential risks of taking out loans.

Can I Use Credit Cards?

It’s possible to charge the cost of your tiny home to credit cards as well, though this option may be one of the least feasible and is not recommended. You’d need to have a high enough available balance to cover the cost of your tiny home, which unless you’ve built or bought a fairly inexpensive one, can be difficult. You should also keep interest in mind; if you don’t have enough saved to pay off the cost of your tiny home right away, it will accrue interest over time and become increasingly expensive for you to pay for.

rocketmortgage.com - Tiny Home Financing And Loan Options | Rocket Mortgage