FINANCING
One of the most common reasons people choose tiny house living is to avoid spending their whole life paying off a huge mortgage. Many people in the tiny house community are also minimalists who endeavor to live simply and debt-free. Although building or buying a tiny house does cost way less than building or buying a regular house, it still is an investment.
How To Finance A Tiny House
Your Own Money
The best option for building or buying a tiny house is funding the purchase or build yourself. This way you can pay for what you need straight up, without worrying about interest rates and paying off a loan. But not everyone has thousands of dollars available in their bank accounts.
Friends and Family
Your second best option might be to borrow the money you need from family or close friends. If you go this route, you’ll want to draft an agreement that suits you both and doesn’t leave your “lender” out of pocket.
Bank Loan
If neither you nor your nearest and dearest have the funds to pay for your tiny house up front, you’re going to have to consider borrowing the money from a financial institution. Banks are one of the more obvious options.
You may be able to secure a construction loan or mortgage if you’re going to build a tiny house on a foundation rather than on a trailer while complying with building codes and adhering to sizing requirements. The issue here most often is tiny houses are too small to qualify for these types of loans and many tiny house customers want to build their homes on trailers.
However, if you can find a bank who will agree to fund your project, there are two types of loans you should consider: an unsecured loan or a secured loan. You’ll need to speak to your bank to find out which options are available to you.
RV Loan
Some tiny house manufacturers, like Nook Tiny Homes, have deliberately classified themselves as Travel Trailer and/or Park Model RV. This allows buyers to secure RV loans to help them fund their new tiny house.
This solution is not perfect though because RV loans are not designed for primary residences. To secure an RV loan, you’re likely to need a steady income, good credit, and an address you can call your primary residence. These loans generally come with higher interest rates and taxes and are typically between seven and fifteen years.
Peer-to-Peer Lending
Matchmaking sites such as TinyHouseLoans.com are striving to make it easier for prospective tiny house owners to get access to funding by connecting them with networks of third party lenders who want to help them secure a good loan.
Often the investors in these networks have an interest in supporting the tiny house movement. Rather than being in it to squeeze as much money out of the loan as they can, they want to help people realize their tiny living dreams and support the tiny house movement.
