Tiny houses are all the craze right now. You see shows about it, and many people are downsizing in order to spend their money where they really want instead of in a mortgage. But many people still need financing. While there are many ways to get financing, from friends and family, through an RV loan or even a gift, the most obvious is through a bank. But what type of loan should you be looking at?
It really comes down to whether or not you are building the house on a trailer that is movable or if it’s going to be a permanent structure. If you’re planning on building the house on a foundation then you can get a construction loan or mortgage, but if you are building it on a movable trailer then you have to go with an RV loan.
One of the nice things about financing a tiny house is that you probably won’t need very much. Tiny houses typically run between $25,000 and $100,000. Because of this, however, mortgage lenders may not be able to fund your tiny house as a traditional home loan because they have minimum loan amounts and they offer these loans for homes on permanent foundations only.
You can take out a personal loan, however, or as we mentioned earlier, an RV loan if it is a mobile type of home.
You can certainly take out an unsecured personal loan if you plan on putting the house on the foundation. However, the interest rates can be higher, upwards of 7% and may be more. With an unsecured home loan, there is no collateral and they are typically underwriting the consumer, not the product.
Even though the interest rates can be higher because the general loan amount is lower, your mortgage payments will be somewhat reasonable in general, but you still need to determine how much home you can afford.
To find out more about a personal loan or a home loan for a small home, custom home or build, contact my office today. I’d be happy to run through the numbers with you and find a solution that works for your needs and budget.