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Tiny homes are a popular home ownership route – especially for those looking for less impact and a more conscious lifestyle. Unfortunately, tiny house mortgages are usually not available as they are not considered traditional real estate. Because of this, people often turn to one of three financing options: home finance, a personal loan, or a mobile home loan.
There are tons of tiny home builders, each of whom offer self-financing or work with a preferred lender. Instead of focusing on this tiny home loan side, our list of the best tiny home loans highlights traditional and online lenders that offer personal and RV loans. We have reviewed the available loan amounts, APRs, repayment terms, and eligibility requirements to find loans that meet your needs.
How do you finance a small house?
Personal loans are usually available through traditional banks and credit unions. However, online lenders can streamline the application process and offer more competitive rates and terms. When considering an RV loan, keep in mind that many RV loans cannot be used for full-time units or so-called parking models that are not towable – like some tiny houses.
How Much Do Tiny Home Loans Cost?
The total cost of a tiny home loan depends on several factors. However, the total cost of the loan is usually summed up by the annual percentage (APR). This interest rate, which can range from 2.5% to 36%, includes the interest rate on the loan plus additional fees such as an origination fee. Depending on the lender, a tiny home loan may include late payment fees, insufficient fund fees, and an prepayment penalty.
Can You Get FHA Loan For A Small Home?
FHA loans are only available for homes that are classified as real estate, and houses on wheels – like tiny houses and RVs – cannot be classified as real estate. While you might consider your future small home to be a real home, you probably cannot use an FHA loan to buy a small home. That said, an FHA mobile home loan can be used if the tiny house is no smaller than 400 square feet and if it is on a permanent foundation.
How we picked the best small home loans
Financing a tiny house can be a challenge. So, we’ve checked the options available to choose the best ones for Treehugger readers. To that end, we looked at the minimum eligibility requirements like credit score and income, as well as loan amounts, APRs, and available repayment terms.
Our best choice, LightStream, features competitive APRs, flexible repayment terms and high loan amounts available. Additionally, the lender’s customer service team is available seven days a week, and borrowers can get loan funds once approved on the same day.