Tiny House Financing: Personal Loans for Your Tiny Home

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Personal loans for tiny homes

Online lenders offer personal loans that can be used to finance all or part of a tiny house purchase. Loan repayment terms are shorter than mortgages — usually up to seven years — which means you may pay off your tiny home faster, but monthly payments can be high.

Lenders use your credit score and income to determine if you’ll be approved for a personal loan and at what rate. Annual percentage rates on personal loans are from 6% to 36%; borrowers with excellent credit scores (720 and above) will qualify for rates at the low end of that range.

Personal loans are unsecured and don’t require collateral, so you won’t lose your tiny house or another asset if you can’t repay the loan (although your credit score will take a hit).

Use a home improvement loan calculator to determine your potential monthly payment and total interest on a tiny house loan.

Personal loans from a bank

Large national banks don’t usually advertise tiny house loans, but you may still be able to get one, especially if you bank locally and have a good relationship with your bank.

Bank loans have similar rates to online lenders, but some offer discounts or lower rates to existing customers. Banks prefer borrowers with good or excellent credit (690 or higher FICO).

Personal loans from credit unions

Credit unions can be a good source for an unsecured tiny house loan, and building a relationship with a credit union can increase your chances of approval.

Credit unions are not-for-profit organizations that serve members who live or work in a particular area. You have to meet the requirements and pay a membership fee to join before you can apply for a loan.

Two options are First Tech Federal Credit Union and Alliant Credit Union. Both offer unsecured personal loans up to $50,000 that can be used for any purpose.

Loans through a tiny house builder

Tiny houses may be financed through a lender that partners with a builder. These loans are either unsecured (based primarily on your credit score) or secured by the tiny house.

The potential benefits include low starting rates (typically under 10%) and longer loan terms (10 to 20 years or longer) than personal loans.

But this option may require a down payment of up to 20% of the purchase price, and if the loan is secured, you can lose the tiny house if you can’t make payments.

Tiny homes on wheels may qualify for RV loans, but only if the vehicle is certified as an RV by the Recreational Vehicle Industry Association.

Home equity loans

Home equity loans and lines of credit are available if you own a home and want to add a tiny house to the land as an accessory dwelling unit or buy a mobile tiny home.

Home equity loans usually have low rates and long repayment terms (typically more than 10 years), which allow lower monthly payments. But you’ll need equity to qualify, and you can lose your primary home if you can’t make payments.

Tiny house financial risks

The benefits of a tiny house may include lower housing expenses and less upkeep. But factor these costs into your budget: