Tiny Home Financing: Compare Loan Options

Whether you want to avoid increasing home prices or declutter your lifestyle, tiny homes can be an attractive option. But you’ll need to find alternative financing because tiny houses often don’t qualify for traditional mortgages.

To fund your tiny home, you might consider a personal loan, tiny house mortgage, mobile home loan, or RV loan. We’ll examine each option and explain how to get approved for tiny home financing.

Why use a personal loan for tiny house financing?

Lender	Best for
LightStream	Excellent credit
SoFi	Good credit
Upgrade	Fair credit
Upstart	Thin (little to no) credit

Personal loans are one of the best ways to finance a tiny home for two key reasons:

1. Personal loans are more flexible: You can use a personal loan for almost anything, including building or purchasing a tiny home. Plus, you can put any leftover funds toward sprucing up your new place.
2. You’re not subject to strict property requirements with a personal loan: Some mortgage lenders won’t finance homes under 400 square feet, or that aren’t built on a permanent foundation, but personal loan lenders don’t impose those stipulations.

How much you can borrow with a personal loan—and at what rates—varies based on your credit score. Higher scores generally have better approval odds, qualify for higher loan amounts, and secure the lowest interest rates.

Knowing your credit score ahead of time can help you target lenders that cater to your credit profile. 

As you find potential matches, prioritize those that let you prequalify with a soft credit pull. That way, you can compare multiple loan offers with no commitment and no impact on your score.

---

Tip

You can pull your credit report every week for free. You can also check your credit score with services such as CreditWise from Capital One or Chase Credit Journey—even if you aren’t a customer.

---

4 best tiny house loans

We’ve curated this list of recommended lenders to start your search for tiny home financing. Each lender boasts a simple application process and quick funding times. For easy navigation, we organized our selections by credit category.

Best for excellent credit – LightStream

View Rates

LendEDU rating: 4.8 out of 5

• Loans from $5,000 – $100,000
• Rate Beat Program offers rates 0.10% lower than the competition
• Repayment terms up to 240 months

LightStream is our top-rated personal loan for excellent credit, with a rate discount when you use autopay. LightStream also offers specific loans for tiny homes, park model homes, and land purchases—everything you need to live out your minimalist dreams.

LightStream loans have no fees. The lender doesn’t have a prequalification process, so we think the best fit is those with excellent credit who are confident they’ll be approved. Approved borrowers can get their funds as soon as the same day. If you’re not satisfied with your experience, LightStream will give you $100 back. 

Best for good credit – SoFi

View Rates

LendEDU rating: 5.0 out of 5

• Loans from $5,000 – $100,000
• Same-day funding available
• Prequalify in 60 seconds

SoFi is our prime choice for customers with good credit, extending several rate discounts to help you save. SoFi doesn’t require origination fees, and it never charges late fees or prepayment penalties.

In keeping with its borrower-centered atmosphere, SoFi offers several one-of-a-kind benefits, from free financial planning to a members-only Facebook group. Having those resources at your fingertips could be valuable as you chart your path to tiny home ownership.

Best for fair credit – Upgrade

View Rates

LendEDU rating: 4.9 out of 5

• Personal loans from $1,000 – $50,000
• Pay off your loan early with no prepayment fees
• Get funds within 1 day of clearing necessary verifications

Upgrade considers credit scores down to 580, making it a solid pick for tiny home hopefuls with fair credit. Upgrade doesn’t penalize prepayment, but it charges origination fees. If you borrow from Upgrade, expect an origination fee of at least 1.85% but no more than 9.99%.

Upgrade loans have repayment terms of up to 84 months. It offers multiple rate discounts and accepts joint applications. If you’re buying your tiny home with someone else, a joint application could help you lower your rate even more.

Best for little to no credit – Upstart

View Rates

LendEDU rating: 4.8 out of 5

• Loan amounts from $1,000 – $50,000
• Next-day funding available
• All credit scores accepted

Short credit history? No problem. Thanks to its alternative lending model, Upstart offers loans to borrowers with little or no credit. Upstart considers more than just your credit score, weighing additional factors, such as your education and employment history, to help you get approved.

You can check your rates with a soft credit pull. Repayment terms are limited to 36 or 60 months, but you can split payments into two monthly installments instead of one, giving you greater control over your budget during your tiny home build.

Pros and cons of a personal loan for tiny home financing

As with most financial products, using a personal loan for tiny home financing has its share of pros and cons.

Pros

• Fast funding (same day in some cases)

• Less paperwork than a mortgage

• Unsecured, so it doesn’t put your home on the line

• No down payment

• Can use the funds for other purposes

Cons

• Higher interest rates than mortgages, especially with poor credit

• Shorter repayment terms

• Higher monthly payments

Alternatives to personal loans for tiny homes

If you’re not sure whether personal loans are the best route to take for your tiny home, explore these alternatives:

Alternative	When it makes sense
Mobile home financing	You want longer loan terms
RV loan	Your tiny home is RVIA-certified
Home equity loan or line of credit	You already own a traditional home
Tiny house mortgage	You want a lender that specializes in tiny home financing

Mobile home financing

It may be possible to use mobile home financing for your tiny home. Today, the proper term for these homes is manufactured home, and several funding options exist. 

For example, you can finance manufactured homes with a Federal Housing Authority (FHA) loan. The maximum loan amounts from the FHA are $69,678 for just a manufactured home or $92,904 for the home and lot. Loan terms range from 15 to 25 years.

RV loan

If your tiny home is on wheels, you can apply for an RV loan. However, it must be certified by the Recreational Vehicle Industry Association as a recreational vehicle (RV) to qualify.

RV loans are available from online lenders as well as brick-and-mortar banks. Depending on your lender, RV loans can have terms as long as 15 years. These are secured loans, meaning you must use your home as collateral.

Home equity loan or line of credit

If you already have a traditional home, you can borrow against its equity to purchase a tiny house. Home equity loans give you a lump sum upfront, and a home equity line of credit (HELOC) lets you pull out funds as needed.

A home equity loan might make the most sense given tiny homes’ $30,000 to $60,000 price tag. However, a HELOC could be better in specific scenarios, such as when you want to upgrade or repair your tiny home.

Tiny house mortgage

Certain lenders offer specific financing for tiny homes without the square footage requirements of a traditional mortgage. You can use these to buy or build tiny homes and similar properties, such as park models—prebuilt trailers that look like a house.

Tiny house mortgages are often similar to personal loans in several ways. They might have same-day funding available, with loan amounts of $5,000 to $100,000. However, that also means higher APRs and shorter repayment terms than traditional mortgages.

Should you take out a tiny home loan?

Taking out a tiny home loan can be a simple decision, but consider the following before you move forward:

Consideration	Why it matters
Your interest rate	Higher rates can increase how much you pay for your tiny home over time.
Your budget	Adding a tiny home payment could make it harder to pay other bills.
Your future goals	Financing may be unwise if it jeopardizes your ability to meet other money milestones.

Your rate

Even if you have a low credit score, you can likely find a lender to approve your tiny home financing. The tradeoff could be elevated interest rates. These rates can increase your monthly payments, borrowing costs, or both.

As you compare loan offers, calculate the total cost of the loan over time. If it’s more than you’re comfortable investing in your tiny home, consider waiting to finance until you can qualify for a better rate.

Your budget

Another consideration is how much you can afford to pay monthly. Look at your income and expenses to see how much wiggle room you have for a house payment. Then weigh that against how your budget will change after moving into your tiny house. 

If your budget is already stretched thin, financing a tiny home may not be a wise move just yet. But financing might make sense if you can swing the added payment—and if your living expenses decrease once you’re in your tiny home.

Your future goals

Are you embracing tiny home living for the long haul, or is it a temporary arrangement? If you fall into the latter camp, do you have an exit strategy? What happens with your tiny home—and your financing—if you decide to live elsewhere?

Before you finance a tiny house, you need to consider how the decision will affect you down the line. You may want a traditional home in the next couple of years, for example, and taking out a large loan now could make it harder to qualify for a mortgage later.

---

Tip

Financing has long-term credit impacts, so it’s not always the best way to approach a short-term situation. Test the tiny home waters first (you could rent one for a weekend, for example) before entering into a loan agreement.

---

How to finance a tiny house with a personal loan

Financing a tiny house with a personal loan is often a quick and easy process, especially compared to applying for a mortgage. And since you aren’t taking out a mortgage, no down payment is involved. Here’s how it works:

1. Check zoning laws and permitting. Your city’s or county’s planning department can tell you what zoning laws will affect your tiny house, what permits you’ll need, and what those permits cost.
2. Determine how much you’ll need to borrow. You can calculate your ideal loan amount once you know how much you’ll pay for permits. Be sure to factor in additional costs, such as appliances, smaller furniture, and land improvements—for example, installing a septic system.
3. Shop around. Before applying, prequalify with at least four lenders. (It usually only takes a minute or two to get preapproved.) Compare your loan offers, and select the one with the best rates and terms.
4. Apply for your loan. After choosing a loan offer, you’ll submit a full application with that lender. 

Once you’ve completed your lender’s verification process and gotten final approval, your lender will disburse your loan, most often to your bank account. In many cases, same-day or next-day funding is available.

For the best shot at fast funding, apply earlier in the week and earlier in the day. If you apply at 6 p.m. on a Friday, for instance, you likely won’t get your funds until the following Monday or Tuesday.

How does repayment work on loans for tiny homes?

Repaying your tiny home loan is similar to repaying any other type of loan: You’ll pay a set amount each month until your loan is satisfied, though most lenders will let you make additional, principal-only payments to accelerate your loan payoff.

Your monthly payment depends on the rate you qualify for, your loan size, and your repayment period. For simplicity, we’ll assume you have good to excellent credit and need a $50,000 tiny home loan. Here’s how different terms and rates could affect your payment: 

Loan term	Monthly payment
36 months at 10.49% APR	$1,625
48 months at 11.74% APR	$1,310
60 months at 12.49% APR	$1,125
72 months at 13.24% APR	$1,010
84 months at 14.99% APR	$965

As you might notice, longer repayment terms decrease your monthly payments. However, longer repayment terms also have higher rates, which could increase the total amount you pay over the life of the loan.

FAQ

What is the best tiny home financing option for bad credit?

Our research shows Upstart is the best tiny home financing option for bad credit. The minimum credit score to apply for a personal loan with Upstart is 300—the lowest possible.

Can I get a tiny home mortgage?

We’ve discussed personal loans for tiny homes, but several lenders offer specific mortgages for tiny houses. Check to see whether your lender offers tiny home financing.

Do any lenders specialize in tiny house lending?

Most lenders don’t specialize in tiny house lending, but some offer specific loans for tiny homes. LightStream is one example of a lender that provides tiny home financing.

Is buying or building a tiny house more expensive?

Buying a tiny home is often more expensive than building one. However, it’s not uncommon to underestimate the cost of building a house, especially if you aren’t experienced. Buying a tiny home will likely provide you with the most predictable costs.