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Personal Loans

How to Finance Your Tiny Home: Personal Loans and 5 Other Options

Tiny homes are affordable and great for individuals or couples, especially those who own a quiet plot of land. But conventional financing options such as mortgages typically aren’t available for the purchase of a tiny house. So, what are your tiny home financing options?

We’ll explore quite a few tiny home financing strategies below, including personal loans, RV loans, home equity loans and HELOCs, and contractor financing.

Table of Contents

Can you get a mortgage for a tiny home?

In most cases, no. Tiny homes continue to grow in popularity as people lean into a minimalist lifestyle and affordable housing (especially after the 2007 to 2008 financial crisis related to mortgages). Though there’s no single definition of a tiny house, we generally consider properties between 100 and 400 square feet to be tiny homes. Generally, tiny homes do not have a foundation. Many are mobile houses (on wheels); others are modular homes dropped in a single location.

Lenders typically restrict mortgages for tiny homes because they often don’t meet the requirements for square footage, permanent foundations, or minimum financing thresholds. However, financing is still possible—you’ll just need to think outside the box.

How to get a loan for a tiny home

When you purchase or build a tiny home, you may have several financing options to consider, depending on your scenario.

Financing typeBest for
Personal loanBorrowers who can pay the loan quickly
RV loanBorrowers purchasing a tiny home with wheels
Home equity loanCurrent homeowners who know exactly how much their tiny home will cost
HELOCCurrent homeowners who aren’t sure how much their tiny home will cost
Contractor financingBorrowers building a tiny home through a contractor
MortgageBorrowers purchasing a more expensive tiny home with a foundation

Personal loans to finance a tiny home

Personal loans are one of the best ways to finance a tiny home. Assuming you have excellent, good, or even fair credit, you should be able to qualify for a personal loan between $1,000 and $100,000, with a repayment period of two to seven years. That may sound like a short repayment window for a home, but tiny homes are a fraction of the cost of a house; it’s doable if you have room in your budget.

You can use a personal loan for almost anything (but you can’t use them as a down payment on a house for a traditional mortgage), and interest rates max out at 36% (or 18% if you borrow from a credit union). If you have a strong credit score and a low debt-to-income ratio, you can expect your personal loan interest rate to be much lower than that.

You may not need a personal loan to finance the entire tiny home, either. If you can save for a “down payment” like you would for a traditional home, you might only need to borrow a portion of the tiny home cost.

We recommending using an online loan marketplace—our favorite is Credible—to compare multiple personal loans in one place, but a good lender to start comparing options on your own is LightStream, which has a personal loan designed for tiny homes. You can also consider other lenders we named to our roundup of the best personal loans:

Company Best for… Loan amounts Rating (0-5)
Best Marketplace $1,000 – $200,000
Best for Good Credit $5,000 – $100,000
Best for Fair Credit $1,000 – $50,000
Best for Excellent Credit $5,000 – $100,000
Best for Little to No Credit $1,000 – $50,000

RV loans for a tiny house

RV loans are another viable option for tiny home financing—if the house is on wheels. RV loans might be secured, much like auto loans, by the item you’re financing. And because RVs tend to be expensive, you can usually get approved for a loan large enough to cover the cost of a tiny home.

Though it depends on the lender, RV loans typically have a repayment term between 10 and 20 years. Interest rates also depend on the lender (and your credit score), but among the best RV loans, interest rates can start as low as 6.74% (Southeast Financial).

Company Loan amounts Secured loan?
$5,000 – $100,000 No
$10,000 – $150,000 Yes
$5,000 – $500,000 Yes

Home equity loans for a tiny home

If you already own a home and want to add a tiny home to your property, a home equity loan could be the right way to go. Even if you purchased separate land and plan to sell your current home, a home equity loan allows you to stay in your current home and wait to sell until your new home is ready for move-in.

Like with a personal loan, a home equity loan means you’ll get a lump sum at the start of the loan, and you’ll make monthly payments over time—anywhere from five to 30 years. Because it’s a lump sum, you should know about how much the tiny home will cost before taking out the loan.

To qualify, you’ll need good credit, and you need enough equity in your home to qualify for a loan large enough to cover the cost of the tiny house. LendingTree is an excellent online home equity loan marketplace to begin your search, but here are several top home equity loan lenders:

Company Loan amounts Rating (0-5)
$10,000 – $2 million
$10,000 – $500,000
$35,000 – $300,000
$25,000 – $249,000

HELOC for a tiny home

A home equity line of credit (HELOC) is similar to a home equity loan in that you borrow against the equity you’ve built in your home. However, home equity loans generally have fixed interest rates, while many HELOCs have variable interest rates.

HELOCs are ideal for homeowners who may not have a clear vision of the total cost of tiny home construction. With a HELOC, you have a line of credit you can draw from as needed. There’s no risk of underestimating or overestimating how much you need.

Like with home equity loans, a solid place to start comparing lenders is through an online marketplace such as LendingTree, but we’ve also identified a few of the best HELOC lenders we like for tiny homes:

Company Best for… HELOC limits Rating (0-5)
Best Overall $20,000 – $400,000
Best Customer Reviews $5,000 – $250,000
Best Credit Union $10,000 – $1 million

Figure is noteworthy because of its fast approval and funding process; plus, unlike most HELOCs, Figure and Aven offer fixed rates.

Tiny home contractor financing

Contractors that specialize in manufacturing tiny homes may also offer their own financing solutions. Investigate this option when shopping for tiny home builders, but always compare it against personal loan rates, terms, and fees to ensure you’re getting the best deal.

Small home loan lenders

Most mortgage lenders do not offer tiny home financing simply because it’s not profitable for them. For instance, the average cost for a lender to originate a loan is $11,600, according to Freddie Mac. And because a lender’s main source of revenue is interest, they will earn much less on a mortgage for a home that costs around $50,000.

This is reflected in the market. Only 13% of home sales are for less than $100,000, per the Urban Institute, and only a third of those were purchased with a mortgage. Online lenders generally have minimum mortgage amounts of $50,000 or even $75,000; you may have luck with a local bank or credit union, but note that mortgages for tiny homes are hard to come by.

How to find the right tiny home financing for your situation

If your tiny home… Consider… 
Has wheelsRV loan
Does not have wheelsPersonal loan, home equity loan, or HELOC
Is on your own lotPersonal loan, home equity loan, or HELOC
Is on a shared lotPersonal loan
Is being built by youContractor financing
Is prebuilt and purchased by youPersonal loan, home equity loan, or HELOC

The best tiny home financing depends on your unique situation. For instance:

If you’re already a homeowner

Maybe you’re building a tiny home on your land to rent out or house relatives, or maybe you’re building it on land you’ve purchased—and then selling your current digs. Either way, you can tap into the equity you’ve built in your home via a home equity loan or HELOC. Often, interest rates for these loan products are lower than personal loans.

If it does vs. doesn’t have wheels

RV loans are a terrific option if you’re building or buying a tiny mobile home, but you won’t be able to use this type of financing for a fixed home. In that case, consider a personal loan or financing through the contractor, if building.

If you own the lot vs. rent on a shared lot

If you own the lot you’re building on—and that lot already has your current home—you can look into home equity financing. But if you’re renting land in a shared community and aren’t a current homeowner, you’ll likely need to stick with a personal loan.

If you’re building

You can purchase prefab tiny homes, in which case there’s not much construction. But if you paid for a team to design and construct your home, you may be able to get financing through it.

What will your tiny home monthly payment be?

Your tiny home monthly payment will depend on three factors:

  1. How much you borrow (the cost of the tiny home minus any amount you paid out of pocket)
  2. The interest rate
  3. The repayment term for your loan

For instance, let’s say you use a $50,000 personal loan to fund a tiny home. The table below shows how various interest rates and repayment terms will affect your monthly payment.

Interest rateLoan termMonthly payment
10%3 years$1,613
12%3 years$1,661
15%3 years$1,733
10%5 years$1,062
12%5 years$1,112
15%5 years$1,189
10%7 years$830
12%7 years$883
15%7 years$965

Remember, shorter loan terms will yield higher monthly payments—but you’ll pay less in interest over the life of the loan, and you’ll be debt-free sooner.

You can use our personal loan calculator to see how various loan amounts, interest rates, and repayment terms will affect your monthly payment.

The same principle that guides these calculations applies to most other loans, with a few caveats:

  • You traditionally make interest-only payments during the draw period of a HELOC.
  • You will need to set aside costs for property taxes if you own the plot of land.
  • While these loan types may not require homeowners insurance the way a mortgage does, it’s a good way to protect your investment. Budget accordingly.