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Tiny Home Financing: What Are My Loan Options?

You’ll typically need good to excellent credit to get approved for a personal loan to finance a tiny home. If you have poor credit, you might need the help of a cosigner to qualify.

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By Taylor Medine

Written by

Taylor Medine

Freelance writer, Credible

Taylor Medine is an authority on personal finance. Her work has been featured by Bankrate, USA TODAY, The Balance, Business Insider, Credit Karma, and MSN.

Edited by Savannah Plasch

Written by

Savannah Plasch

Editorial assistant, Credible

Savannah is an editorial assistant at Credible. She received her BA in English from UCLA and an MFA in creative writing from Queens University of Charlotte.

Reviewed by Meredith Mangan

Written by

Meredith Mangan

Senior editor, Fox Money

Meredith Mangan is a senior editor at Fox Money and expert on personal loans.

Updated May 29, 2024

Editorial disclosure: Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

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A tiny home generally refers to a home that’s 500 square feet or less. Because these structures are much smaller than traditional homes, buying one could be much more affordable in comparison.

Tiny homes cost $45,000 on average — but if you get one with few amenities, it could set you back as little as $8,000, according to HomeAdvisor. Additionally, there are several options that could help you finance a tiny home purchase, such as taking out a personal loan.

Tiny home loan types

If you’re looking to finance a tiny home, you likely won’t be able to use a traditional mortgage. While mortgage lenders don’t often disclose their minimum loan amounts, mortgages typically aren’t offered under $60,000 — meaning a tiny home purchase probably won’t qualify.

The good news is that there are several options available that could help you finance a tiny home purchase, including:

Personal loans

A personal loan is a type of installment loan that can be used for almost any personal expense, such as a tiny home. These loans are offered by a few types of lenders, including online lenders, banks, and credit unions.

You may be able to borrow $600 to $100,000 (or more) with a personal loan and will often have options between one and seven years to repay it, depending on the lender. Additionally, most personal loans are unsecured — meaning you don’t have to worry about collateral.

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You’ll generally need good to excellent credit to qualify for a personal loan. There are also several lenders that provide personal loans for bad credit, but these loans tend to come with higher interest rates.

If you have poor credit and are struggling to get approved, consider applying with a creditworthy cosigner to improve your chances. Not all lenders allow cosigners on personal loans, but some do. Even if you don’t need a cosigner to qualify, having one could get you a lower interest rate than you’d get on your own.

If you decide to take out a personal loan, be sure to consider as many lenders as possible. This way, you can find the right loan for your needs.

Credible makes this easy: You can compare your prequalified rates from our partner lenders in the table below in just two minutes — without affecting your credit.

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All APRs reflect autopay and loyalty discounts where available | LightStream disclosure | SoFi Disclosures | Read more about Rates and Terms

Builder financing

Some tiny home builders offer their own financing programs, often in partnership with a third-party financial institution.

Interest rates and terms can vary widely with these options, so be sure to read the fine print carefully and ask any questions you might have to make sure you fully understand what you’re agreeing to.

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Keep in mind

Some builders might require a down payment to secure financing — this could range anywhere from 10% to 20%, depending on the lender.

Learn More: Best Personal Loan Companies

Home equity loan or HELOC

If you already own a home, you might be able to tap into your home’s equity with a home equity loan or home equity line of credit (HELOC). With these options, you might be able to access 75% to 85% of your home’s equity, depending on the lender and the value of your home.

Here’s how they work:

  • Home equity loan: Like personal loans, home equity loans are installment loans that typically come with fixed rates. Because a home equity loan is secured by your home, you’ll likely get a lower rate than you’d get on a personal loan. However, this also means you risk losing your home if you can’t make your payments.
  • HELOC: Unlike a home equity loan, a HELOC gives you access to a revolving credit line that you can repeatedly draw on and payoff — similar to a credit card. HELOCs also tend to come with variable rates, which means your rate could fluctuate with market conditions. Also remember that because your home acts as collateral for a HELOC, you risk foreclosure if you don’t keep up with your payments.

Use your home to get better rates

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How do I calculate my home’s equity? To calculate the equity in your home, you’ll subtract your current mortgage balance from your home’s current market or appraised value.

For example, if your home is worth $400,000 and you owe $300,000, then your home’s equity is $100,000.

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Financing a tiny home: additional considerations

While the cost of a tiny home could be low, here are a few additional considerations to keep in mind:

Will you have to buy land?

You’ll need a place to build your home if you want a permanent structure — which means you’ll need to also purchase land. Depending on the location, this could end up being much more expensive than the actual house.

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Keep in mind

If you’re thinking about buying raw, undeveloped land, then you’ll have to account for preparing the land for construction as well as getting it hooked up with water, power, and other amenities.

You’ll also need to consider local building codes and how much it will cost to make sure your dwelling is up to code. For example, some areas require that sleeping lofts in tiny homes have an automatic sprinkler system, which is another extra cost to budget for. 

Related: Personal Loan To Buy Land

How will you pay for home maintenance?

Like any other home, tiny homes also come with maintenance costs. For example, you might need to service your plumbing, appliances, and other home systems. Plus, if your tiny home is on wheels, you might need to purchase and maintain a truck to haul it.

Learn More: Personal Loan Calculator

Will the home be on wheels?

If you’re planning to build or purchase a tiny home on wheels, you might be eligible for a recreational vehicle (RV) loan. Many of these loans use the RV (or tiny home) as collateral, which means you might get a lower rate compared to a standard unsecured loan.

There are also lenders that offer unsecured RV loans — for example, Credible’s partner lender LightStream offers RV loans from $5,000 to $100,000 and doesn’t require collateral.

If you decide to take out a personal loan for a tiny home, remember to consider as many lenders as you can to find the right loan for your situation.

Meet the expert:
Taylor Medine

Taylor Medine is an authority on personal finance. Her work has been featured by Bankrate, USA TODAY, The Balance, Business Insider, Credit Karma, and MSN.