HOW CAN I FINANCE MY TINY HOUSE? $$$$$

So you wanna buy a tiny home? Four steps to your dream tiny home:

  • Step one: secure your financing so you know your budget.
  • Step two: secure your location to park your tiny home. Will you buy land? Park in a family or friend’s backyard, or a RV park or community? See more info at this blog post:
  • Step three: choose your builder. You can schedule a free 30 minute phone consultation with Hill Country Tiny Houses to discuss your project. We will use your budget and needs as the guideline. If you wish a custom design, we offer that too. (At this phase, you may want to schedule a tour of one of our homes and/or you may want to book a weekend stay in a tiny home to confirm it’s the right decision for you.)
  • Step four: now you’re ready to dive in and make your big dreams come true! We collect a $2,000 deposit to start your project. This will be credited back when you place your final order. We start designing your custom home with our software, the floor plan, the elevations, choosing colors and finishes, all the fun stuff!
  • Step five: 50% down to start your build and 50% two weeks before we are finished. Allow at least 12 -14 Weeks to complete your project. We can deliver it or you can pick it up.

Tiny House Lender Options

1. Personal loans from your local bank, Lending Tree, or even PayPal (many people will combine 1-3 loans from different companies to get the desired total) 

2. Home equity line of credit (some will take out a loan this way and when they sell their house, pay it off).

3. Of course, the option to borrow from friends and family and let them be your bank may save on down payment fees, closing fees, and higher interest rates.

4. The last section of this post includes tiny house trailer lenders. The middle section is for tiny houses on land only. I have listed in order of my personal preference.

NOTES FROM A TINY HOUSE EXPERT

Shari here: “As a Dweller, builder, and advocate in this industry for almost 3 years, I have to report it’s been discouraging and difficult to get our clients financed for THOW’s (see below) . We paid cash with the proceeds from the sale of our big house for our own tiny house and many of our clients are cash buyers, sometimes borrowing from family. I believe the day will come when financing becomes easier, but until then, I hope the following info helpful on your journey.

The first thing you need to understand is the difference between a THOW (Tiny House on Wheels – ie. Travel trailer) and a 399 sq ft Park Model Design – I refer to it as a home on a trailer that can travel occasionally (ie. one with a trailer/chassis under it that comes in on wheels and is designed to be put on land or not moved very often) and a general small home (typically 400-800 sq ft) built off site and delivered to land. The latter is the model we have chosen for our development in Kerrville, Texas, called Tiny Town Texas, coming 2020!

Tiny Houses and RVIA park models on wheels/chassis, are similar to a manufactured home and do not appreciate much in value, esp. if they are not attached permanently to land. Tiny Homes on a foundation on land, however, are considered a modular built home and will appreciate in value like any traditional home. This is the ideal scenario for the banks and insurance companies. You will get far better rates.

It is far easier to get a tiny house loan if you own the land and it’s not on wheels, but on a permanent foundation. The terms and rates are like a traditional mortgage as long as you take the wheels off and put it on a permanent foundation. The banks deem a THOW (tiny house on wheels) a high risk because if they need to repossess it, it could be parked anywhere in the country. Most likely, you will need a down payment around 20-25%.

Many will get a home equity loan, purchase their tiny house, and then sell the home and pay off the loan with profits from the sale. Honestly, this is the simplest way. Of course, you can sell your home, then use the cash to buy a tiny home, but you may be homeless while your tiny home is being built (usually about 12 -14 weeks from the order date with a 50% down requirement).

If you are determined to own a tiny home, please know it may take perseverance and patience on your part to secure a loan. You may not get a “yes” from the first lender you contact. Don’t be discouraged, it’s not you, the system is broken. I often feel like there’s a discrimination against those of us who want to live tiny. We are pioneers and it’s not easy, but I believe it is worth it!”

TINY HOUSE LENDERS FOR THOSE WHO OWN LAND OR WANT TO BUY LAND

Hugh Vaughn, rep for Guild Mortgage

GUILD MORTGAGE, HUGH VAUGHN

Mortgage Broker/Lender. He has access to multiple lenders, but can only serve clients who own land and will put a park model (permanent style–ie. take the wheels off the trailer and put on foundation) style tiny home on it. hvaughn@guildmortgage.net. 512-775-2883. Hugh has had success helping a family in Bastrop, TX, secure a small lot for a small home and get funding. He is a personal friend of ours and we highly recommend him. On the website, you will find some tools like the pre-qualification calculator and affordability calculator.

THRIVE MORTGAGE, GEORGETOWN, TEXAS

SOUTH STAR BANK, AUSTIN, TEXAS

(Please note: Not our first choice simply because they haven’t succeeded with our clients.) Ryan Noyce. phone:  (512) 243-7430.   20-25% down. 7-10% rates for 10-15 year loans.  ryan.noyce@southstarbank.com. https://southstarbank.com/

TEXAS HILL COUNTRY BANK

Kenneth Early is our contact over there. We are friends with the President of the bank and they will do what they can to help you. Mention our name. 830-955-8535. kenneth@txhcb.com.

FIRST FINANCIAL BANK

Texas only. No land size requirement, can finance land and home as a package. Builders risk policy.

CITIZENS STATE BANK

CITIZEN TRUST BANK

MINNEOLA COMMUNITY

Dallas, Texas area.

CAPITAL FARM CREDIT

If you won or are buying at least 5 acres, this one may be a great fit for you. It does require a down payment and you can not have a chassis (trailer/wheels) under it. Rates are very good in this option. We deliver to you on pier and beam and set on a permanent foundation. As long as it is still under 400 sq ft, it doesn’t raise your property taxes. It is often considered an ADU (accessory dwelling unit). Some cities like Austin, Kerrville and most recently Los Angeles, have already legalized ADU’s. Visit website here.

LOAN STAR AG CREDIT

If you own or are buying at least 10 acres, you can have a fully titled home at the end and get the best rates (even without a construction loan process or down payment) in the industry of tiny houses here. Again, you can not have a chassis (trailer/wheels) under it. We deliver to you on pier and beam and set on a permanent foundation. As long as it is still under 400 sq ft, it doesn’t raise your property taxes. It is often considered an ADU (accessory dwelling unit). Some cities like Austin, Kerrville and most recently Los Angeles, have already legalized ADU’s. https://www.lonestaragcredit.com/800-530-1252

BULLISH BOB BAGLEY SECURITIES INC.

TYPE OF LENDER: Other REQUIREMENTS: Other COLLATERAL REQUIRED: Yes ADDITIONAL NOTES: Bob is a an Investment Banker (Securities Broker/Dealer) 972-285-5474…

INCOMMONS BANK OF WACO

LOCATION SERVED: Texas Only. This is a full-service lender.…

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TINY HOUSES ON WHEELS – TRAVEL TRAILER OPTIONS

******Again, it is far more difficult to finance these. Cash buyers are best. Banks do not like them because they are mobile and if they need to repossess one, it could be far away and they probably could not track it down. Consequently, they require about 20-25% down payment and shorter terms like 7-15 years and higher interest rates (often times 7-15%). They also require higher credit scores. If you have any assets/collateral to offer, that does make it easier. Oftentimes, people get a family member to loan them the money or they apply for a personal loan, sometimes two or three personal loans to equal the total they want to borrow.

CITY NATIONAL BANK

Title Required 20% down / min credit score 650 Contact: RonWatson # 903-885-7523 Ext 4139 email: ron.watson@bankatcnb.com

LIGHT STREAM

LIGHT STREAM LOCATION SERVED: USA TYPE OF LENDER: Bank REQUIREMENTS: Personal Loan COLLATERAL REQUIRED: https://www.lightstream.com/tiny-houses

PROSPER FUNDING LLC

LOCATION SERVED: Nation wide with exceptions listed below

ROCK SOLID FUNDING

SOFI

LOCATION SERVED: All States except Mississippi. Call Ken

LIBERTY BANK OF UTAH

ONE MAIN FINANCIAL

ONE MAIN FINANCIAL LOCATION SERVED: USA TYPE OF LENDER: Bank REQUIREMENTS: Personal Loan COLLATERAL REQUIRED: No ADDITIONAL NOTES: https://www.onemainfinancial.com/

LIBERTY BANK OF UTAH