Can a Tiny House be Financed?

When I first began writing about tiny houses in 2009, I couldn’t find any information on financing homes under 400 square feet. If anything, the information I found was usually pointing towards, “NO,” they can’t be financed. Yet, with the growing popularity of tiny houses through television shows, like Tiny House Nation, financing is now available. 

I’ll get to all the financing details in just a moment…

I’ve also realized that I haven’t kept on top of the plethora of companies that now build and sell tiny homes. I remember a time when Tumbleweed Tiny Homes was pretty much the only company building and selling these kinds of homes. Thanks Jay Shafer, you started a movement! (Hope you’re being reimbursed in some way. 😉 ) With all of the new tiny house companies popping up, one that I’m really impressed with is Wind River Tiny Homes. They have a few different floor plans (with and without lofts) and style options ranging from craftsman to rustic to modern. Their interiors are gorgeous with bamboo flooring and tongue and groove cedar planks. But what I think I like most about their website is the transparency – they list what each home comes with, including options for going off-grid, and state their pricing right on their site. They’re based out of Tennessee, but the homes can be delivered anywhere in the United States (because they’re on trailers, essentially.)

Now, back to the financing. Wind River Tiny Homes has a great FAQ section that delves into the common questions people have about tiny homes including financing. There are now a few different ways to finance a tiny home including going through Tiny House Lending or LightStream (a division of Sun Trust Bank). Based on information on both sites, the financing for a tiny house isn’t considered a mortgage. Instead, it’s a consumer loan, so no down payment is required and it would report to your credit report as a line of credit, basically. However, the length of the loans only go up to 84 months, or 7 years. The shorter the loan, the better the APR, starting around 4% for excellent credit. So, let’s do some math because math is fun!

Let’s say I purchase a Modern level 2 with a bedroom over the gooseneck for $54,000 (I love how the pricing is RIGHT THERE on the Wind River site). I’m going to pretend that I have $15,000 to put down towards the tiny home, though it won’t be considered a down payment, instead it will be paid directly to Wind River when I hand over the complete payment. So, I’d finance $39,000. Since I love low APRs, I’d want to go with the lowest APR and over a short time period. Using the information on LightStream’s website, I’m going to predict that I’d qualify for the 4.9% APR (based on my credit score, history, and income) and pay the balance off in 3 years or 36 months. My monthly payment would be $1,156 and I’d only end up paying $2,634 in interest. Here’s a clearer breakdown:

• Total cost: $54,000
• Cash on hand: $15,000
• Financed amount: $39,000
• APR on a 36 month loan: 4.29% (current rates based on LightStream’s site)
• Monthly payment: $1,156
• Total interest paid over time: $2,634

Okay, so if you break down the price per square foot, it’s about $250 / square foot (and this doesn’t include land, which is a separate article, entirely). Now, I know some might argue that’s a ridiculous amount to pay on such a tiny house, but tiny homes allow for flexibility of location and a way to be mortgage free in a few short years.

[dropshadowbox align=”none” effect=”lifted-both” width=”auto” height=”” background_color=”#ffffff” border_width=”1″ border_color=”#dddddd” ]If you’re interested in building your own tiny home, check out the Tiny House Plans book. It has some great building plans.[/dropshadowbox]

*Photo: Wind River Tiny Homes, Chimera