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Tiny home, big dreams: Can I get a mortgage on my tiny home?

There isn't one solid definition for "tiny home," but the general idea is a small home structure usually built on a trailer foundation that is under 600 feet. A tiny home doesn't have to be built on a trailer foundation, but many are for mobility purposes. You can build a tiny home on your own, or you can buy one manufactured — meaning there are a few templates you can choose from and it’ll arrive, ready to live in. You can even buy a pre-owned tiny home.

You may be charmed by the lifestyle of a tiny home, but before you start downsizing your personal belongings, there are a few things you need to know since financing a tiny home isn’t the same as getting a mortgage for a traditional home.

Why consider a tiny home

This trend isn’t among us just because it’s cute and convenient. Tiny homes have many features that make them attractive to potential buyers.

Financial considerations

  • Tiny homes can cost much less upfront. You have the option to build or buy a new tiny home for much less than a traditional home.
  • Smaller home means lower utility and maintenance bills. Overall, they’re less to power and fix because it's significantly smaller.
  • Often come with lower property taxes and rent. You'll likely be renting a piece of land for your tiny home to occupy, as it’s rare and often not worthwhile to buy the piece of land unless you plan on living there long term.
  •  This is much cheaper than renting a traditional home. Since tiny homes aren't permanent, they don't drive up the value of your land which typically means lower property taxes.

Lifestyle benefits

  • If you're looking to lead a simple, low-key lifestyle.
  • If you're looking to deprioritize material items, living in a tiny house can help with this because there is less room for stuff.
  • Having a tiny home helps reduce your carbon footprint. The smaller the home the less energy output and the less opportunity for waste overall.
  • If you love to travel and are keen on the idea of having a mobile home.

A tiny home’s homebuyer’s journey

When you purchase a regular sized home, it is already on a designated piece of land. It’s a bit of a different story for a tiny home. Before you decide to buy a pre-made tiny house or build your own, you’ll want to figure out where you’re going to put it:

  • Will it be used as a mobile home?
  • Do you want to buy a piece of land for it?
  • Are you looking to rent a piece of land for it?
  • Do you know a homeowner who will let you put it on their property?

It can be difficult to buy a piece of land for a tiny home. Using it as a mobile home, renting a piece of land or borrowing a part of someone else’s property are the most common options. After determining where your tiny home will go and how you will use it, you might want to look into financing options.

A tiny house can cost anywhere from a couple grand to 80 thousand dollars. It depends on the size, amenities and how you plan on acquiring it. You may build it yourself, have one built for you or buy a pre-owned tiny house.

If you're crafty, you may want to build your own as a project. You can buy a floor plan, instructions and various materials from other tiny home builders for guidance. You can also use YouTube tutorials — but building it yourself can still be costly. You’ll need to buy a floor plan and the materials which can cost between 10 to 30 thousand. If you end up hiring builders for help, that could double the expenses.

But how exactly do you go about financing a tiny home?

Buying a regular-sized home vs. a tiny home

Unlike a traditional home, you can't get a mortgage to finance a tiny home. You may be able to use one or more of these options:

  • Recreational vehicle loan
  • Travel trailer loan
  • Personal loan
  • Home equity loan
  • Liquid cash

Using cash up front is usually the best option but not always the most realistic. If you own another home where you’ve built up home equity, taking out a home equity loan may be a good option for you. You can use the money you put into your home to help finance your tiny home. Recreational vehicle loans and travel trailer loans may be a good option for you, but they can be a bit harder to get and carry a high interest rate.

Tiny homes are trending and there’s no secret why. The option for mobility, decreased waste and a simpler lifestyle are enticing features. 

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