If your Tiny House is/will be RVIA Certified:
Tiny homes built on trailers may meet specifications that help them qualify for an RV loan. To qualify, your tiny home typically needs to be road-worthy as if it were a recreational vehicle, or RV.
This classification, not only helps insurance groups and parking (zoning) rules, but it helps banks classify your tiny house properly. Many local credit unions and regional banks are comfortable financing RV loans too.
- Rates: RV loan rates can be as low as 3.24 percent APR. Rates and monthly payments for these loans tend to be fixed.
- Terms: Typical RV loans are offered for up to 15 years, although 20-year loans are occasionally offered for more expensive projects.
- Amount that can be borrowed: You may be able to borrow up to $100,000 or even more since some RV loans have no upper limit
- Loan requirements: RV loans require proof of income and a good credit score. While the minimum credit score varies from lender to lender, those with higher credit scores tend to get better loan terms and lower interest rates.
All Other Tiny Houses:
Personal Unsecured Loans
Personal Loans are unsecured loans you can access for any reason, including the purchase of a tiny home. The benefit is the fact that you won’t have to get your home approved for the loan to go through. Because a personal or unsecured loan is not backed by any collateral the credit requirements tend to be more stringent than RV loans.
- Rates: Personal loan rates are typically fixed and fall in the 5.99 to 24.99 range. Interest rates can vary widely depending on your creditworthiness.
- Terms: Personal loans are typically fixed, which means you’ll know how much interest you’ll pay and have a fixed monthly payment for the life of the loan.
- Amount that can be borrowed: Personal loans are typically offered in amounts up to $35,000, although you may be able to borrow more.
- Loan requirements: You need proof of your ability to repay the loan and very good credit (generally a FICO score over 740) to qualify for a loan with the best rate and terms. Lenders may also look at your debt-to-income ratio to see how much you can borrow. Determined by taking your total monthly recurring debt and dividing it by your monthly income, typically below 36 percent is ideal for a personal loan.