The 5 Best Tiny Home Loans in 2020

Finance your (tiny) home

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Tiny houses are a popular route to homeownership—especially for those hoping to lead a lower impact and more intentional lifestyle. Unfortunately, mortgages aren’t typically available for tiny houses because they don’t qualify as traditional real estate. For that reason, people often turn to one of three financing options: builder financing, a personal loan, or an RV loan. 

There are tons of tiny house builders, each of which may offer in-house financing or work with a preferred lender. Instead of focusing on this side of tiny house lending, our list of the best tiny home loans highlights traditional and online lenders that offer personal and RV loans. We reviewed available loan amounts, APRs, repayment terms, and eligibility requirements to find loans to meet your needs.

Best Overall: LightStream

LightStream

LightStream

As a consumer lending arm of Suntrust (now Truist), LightStream offers personal loans to borrowers in all 50 states, plus Washington, D.C. and Puerto Rico. In addition to providing loans up to roughly $100,000, LightStream has flexible repayment terms for lenders—between two and seven years. While personal loan terms don’t extend as long as for mortgages, LightStream’s terms can lower the monthly cost of owning a tiny house as compared to some other lenders.

Borrowers can also save money on interest by taking advantage of LightStream’s low APRs, which start at about 2.49% (and reach a maximum of 19.99%), as of November 2020. That said, the lowest rates are reserved for applicants with excellent credit (though the minimum qualifying score is roughly 660). Once approved, LightStream customers avoid origination fees, late fees, and prepayment penalties, which can help reduce the total loan cost.

LightStream also excels at customer service. Borrowers can receive their loan funds as quickly as the same day if their application is approved before 2:30 p.m. EST on a banking business day (among some other administrative requirements). Customer support is available for current borrowers Monday through Saturday and seven days a week for application processing

Why it's a fit for Treehugger: LightStream is Treehugger’s overall top pick because borrowers can access funds as soon as the same day they apply and get in their tiny dream home quickly.

Best Prequalification: SoFi

SoFi

 SoFi

SoFi is an online lender that offers personal loans for a range of uses—including the purchase of a tiny home. Although SoFi's personal loans can’t be used for the purchase of real estate, we confirmed with a rep that they may be used to purchase a tiny house. Loans are available in every state except Mississippi, and—like LightStream—loan amounts range from roughly $5,000 to $100,000, making it a flexible option for a range of tiny houses. 

Repayment terms are available from two to seven years, and APRs range from around 5.99% to 18.28% (including a 0.25% autopay discount), as of November 2020. SoFi’s minimum credit score requirement of 680 is higher than other options on our list, but prospective borrowers can also take advantage of the lender’s prequalification process. This lets tiny home buyers shop around for the best rates and terms without a hard credit check, which is extremely helpful when buying a tiny house—especially if you have a weaker credit profile and aren’t sure what you’ll qualify for.   

As a bonus, SoFi does not charge any fees, and you won’t incur a prepayment penalty if you decide to pay off your loan ahead of schedule. And, if you lose your job, you can take advantage of the lender’s unemployment protection or payment deferral.  

Why it's a fit for Treehugger: SoFi is a great option because its prequalification process makes it easier to find competitive loan repayment terms that fit with your budget and creditworthiness.

Best Manufacturer Financing: Liberty Bank of Utah

Liberty Bank of Utah

 Liberty Bank of Utah

Liberty Bank offers tiny house funding in all 50 states and through more than 25 approved tiny home manufacturers. Unlike other lenders on our list, Liberty Bank of Utah’s loans are tiny house-specific and are secured by the financed home. This means that you’ll have to make a down payment of at least 20% of the purchase price, and the bank will hold the title to your tiny house until the loan is paid off.  

Liberty Bank of Utah loans are available from roughly $20,000 to $100,000, making the lender a good option for those wanting to purchase a new tiny house from a manufacturer. Repayment terms are available for five, 10, 15, and 23 years, and APRs range from around 6% to 10%, as of November 2020.

If Liberty Bank doesn’t underwrite loans in your state but you’re buying a tiny home straight from a manufacturer, check with your builder to see if they offer in-house financing or loans through a partner. If you’re eligible for favorable rates and terms, manufacturer financing can be an easy way to afford your new home. 

Why it's a fit for Treehugger: Treehugger loves Liberty Bank because it works with so many tiny house manufacturers, making it easier to finance the custom tiny house of your dreams.

Best Mobile Tiny Home Loan: Rock Solid Funding

Rock Solid Funding

 Rock Solid Funding

Rock Solid Funding, LLC is a Texas-based lending platform that specializes in RV and trailer loans in most states. For tiny houses that qualify as an RV—homes that are built on wheels—Rock Solid Funding offers loans starting at just $1,500 and doesn’t impose a maximum lending limit, so loans are truly customizable. Rock Solid also provides borrowers with flexible repayment terms, ranging from three years up to 20 years for loans over $100,000. 

Beyond offering an incredibly wide range of loan options, Rock Solid makes financing available to a larger number of applicants. The lender’s minimum credit score requirement is just 575, so it's an accessible option for borrowers with poor credit. 

As of November 2020, APRs start at about 4.5% and go up to about 17.99%—so you won’t pay an exorbitant rate even if you have a weak credit history. Plus, like many other lenders on our list, you won’t be penalized if you decide to pay off your tiny home loan early.

Why it's a fit for Treehugger: We love Rock Solid Funding because it offers incredibly flexible loan options and accessible qualification requirements for movable tiny houses.

Best DIY Tiny House Loan: Marcus by Goldman Sachs

Marcus by Goldman Sachs

 Marcus by Goldman Sachs

As the consumer lending and banking arm of Goldman Sachs, Marcus offers personal loans between roughly $3,500 and $40,000. Because of the lower loan amount, Marcus is our top choice for Treehugger readers who are building their own tiny house or buying a less expensive dwelling. 

Marcus doesn’t disclose the minimum credit score required to qualify for a personal loan. That said, some third-party sites report that borrowers must have a score of at least 660; higher scores mean lower rates and more favorable loan terms. As of November 2020, the APR runs between roughly 6.99% and 19.99% and repayment terms are between three to six years.

Marcus does not have a minimum income requirement. Instead, applicants are evaluated based on whether their income can cover their current debts and repayment of the Marcus loan. However, Marcus does not allow co-signers or co-applicants, so we only recommend this option if you have a score high enough to qualify on your own.   

Marcus borrowers also benefit from a no-fee structure—meaning you won’t have to pay any origination fees, late payment fees, or prepayment penalties. Customers can also take advantage of a 0.25% discount rate by signing up for autopay and can get a loan approval in under 24 hours, which may be helpful if you want to start building your tiny house right away. 

Why it's a fit for Treehugger: If you’re building your own tiny house or buying a more budget-friendly model, Marcus’ lower loan amounts and flexible terms may fit your needs.

How Do You Finance a Tiny House?

Personal loans are typically available through traditional banks and credit unions, but online lenders can streamline the application process and may offer more competitive rates and terms. If you’re considering an RV loan, keep in mind that many RV loans can’t be used for full-time units or so-called park models that aren’t towable—like some tiny houses. 

How Much Do Tiny Home Loans Cost?

The overall cost of a tiny home loan depends on several factors, but overall loan expenses are typically summarized by the annual percentage rate (APR). This rate, which can range from 2.5% to 36%, includes the loan’s interest rate as well as additional fees, like an origination fee. Depending on the lender, a tiny home loan may include late payment fees, insufficient fund fees, and a prepayment penalty.

Can You Get an FHA Loan for a Tiny House?

FHA loans are only available for homes that are classified as real estate, and homes that are on wheels—like tiny houses and RVs—cannot be classified as real estate. So, while you may view your future tiny home as a true house, you likely won’t be able to use an FHA loan to purchase a tiny house. That said, an FHA mobile home loan may be used if the tiny house is not smaller than 400 square feet and if it’s affixed to a permanent foundation. 

How We Chose the Best Tiny Home Loans

Financing a tiny home can be challenging, so we reviewed available options to choose the best for Treehugger readers. To do so, we looked at minimum eligibility requirements, like credit score and income, as well as loan amounts, APRs, and available repayment terms. 

Our best overall choice, LightStream, stands out because of its competitive APRs, flexible repayment terms, and high available loan amounts. What’s more, the lender’s customer support team is available seven days a week and borrowers can receive loan funds as soon as the same day they’re approved.