Can I get a Mortgage on a 'Tiny Home"?

All across the county people are looking to streamline their lives and downsize into small and in some cases tiny, homes. Tiny homes may be all the rage, but can you get a traditional mortgage on a tiny home? Does it matter whether your tiny home has a foundation or is on wheels? If you’re thinking about purchasing – or building – a tiny home this year, read below for information about obtaining a mortgage on a tiny home. 

Why are tiny homes becoming so popular?

The “tiny house movement”, which includes small homes (generally under 1,000 square feet), small apartments, tiny (generally under 500 square feet) homes and spaces is a social movement whose strongest supporters advocate for living more simply and maximizing your living space, rather than continually trying to increase your living space.

The average home size in the United States is just over 2,600 square feet, and according to some real estate studies, homes which are less than 1,000 square feet in size account for only 1% of all the real estate transactions in the US; but that percentage is likely to grow in the future. Following the financial crisis in the late 2000’s, the sale and purchase of smaller homes which are more affordable started to rise. Additionally, tiny homes are often a more ecologically and environmentally-friendly option, which appeals to many millennials as well as baby boomers who are looking to retire and travel more and have less need for a large home.

Can you get a traditional mortgage on a tiny home?

That will depend – maybe yes, but don’t count on it. While many people are interested in tiny homes because they are a lower cost alternative to a larger home, that can actually make it more difficult to obtain a traditional mortgage on them because many lenders don’t offer traditional mortgage loans for amounts less than $50,000. Some lenders may offer personal or unsecured loans that you could use to finance the purchase of your tiny home, but these types of loans almost always have interest rates that are higher than that of traditional mortgage loans, which is something you’ll want to watch out for.

If your tiny home comes with a price tag of more than $50,000 and is on a foundation (versus wheels), you should be able to find a lender that can extend you a traditional mortgage loan – subject of course to your income, assets and credit score. 

I’m thinking about buying/building a tiny home; what else do I need to watch for?

One thing you’ll want to determine is whether you will put your tiny home on a traditional foundation, or mount it on wheels. There are pros and cons to both options, and you’ll want to make sure to research your local code ordinances to see if your tiny home may be subject to any codes or laws which would require a certain foundation type. 

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