How To Buy And Finance Your Tiny House While Helping Your Wallet

how to buy a tiny house

NAVIGATION

If you’re wondering how to buy a tiny house, it probably means you are looking for some kind of change in your life. There are so many reasons people start to look into the tiny life for the first time!

Maybe you are looking to buy a tiny house to live in full time and travel the world with loved ones. You might also want to buy a tiny house if need an accessory dwelling unit to use as your creative backyard studio.

You could be building a living space for your mom who’s moving in, or even hoping to enjoy retirement in a brand-new way. There are so many reasons people get the bug to go tiny.

ryans tiny house

Hi, I’m Ryan

Over a decade ago I started to dream about the tiny life and later moved into my tiny home full time. Buying a tiny house is a big decision and there is a lot that goes into it. Here’s what I’ve learned.

ryan mitchell simple living expert

How To Buy A Tiny Home: What To Know Before You Buy

What To Know Before You Buy A ATiny Home

Understanding the buying process of a tiny home is the first step to making your dreams a reality. The process is not for the faint of heart and there are a lot of decisions that need to be made in the process.

There are plenty of sellers out there who will try to sell you less than the best, so I want to give you some advice on the best way to make sure you are ready to buy a tiny house of your own.

What Types Of Tiny Houses Can You Buy?

What Types Of Tiny Houses Can You Buy

First things first — if you want to buy a tiny house, you’ll need to know what you actually want. The tiny house category can stretch pretty wide, and there are many versions of alternative living that people often lump in with the tiny house category.

In addition to figuring out the type of tiny house that fits your lifestyle, you’ll also need to think through the extra assets that will be needed to make a life for yourself in your tiny home. You may need to purchase a trailer, utility hookups, tiny house plans, or other additional assets to make your house complete.

How Much Does It Cost To Buy A Tiny House?

How Much Does It Cost To Buy A Tiny House

With all of that considered, how much will buying a tiny house actually cost? Cost estimates are always tricky because there are so many factors that go into the cost breakdown, like the cost of living in your state, the features that your tiny house has, whether your house is new or used, the size of the house, and much more.

On average, buying a prefabricated tiny house can typically range anywhere from $30,000 to $150,000. It just depends on what makes up the specific home you’re looking at.

how much does a tiny house cost cta

What To Consider Before You Buy A Tiny House

What To Consider Before You Buy A Tiny House

Buying a tiny house can be for anyone who wants to experience the tiny lifestyle. That said, as someone who has paid attention to the tiny house world for over a decade, I often see people get a tad ahead of themselves when getting ready to buy a tiny house.

It’s easy to dream big and forget about all the tiny details that go into such a big purchase. There are certainly things to think about before committing to buying your own tiny house. You want to make sure you know what you’re getting into.

Before You Buy A Tiny House

  • How much money can I afford to spend?
  • Will I need to take out a loan?
  • What ways can I save money?
  • Will I need to hire a builder?
  • What is the cost of utilities?
  • Will I need a hook up to the grid?
  • Will power cost more?
  • Will water cost more?
  • Are tiny homes legal in my city?
  • What else will I need to buy?
before buying a tiny house

Where Can I Buy A Tiny House?

Where Can I Buy A Tiny House

When you’re ready to buy your tiny house, where should you look? There are many sources out there to find tiny homes, but each method has its pros and cons.

In today’s fast-paced, chaotic world, many are craving the simple life. This means that there are many sellers out there trying to sway you into tiny living, so you want to make sure you buy from a trusted, high-quality source.

Tiny Homes On Amazon, Facebook, Cragslist, And More

Tiny Homes On Amazon Facebook Cragslist And More

With the tiny house craze getting more and more popular, big-name websites now have them for sale. Amazon, Facebook Marketplace, and Craigslist are just a few that I can name that have tiny houses for sale at the ready.

tiny houses for saleThe thing with these websites is that they sell a little bit of everything and don’t have specializations. This isn’t necessarily a disadvantage if you are looking for a basic tiny house kit, a used cargo trailer that you plan to refurbish, or a basic trailer to get you started.

These websites are awesome for buying the basics from others and getting a good bang for your buck. They are a fast and affordable option.

However, if you’re looking for a more high-quality tiny house with all the bells, whistles, and fancy features, I would suggest starting with a real estate website or builder that specializes in tiny homes specifically.

Another thing to keep in mind with these websites is that it’s easier to be tricked. Keep an eye out for listings without pictures of the house, extremely cheap prices, or pictures that are identical to or duplicates of other listings. Don’t give anyone your credit card information without confirming that they are a real, trustworthy human being.

Prefabricated Tiny Homes From A Manufacturer

Prefabricated Tiny Homes From A Manufacturer

Buying a prefabricated tiny house from a builder is a great way to go when buying a tiny house. From my own experience, I would say that buying directly from a build and design company is the most trustworthy method to use.

tiny house building companyThat being said, there are still builders out there who don’t have your best interest in mind. My team and I have put together a builder’s guide with tiny house builders in each state if you’re having trouble finding a trustworthy builder near you.

With most tiny house building companies, they have prefabricated designs that you can buy and have shipped straight to you. Additionally, you can choose to partner with the building company to create a custom design that fits all of your specific needs. However, this is a longer process.

If you do go the building company route, also make sure the company you select is reputable and nearby or ships to your area. It would be the worst thing for you to find the tiny house of your dreams only to have to drive across multiple states to pick it up.

Sometimes companies will ship outside of the state that their warehouse is located, but sometimes they only sell locally. Check out our builder’s directory for more information.

Buy A Tiny House From Tiny House Real Estate Websites

Buy A Tiny House From Tiny House Real Estate Websites

There are several real estate websites that were specifically created to buy and sell tiny houses and other alternative housing options. Think of it like a virtual marketplace for tiny house enthusiasts only.

On most of these websites, you have the option of being a buyer or a seller, and can message buyers and sellers in the same way you would on a website like Facebook or Craigslist. Some of the real estate websites are limited to the continental United States, while others have listings in Latin America, Europe, and even Canada.

Tiny House Loans: What To Know

What To Know About Tiny House Loans

Financing a tiny house honestly isn’t all that different from any other type of personal loan you would need to take out. You can apply for a tiny house loan through your traditional bank, a lending company, or sometimes directly from the building company you’ve used for your tiny house.

There are several lending companies that specialize in loans for things like tiny homes, accessory dwelling units, recreational vehicles, boats, or even an island timeshare. However, there are definitely elements of your own financial standing you will want to consider before taking out a loan like this, just to ensure you are ready.

Can You Take Out A Loan For Your Tiny House?

Can You Take Out A Loan For Your Tiny House

The short answer is yes — you definitely can. In a basic sense, taking out a loan for a tiny house is virtually the same as many other loan types.

To get a loan from a lender or a bank, you have to apply for the loan and go through a typical screening process in which your credit score, value of collateral, liquid assets, and employment history are evaluated, and are then approved or denied for the loan.

It’s a pretty black-and-white process, but can take a long time and involve many forms and exchanges with your lender. Additionally, you might run into some unwanted hurdles when trying to finance your tiny home specifically, especially if trying to take out a loan like this from your traditional bank.

It’s important to know what you need and what options are out there so you can make the entire process as easy as it can be on yourself and your wallet.

tiny house contracts

How Are Tiny Homes On Wheels Financed?

How Are Tiny Homes On Wheels Financed

This is probably the most common question when it comes to buying a tiny house. This is because the answer isn’t only dependent on the type of loan or group you use, but the tiny house laws in your state that put your THOW into a category.

Some lenders have categories specifically for tiny houses that cover all types of tiny houses, both on wheels and on foundation. Some lenders have a personal section for park model homes and tiny homes on foundation, while tiny homes on wheels are considered Recreational Vehicles (RVs) and are under a different loan category.

However, RV loans will need to fulfill requirements set by the RV Industry Association or else you’ll be ineligible for this financing.

How to categorize your tiny house on wheels is going to be dependent on where you get your loan, which type of loan you are applying for (which I explain further down in the post), and the housing laws and regulations in your state and city.

how to buy a tiny house pro tip

How Does Interest Work For Tiny House Loans?

How Does Interest Work For Tiny House Loans

The interest rate on your tiny house loan will depend on the group you use or type of loan you use. Interest rates on a tiny house loan work very similarly to any other loan.

You can usually discover your interest rates by talking with a representative from your lending company or by browsing on their website to see what your personal rate might be.

My biggest piece of advice is finding a lender where your interest rates are locked in from the very beginning and aren’t going to increase as time goes on. This is the best way to secure your finances as you pay your loan off.

What To Consider Before Taking Out A Loan For A Tiny Home

What To Consider Before Taking Out A Loan For A Tiny Home

Especially in today’s economic climate, it’s important to make sure you are ready for a loan before diving in. Ask yourself these questions before deciding to finance your tiny house.

Questions To Ask Yourself

  • Is my credit score in good standing?
  • Am I in a stage of life with steady income?
  • What need am I filling with this purchase?
  • Should I wait longer before making this purchase?
  • Could a smaller purchase serve the same purpose?
  • Can I afford the monthly payments for this loan?
  • How much will the loan be with interest?
  • How fast will I be able to pay this off?
  • What repercussions will I face if I can’t pay this off?
  • Does the loan I have chosen have extra fees?
filling out loan application to buy tiny house

One of my favorite aspects of minimalism and simple living is the wisdom behind spending, saving, and the pursuit of financial freedom. Money isn’t our purpose, but being smart with it gives us power to achieve freedom, independence, and a higher quality of life.

Take it from a guy who has learned the value of being intentional with his finances: the last thing you want to do is get yourself into debt you can’t get out of.

Don’t get me wrong — loans can be a great tool to get you where you want to be in life. However, the practice of caution and thoughtfulness when deciding to take out a loan of any kind can be a lifesaver in the long run.

Options For Financing A Tiny House

Options For Financing A Tiny House

To walk you through the process of financing a tiny house, let’s start with the two basic questions you need to consider:

Where is the loan coming from?

What type of loan will I need?

There are definitely pros and cons to each of these routes, and a lot of what goes into your decision will depend on your personal financial situation, where you’ve purchased your tiny house from, and what type of loan works best for your life.

Tiny House Loans From A Lending Company Or Bank

Tiny House Loans From A Lending Company Or Bank

I got the chance to speak with Julie Olian, a representative from Lighstream lending company. Julie explained the benefits of going through lending companies with these kinds of loans.

Lighstream lending company specializes in providing personal loans for large purchases that may not be as easy to get approval for if going through a traditional bank, like weddings, time shares, and tiny houses.

how to buy a tiny house pro tip

“Traditional banks don’t quite know how to handle tiny houses because they are often too small to qualify for mortgages.”

– Julie Olian, LightStream.com

A huge advantage to using a lending company and the reason so many tiny house enthusiasts gravitate towards this option that it really streamlines the process of getting the actual money in your hands. It’s just simpler — there is less paperwork, less back and forth, and less confusion than there would be with a traditional bank.

borrowing money to buy a tiny houseAnother reason homeowners gravitate toward this route is that there aren’t typically fees placed on top of the price of the loan itself, which tends to be attractive to customers. The cost of your loan is made clear from the beginning.

Lending companies also rarely require a down payment, which also helps out tiny homeowners significantly. Lastly, lending companies tend to have more of an understanding of the fact that the makeup of every lifestyle is different.

If you’re buying a tiny house, it’s likely that you may not have a typical employment history and may have different types of paperwork to prove your stability. Lenders who specialize in more Avant Garde loans tend to get this more than a bank might.

However, like anything else, do your homework when deciding if this is the route for you. Calculate the total a loan from a lender would cost you, and don’t forget interest rates. Evaluate what you can comfortably afford.

pro tip how to buy a tiny house

“Every situation is different. All we have to determine is that the funds we are giving to you will come back to us, month to month, in a timely manner. Other than that, it’s simple.”

– Julie Olian, LightStream.com

Loans From Tiny House Build And Design Company

Loans From Tiny House Build And Design Company

Taking out a loan from a building company directly is a different ballgame, because the financing process is often embedded into your partnership with the build and design company itself.

new tiny house for saleFor example, Tumbleweed Houses advertises a 15-year loan at a 6.09% interest rate. However, you have to be able to put 20% down on one of their specific tiny house designs. With almost all building company loans, you can’t take out the loan without buying one of their tiny homes.

The major upside to taking out a loan with your building company is all the hoops come from one source. You don’t have to spend extra time seeking out a lending company after you’ve already found your dream builder.

The downside is there is less freedom or fluctuation in what type of loan you can get, how much you can borrow, and developing a plan that works for you. Building companies usually have standard plans worked into the entire process.

Rent To Own Your Tiny Home

Rent To Own Your Tiny Home

In today’s tight economy, renting to own is becoming a much more popular option for people who want a change quickly but can’t quite afford to move out and buy property right away.

rent to own a tiny houseA major advantage of renting to own is that you don’t have to pay back a loan overtime. Instead, you pay on the property like a renter until your lease is up and you are able to buy the tiny house from its current owner.

There are two basic types of Lease Purchase agreements. Some agreements give the renter the option to buy the property at the end of their lease, while others lock you into buying the house at the end of your lease from the beginning of the lease agreement.

For tiny homes, you will typically see a monthly payment between $120 per month up to $460 per month, depending on terms and cost of the house. You’ll also be required to pay a down payment.

The down payment on a tiny house rent-to-own agreement is usually between 2% to 5% of the loan, so plan to put down at least $500 up to $3,000 as your down payment.

Should I Buy Or Build My Tiny House?

Should I Buy Or Build My Tiny House

You can’t really go wrong with buying or building your tiny house. Both options are awesome and have pros and cons to them. At the end of the day, people who buy a tiny house over building one are typically concerned about two things: money and turnaround rate.

Buying your tiny home pre-built is typically going to be cheaper than building one because labor is a cost of its own. While the cost of labor is built into the cost of your house, it doesn’t fair with builder costs.

The exception to this is if you build your tiny house entirely yourself and use a budget-friendly tiny house floorplan. There are many floorplan options out there for two-bedroom, three-bedroom, or even four-bedroom tiny homes.

buying a tiny house pro tip

“Consider the auxiliary costs that go with tiny houses. Do you need to purchase land? Will you need a trailer? Will there be travel costs? Don’t just budget for the house alone.”

– Julie Olian, LightStream.com

If you are hoping to have your tiny house ready to move into quickly, it might not be the best option to build it. Buying your tiny home expedites the process and will have you ready to move in much faster. Both options work, but buying does tend to be faster and cheaper.

Your Turn!

  • Where you will buy your tiny house from?
  • Will you need a loan for your tiny home?
4 Comments
  1. I see that you wrote this several years ago. However it is now June of 2022, and your numbers are really out of date especially considering the huge price increases in materials since COVID. Promoting that you can build something for so incredibly little does a huge disservice to the tiny home community and builders therein. Now you can not build something of quality without spending $45-50,000 minimum. And then there’s labor and profit because if it’s your job to build houses you deserve to be paid for it too. Just as anyone else who works deserves to be fairly compensated for their work. So most probably you will not be having someone else build something for less than 80-90,000 and a good 25-30,000 of that’s labor .

  2. Hi Ryan, your house is beautiful. Did you build or buy? If buy, what company? Model?

  3. Where is your web site that sells the tiny houses very interested

  4. Are there plans that include building material? Such as these prefabricated boxables? Like a tiny house kit, if you will. Beams, floorboards, wall paneling, etc….

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