Mortgage loan options for small homes
Many college graduates dream of owning their own home one day. Unfortunately, due to student loan debt, many view the idea of owning their own house as nothing more than a distant dream.
However, more and more people are starting to explore other options, such as buying a tiny home. Read this article to learn more about mortgage loan options for small homes.
What Is a Tiny Home?
The average home in the United States is about 2,600 square feet. On the other hand, the typical tiny home is anywhere from 100 to 400 square feet in size.
There are no official rules in terms of how small a property must be in order to be considered a tiny home. However, in general, a tiny house has an area that is no greater than 400 square feet.
If you want to have a professional builder construct the tiny home, then you may need to pay as much as $100,000. However, it is very feasible to spend as little as $10,000 to build a tiny home.
One of the main problems that individuals encounter when it comes to building or buying a tiny home is deciding where to put it. Some of the most common options include buying land or parking on a family member’s or friend’s property.
If your tiny home is on wheels, you have a few more options. You can move the tiny home to public land or rent an RV spot.
If you decide to purchase land for your tiny home, this will add to the overall costs. Also, you will need to take property taxes into consideration.
If your tiny home is on wheels, you will need to buy or rent a vehicle to move it around. It is also required that you get RV registration and a trailer license plate.
Financing: RV loan vs. Personal loan
You will probably be hard-pressed to find a traditional home loan for a tiny house. The reason for this is that the vast majority of mortgage lenders have minimum amounts for loans.
Also, many mortgage lenders only offer loans for houses that have permanent foundations. Many tiny homes are on wheels. However, to finance a tiny home, you still have the option of taking out a personal loan, an RV loan, or financing directly through the builder.
For example, if you get an RV loan to buy a tiny home, you will get an interest rate for a certain period of time. The interest rate and the length of the term will depend on your credit.
To qualify for an RV loan, you will need to get certification for your tiny house from the Recreational Vehicle Industry Association. Also, you will need to fulfill all safety and manufacturing requirements to make sure the tiny house is safe to hit the road.
If your tiny home is not certified from an association or you hope to place the tiny home on a foundation, you can get a personal loan. The interest rate for the personal loan will probably higher than that for an RV home. The reason is that the loan is unsecured.
For more information about the USDA home loan market and mortgage loan options for small homes, reach out to a mortgage lender.