How to Finance a Tiny House

Securing financing for a tiny home can be challenging for many aspiring tiny homeowners. Unfortunately, most tiny house builders make it hard for customers to obtain a tiny home loan.

They lack the necessary licenses to sell modular homes or recreational vehicles (RVs), which are required by most banks. As a result, buyers are left with limited options, often relying on a few well-known lenders who offer high-interest personal loans or THOW (Tiny House on Wheels) loans.

In contrast, Tumbleweed is a member of the Recreation Vehicle Industry Association and a licensed vehicle manufacturer and dealer. This allows us to offer our buyers access to manufactured home mortgages and RV loans, resulting in:
  1. Competitive annual percentage rates (APR)
  2. Lower monthly payment on a tiny house
  3. Longer repayment terms
  4. Loan options for buyers with less than excellent credit

Here’s a comparison of our lender network with Lightstream, a popular tiny home lender:

Two women sit on wooden steps, smiling and holding papers about tiny house loans. A laptop is open in front of them, surrounded by plants.

Tumbleweed has financed hundreds of customers using a dozen different banks.

Tumbleweed Network
Industry Standard
$946
per month		 $2,238
per month
$12,137 down $12,137 down
9% interest rate 12% interest rate
25 year
loan term		 7 year
loan term
600+ credit score 700+ credit score
Tumbleweed
Network
Industry
Standard
$946
per month		 $2,238
per month
$12,137 down $12,137 down
9% interest rate 12% interest rate
25 year
loan term		 7 year
loan term

We achieved these savings by shopping your loan with various lenders. Over the years, we’ve financed tiny homes through over a dozen different lenders as RVs, manufactured homes, or personal assets. Finding the best lender for you depends on four key factors:

  1. Your home state
  2. How you intend to use the tiny home
  3. Your credit score
  4. Your debt-to-income ratio

We’ve made it incredibly easy for you to compare rates. Just fill out our pre-qualification form, which takes only a few minutes, and we’ll provide you with the best tiny house payment options tailored specifically for you.

Types of Lenders

When it comes to securing a loan for your tiny home, there are several options for financing a tiny house, each with its own set of advantages and challenges. Tiny home lenders, RV loans, and credit unions all provide pathways to ownership, but the terms, requirements, and ease of approval can vary significantly. Understanding these differences is crucial to finding the best financing solution for your needs.

Tiny Home Lenders

Tiny home lenders are the most likely to approve loans for tiny homes, offering a range of financing options, including loans for a primary residence. Some lenders, like LightStream, provide personal loans with terms up to 7 years, while others offer mortgages with terms up to 25 years. There are no universal standards, so terms and requirements vary. Most lenders require a credit score of 700 or higher, though some will consider scores as low as 600. These lenders understand the unique nature of tiny homes and provide favorable debt-to-income ratios.

RV Loans

Tumbleweed partners with a national RV lender to offer RV loans, which often have similar rates to tiny home loans. However, RV loans can be more difficult to qualify for as they are considered luxury purchases. As a licensed and registered RV manufacturer, Tumbleweed can offer loans with a VIN recognized as an RV. Many other tiny home builders use trailer chassis from RV manufacturers that do not qualify as RVs, making RV loans hard to obtain for most tiny home brands.

Credit Unions

Credit unions occasionally provide loans for tiny homes, but success is more common when the loans are written as RV loans (as Tumbleweed manufactures tiny home RVs). Credit unions offer the lowest rates but have shorter repayment terms. Securing a loan from a credit union can be challenging and often depends on individual relationships. Even if a loan is initially approved, it may be canceled during underwriting if it doesn’t fit the credit union’s criteria for placing a lien on the tiny home. Therefore, it’s crucial for buyers to secure funds quickly once approved to avoid reversals.

By understanding the different financing options and their requirements, you can make an informed decision and find the best loan for your tiny home.

Tiny Home Lender RV Loans Credit Unions
Where to apply Through a builder or online. Apply here. Conventional banks Directly at the credit union with someone you know.
Rates Medium(8.2% – 14%) Medium (7% – 14%) Best (6%-12%)
Length 7-25 years 7-15 years 7-15 years
Minimum Salary* ~$3,000 / mo ~$5,000 / mo ~$4,500 / mo
Minimum FICO* ~600 ~650 ~680
Down Payment 10% – 25% 0% – 20%  0% – 20%
1st Payment Due After delivery After delivery Before it’s built
Consider This Easy to qualify, but the most paperwork. These loans look and feel more like a mortgage than an RV loan. While terms are great, these are designed for buying a Winnebago or Jayco. They worry about how to reposes the house if you default. Very unpredictable underwriting process, they take a lot of leg work and succeed when you have a credit union employee on your side.

Other Tiny House Financing Options

“Buyer beware” when considering these non-conventional options.

Builder Financing

From experience, we’ve learned that offers like “builder financing” or “no credit check” are often scams. These terms should raise significant red flags. Approach any tiny home dealer offering such financing with the same skepticism you would use with a used car dealer making similar promises.

Credit Cards

It is possible to purchase a tiny home using a credit card, but finding a builder willing to accept this payment method can be challenging. Credit card companies impose high transaction fees on sellers, which most builders cannot absorb. However, in some cases, a credit card can be used for the down payment if the lender approves.

Traditional Home Loans

Unlike traditional homes permanently attached on a foundation, the vast majority of tiny homes don’t qualify for the standard home loan. Sadly, this includes VA home loans. Most banks have requirements around the minimum home size.

How To Finance Your Tiny House

Have Your Documents Ready

Most lenders require you submit the following documents:

  • A copy of your driver’s license, passport, or state ID.

  • A copy of your social security card or W9.

  • A recent paystub.

  • Last 2 years tax returns or W2.

  • Proof of good funds for the deposit.

What if you haven’t been working for 2 years? Lenders look at that on a case by case basis. Submitting a letter of explanation often overcomes this concern.

Pick the Best Loan for You

Always start by talking to the builder about their suggested lenders. But remember this: What’s best for the builder isn’t always your best option.

As we’ve reviewed, there are multiple types of lenders, and different lenders pay the builder differently. By way of example, credit unions and tiny home stallwart Lightstream pay the builder before the house is built. On the flip side, manufactured home lenders only pay the builder after the house is finished, requiring the builder to front the construction cost – making this option impossible for the smallest of builders.

Talking to the Lender

IMPORTANT: Always talk to the builder before the lender.

Your builder should be able to recommend a reliable lender. Be cautious when finding your own lender. Often they will approve you for a loan, then pull back the loan when it gets to underwriting at the corporate headquarters. If they’ve never done a tiny house loan before, have a backup plan.

Find out when your first payment is due. Often it takes months for a tiny house to be finished. Is your first payment due before the building even starts? Or after the house is delivered? And what if the house is delayed?

How Long Does This Take?

Step 1: Submit a loan application with a quote from the builder. Usually you get an approval or denial within 1 – 3 business days.

Note: Don’t be discouraged by a denial. We’ve seen about 50% of denials flipped to an approval.

Step 2: Submit your documents

It’s time to dig. The lender will provide a list of documents they need. Then, expect a second wave of document requests. And sometimes even a third wave.

Most borrowers take 1-2 weeks in between each round. For a well organized borrower it can take 1 week, but for the average borrower, this process takes a month.

Step 3: Loan package

Once all the documents are approved, the lender will create the loan documents and send them to you for signature and notarization. Once completed, they are sent back to the lender, for final audit. This usually takes 1 week.

Step 4: Final audit

During final audit, the lender might request updated documents if it’s been several months since you started the loan. Once those documents are submitted, your loan is approved for funding and your tiny house can be delivered. This usually takes 1 day – 2 weeks.