Since the summer of 2014, the topic of tiny houses has rapidly gained popularity, especially in the U.S. From tv shows to tiny house communities, the tiny house movement is making a big commotion in the housing industry. But behind every tiny homeowner’s dreams of flexibility, living a simple life, and helping the environment comes a more serious question: how do you finance a tiny house?

Can I take out a mortgage for my tiny house?

In short, yes. While traditional lending options for tiny houses were scarce in the past, Cardinal Financial now offers Conventional financing for tiny homes, container homes, and other similar properties. Here’s the catch. The only way to get a Conventional mortgage for a tiny house is if it’s built on a foundation—it can’t be mobile.

If it’s mobile, it’s not considered real property, therefore, it doesn’t qualify for a traditional mortgage. Aside from that, if your property meets all applicable appraisal requirements and your credit score is above 620, you should be good to go. We’ll also accept down payments as low as 3%, so if you see a tiny house in your future, there’s a good chance you’ll be able to finance one with us.

While traditional lending options for tiny houses were scarce in the past, Cardinal Financial now offers Conventional financing for tiny homes, container homes, and other similar properties.

Do it yourself

Since tiny houses are significantly cheaper than traditional homes on the market, it’s safe to say you can probably come up with financing on your own. If you already have a primary residence and you’re not in a hurry to move, a good bet may be to make your current living situation work as long as possible and save up during that time. Then, when it comes time to finance your tiny house, you can pay solely from your savings. While this method takes longer than other options, the benefit is moving into your tiny house debt-free! That’s something traditional homeowners can’t tout.

Borrow from friends and family

If you’re someone who has generous friends and family who support your tiny house dreams, it might be worth it to ask them for financial support! Benefits may include: You don’t have to involve a financial institution. You get to determine the payback schedule with someone you know well and trust. You might even be able to borrow without interest. Basically, the two of you can make your own rules, so long as the agreement is fair and doesn’t leave either one of you in financial straits.

If you’re someone who has generous friends and family who support your tiny house dreams, it might be worth it to ask them for financial support!

Peer-to-peer lending

One of the coolest things about the tiny house movement is that it really feels like a community. This vibe comes to life through peer-to-peer lending sites where prospective tiny homeowners can access funding and get connected to third-party lenders. Normally, these lenders are investors who genuinely desire to help tiny homeowners achieve their tiny living dreams and are supportive of the big-picture tiny house movement. How cool is that?!

Other types of loans

Secured Loan: Secured loans are tethered to property. This means you can borrow money from a secured source, such as equity in your primary residence, another property, or even a paid-off car. With a secured loan, you can borrow money against your assets and use that money to finance your tiny house.

Unsecured Loan: Unlike secured loans, unsecured loans are not attached to a piece of property. You can borrow an unsecured loan from your bank once they determine that you have qualifying credit.

Manufacturer Loan: This type of loan is quite common in the tiny house industry. Many tiny house manufacturing companies have their own financing set up and will offer this type of loan to their tiny house customers.

Construction Loan: If you’re a real go-getter and you want to build your own tiny house, a construction loan will help you borrow as you build. These loans typically require interest-only payments during construction with the full balance due upon the house’s completion.

Installment Loan: An installment loan is a loan in which you borrow a specific amount from a lender and agree to pay it back, plus interest, in a series of monthly payments. These can be originated from your bank and are considered a generally safe and affordable alternative for tiny home financing.

RV Loan: If you’re like the majority of tiny homeowners, you joined the literal bandwagon because you wanted a mobile lifestyle, fulfilling your desires for freedom, flexibility, and more travel. However, as aforementioned, mobile tiny homes do not qualify for traditional mortgages because they’re, well, mobile. The good news: tiny house manufacturers are now classifying their products as “trailers,” making them available for RV loans. The downside: RV loans are not for primary residences, so you’ll need somewhere else to call home in order to qualify. In addition, the interest rates on RV loans tend to be higher than those of traditional home mortgages.

So which way is best?

Truth be told, there really is no “best” way to finance your tiny house. Just like the reasons why people choose tiny living are different, their financing methods will be different too. As with any big financial decision, it might be wise to contact your financial advisor to discuss which option is best suited for your personal needs and financial situation. We hope this article helps you decide which tiny house financing option works best for you.

Does taking out a mortgage for your tiny home sound like your best option? We can help you out! Call Cardinal Financial today and let’s get started.

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By now, you’ve probably heard of the latest housing trend—tiny homes. While the average American house is over 2,400 square feet, tiny homeowners are opting for a living space that’s a meager 100–500 square feet! This countercultural tiny house movement is picking up speed and it doesn’t seem to be slowing down. Is it crazy to voluntarily live your life in a glorified camping trailer? Let’s look at some of the practical benefits and reasons why people are joining the tiny house movement.

Live the simple life

In this present culture of more, more, more, the practice of downsizing is unusual. Rather than acquiring things, tiny homeowners seek to acquire experiences. They favor a minimalist alternative lifestyle of fewer belongings and more memories made. For tiny homeowners, the focus is on travel, time spent in the great outdoors, and nurturing the human connection. Owning a tiny house is more than just a fun and exciting challenge, it’s a lifestyle that reflects every aspect of what they believe is truly important in life.

Enjoy financial freedom

A basic principle to tiny living is the notion that owning a home shouldn’t require sacrificing your financial freedom to gain luxury. In fact, most tiny homeowners are able to save more money than traditional homeowners, thanks to the affordability offered by tiny living.

Let’s crunch some numbers. The average cost to buy a ready-made tiny house is anywhere from $30,000–$60,000. Build it yourself and that’s usually between $18,000–$40,000. Compare that to the traditional American home that sells for hundreds of thousands of dollars. And get this—68% of tiny homeowners live free of mortgage debt while only 29.3% of all American homeowners enjoy that privilege. Did we mention utility bills? Tiny houses are designed to be partially or fully independent of public utilities which means, for some tiny homeowners, no bills to pay.

Sustain yourself and the environment

Yet another benefit to this lifestyle is the small footprint tiny homes leave on the environment. Tiny homeowners who seek to be 100% self-sufficient and eco-friendly are finding clever and creative ways to live off the grid. For example, tiny houses use less waste—both in the way they are built and in their day-to-day function. Many tiny houses run on solar panels or a generator as their primary or only energy source. Self-sustaining HVAC units used by tiny homeowners include energy-efficient compact air conditioners and wood-burning stoves. Ever wondered about tiny house bathroom plumbing? Most tiny houses use composting toilets, which are completely self-contained, portable, and beneficial to maintaining clean natural waterways.

Be more flexible

While some tiny homeowners prefer to stay put, others enjoy the mobility of a tiny house on wheels. Stationary tiny homes are sometimes hooked up to public utilities, like a regular home, and can be built in all kinds of shapes and sizes. On the other hand, mobile tiny homes are built on trailers that can be attached to your vehicle and moved from place to place. One benefit to a tiny house on wheels is the opportunity to buy land in several states and move around the country whenever you want. If you’re not ready to buy land, no problem. Tiny house communities are popping up all across the nation with arms wide open to other like-minded folks.

When living tiny is simple, self-sustaining, and eco-friendly and offers financial freedom and flexibility, it’s no wonder so many people are joining the tiny house movement.

The post 4 Reasons Why a Tiny House Is Worth Your Attention appeared first on Cardinal Financial.