Tiny House Financing Remains a Significant Challenge

> Tiny House News > Tiny House Financing Remains a Significant Challenge

July 17, 2017 / By tampabaytinyhomes

Tiny House Financing

When clients contact us for the first time there are three conversations that are extremely common. How can I pay for my tiny house, where can I put my tiny house on wheels and millions of design related questions. Tampa Bay Tiny Homes can certainly help you with design questions and developments like Circle Pond Tiny Home Community are helping to address long term living options. However, financing remains a significant challenge even for highly qualified potential tiny home owners who would easily qualify for a typical home mortgage or car loan.

If only there were better options to make the dream of tiny home ownership an easier process to navigate by having long term mortgages specifically designed for tiny houses on wheels!

So you are probably asking, “Why is it so difficult to get financing?” This is a complex question but from our perspective it is primarily a lack of programs that are designed for tiny houses, which results in trying to finance a tiny house with a loan not meant for a tiny house. The lending programs just do not exist at this time and lenders typically take a long time to adapt to changing market conditions.  Common lending related questions involve the structural capacity of the collateral structure itself,  the amount of industry subject matter expertise as well as understanding of local policy, regulations, zoning, codes, Etc.  

  • Tiny homes are built to codes soon to be included in the international building code used for residential building codes. Florida builds include hurricane bolts to the trailer and hurricane ties throughout the structure. NOAH conducts inspections throughout the build process and certifies the build at completion assuring the structure is insurable, licensable, etc.
  • GPS tracking locators, which are a federal offense to remove, are easily integrated into the structure.
  • Policies are being positively impacted by local zoning and code changes currently taking place in cities and counties across our nation.
  • Current financing options are primarily based on RV loans, or unsecured loans for short terms.
    • The unsecured loans for short terms have high interest rates and down payments, and typically are not particularly suited for a tiny home purchase they are just a potential option.
    • RV loans are also a potential option but require a builder to become certified in RVIA and use that code for building their tiny homes which goes against future state of the market which will be based on International building codes.

In our experience working with clients we have found that the majority of our potential clients are the type of potential customer lenders historically prefer as customers. Many of our clients have credit scores in the 700-800s, long standing careers and significant savings and while they can get a no-collateral personal loan that type of loan does not truly fulfill their needs or desired experience. We have many clients who have no problem qualifying for a 40k car loan for 7 years but cannot find a lender to give them a 40k tiny house mortgage for 10 or 15 years. In addition we have a large group of clients who are seeking a rent-to-own option for acquiring their tiny house and without priviate builders like Tampa Bay Tiny Homes, doing the design, build and financing, this option is rarely available to clients.

What can we do about it?

Here at Tampa Bay Tiny Homes we are working with our network to create financing opportunities for our clients by working with small private and public lending institutions to understand the low risk and high reward opportunity that long term tiny house mortgages represents. We would like to know more about how having a 15 year tiny house mortgage would impact your ability to achieve your tiny house dreams.

Tell us more below and we will keep you in the loop as new financing options become available!

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