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Financing & Insurance

Even with the spike in tiny house purchasing across the United States, finding financing and insurance can still be tricky, but is 100% possible.

Since tiny homes are between 100 sq ft and 600 sq ft, there are some options that aren’t available to a typical stick-built home, which can be a benefit. Locating financing and insurance is a step that you won’t want to skip when looking into investing in a tiny home, along with researching the builder.

Financing Options Broken Down

A traditional 30-year mortgage is unlikely for a tiny home since they generally cost between $30,000 and $80,000, so they don’t make the cut-off. The best avenues to research are looking into a personal loan, a home equity loan if this is a secondary residence or investment property, or financing through a lender partnered with a tiny house builder.

It’s important to ask questions about what the lender will require when researching which loan is best.

  • Do they require a permanent foundation?
  • Is there a square footage requirement?
  • What are the minimum and maximum amounts for financing?

Personal Loan

Personal loans are very common to use when getting financing for a tiny home. They are typically unsecured, meaning the bank doesn’t hold anything for collateral. A personal loan has an annual percentage rate between 3% to 36%, and good credit is required. Personal loans usually have a length of seven years to pay off. Payments will be higher due to the shorter amount of time on the loan.

Builder Financing

Some builders can offer in-house financing for tiny homes. This is generally done through a partnership that the builder and a lender have.

RV Loans

Purchasing a THOW (Tiny Home on Wheels) opens up the option of an RV loan since it won’t be placed on a permanent foundation and can be moved around. The Tiny Home will need to pass an inspection to prove it meets the standards set by the U.S. Department of Transportation’s National Highway Traffic Safety Administration and get an RVIA tag (Recreation Vehicle Industry Association).

One benefit of an RV loan is that they are often financed for 20-30 years so that the payment will be smaller than a personal loan. The rates are also lower, usually around 4%-8%. A con of this type of loan is that the tiny home will be used as collateral for the loan, so if it is defaulted on, the tiny home can be repossessed.

Finacial Company Options

Lending Club

Estimated APR 6.34% – 35.89%

Loan Amount $1,000 – $40,000

Minimum Credit Score 600

SoFi

Estimated APR 6.99% – 22.28%

Loan Amount $5,000 – $100,000

Minimum Credit Score 680

LightStream

Estimated APR 4.99% – 19.99%

Loan Amount $5,000 – $100,000

Minimum Credit Score 660

Operation Tiny Home

This is a matching grant program, which could be up to $12,000 of the down payment.

To qualify, someone in the house must be a community hero or struggling with hardship. Check with Operation Tiny Home to see if qualifications are met or get on the waitlist for the next round of grants.

Examples of past Grant Qualification Includes

  • Military / Veteran Status
  • Law Enforcement
  • Fire Fighter
  • Pre-K – 12th Grade Teachers
  • Lives in an area affected by hurricane, wildfire, flooding, or other natural disasters
  • Aging out of Foster Care
  • Many more! Check out their website for a complete list.

Insurance

Like any home, it is important to secure proper insurance on a tiny house. Natural disasters and other tragedies (fire, flood, vandalism, etc.), so it’s important to make sure the investment is covered. There are a few options to obtain insurance.

RV Insurance

If financing the tiny home via an RV loan, this would be the best bet for getting insurance. RV Insurance is also great if your tiny home is on wheels and will be moved frequently. Extra insurance coverage that is included with RV that isn’t from traditional insurance are:

  • Collision
  • Comprehensive
  • Liability
  • Uninsured Motorist
  • Personal Property
  • Medical Payment

Mobile Home Policies

Mobile Home Insurance is an excellent option if the home will be on a foundation or rarely moved. A comprehensive mobile home insurance policy, similar to homeowners insurance, will cover:

  • The Home
  • Personal Property
  • Liability Claims

If this route is taken, get a transit endorsement, so the tiny home is covered while transported.

Tiny House Insurance Specialists

With the tiny home boom that keeps growing, we will likely see more and more tiny house insurance specialists come on board. These companies usually offer coverage for traditional and alternative living structures, such as off-grid cabins, micro homes, storage containers, and Tiny Homes.

Insurance Company Options

American Modern Insurance Group

American Modern Insurance Group offers tiny home insurance as part of its manufactured home policies. They generally cover liability, personal property, water damage, and more.

American Family Insurance

American Family Insurance covers everything someone would need insurance for – life, business, homeowners, and auto. They can help find the right category for insurance coverage on your tiny home with their different policy types, including RV insurance and manufactured home coverage.

State Farm

If the tiny home is in the purchaser’s backyard, State Farm is an excellent option. They can add coverage with standard homeowners insurance and list it as a detached dwelling.

Foremost Insurance Group

Foremost offers specific coverage for tiny homes for full-time tiny home dwellers. Insurance is available through its Travel Trailer Program if the tiny house meets RVIA standards or is certified by NOAH (National Organization for Alternative Housing). They also have a specialty dwelling program covering tiny homes on a permanent foundation and is for personal use.

Liberty Mutual

If the tiny home will be an investment property, such as an Airbnb, Liberty Mutual is a great option to look into. They offer short-term rental coverage as well as mobile home insurance. Liberty Mutual builds the insurance policies to fit each individual’s needs so that you can add on to the policy as necessary.

Overall, there are a lot of possibilities open to someone enquiring about financing and insurance on a tiny house. Shop around and check out several different companies to find the best option that suits your needs. Not only do we love helping you choose and customize your tiny home, but we are happy to help with further recommendations when it comes to financing and insurance. Contact us today and let’s get started!

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