Yes, tiny home financing exists, but the path depends on build type, certification, and whether the home sits on a permanent foundation.
Shopping for a small-footprint house brings a big question: funding. The way money flows hinges on what you plan to buy or build. A wheel-based rig lands in a different bucket than a cottage on a slab. Lenders sort these projects by code, size, title, and how the dwelling will be used. This guide lays out the choices, the paperwork, and the traps to skip so you can pick a path and move forward.
Financing A Tiny House: What Lenders Approve
Lenders look first at classification. Is the dwelling a modular build set on a foundation and deeded as real estate? Is it a HUD-code manufactured unit? Or is it a movable rig certified to RV standards? Each route points to a different set of loans, terms, and inspections. Broadly, foundation homes may fit a standard mortgage; HUD-code units follow manufactured housing rules; movable rigs often use RV or personal loans. The table below maps those lanes.
| Build/Setup | Common Financing | Core Requirements |
|---|---|---|
| Modular Or Site-Built On Foundation | Conventional mortgage; construction-to-perm; home equity (if you own land) | Real property title; local code sign-offs; appraisal with comps |
| HUD-Code Manufactured Home | Conventional (manufactured), FHA/VA where eligible; chattel in some cases | HUD label/data plate; 400 sq ft+ and 12 ft+ width; permanent chassis; approved foundation |
| Movable Rig (On Wheels) | RV loan if RVIA/ANSI certified; unsecured personal loan; credit union programs | RVIA or ANSI A119.5/1192 compliance; VIN/title; not a permanent dwelling for many RV loans |
| Shell/DIY Build | Personal loan; builder financing; construction loan only with strong plans and GC | Budget, timelines, permit set, builder creds; path to occupancy sign-off |
What Counts As Real Property For Mortgage Underwriting
To fit a standard mortgage, the dwelling needs a foundation, local final inspections, and a deed that treats the structure and land as one parcel. Lenders then send an appraiser to find recent sales that match style and size. Factory-built homes that meet local code as modular housing can also fit this lane. By contrast, a movable rig on a trailer is titled like a vehicle; that pushes you toward RV or personal lending.
Manufactured housing rules are stricter. Under agency guides, a HUD-code unit must meet size thresholds, carry HUD labels, and sit on an approved foundation before many lenders will review it. You can read the size and label rules in the Fannie Mae manufactured housing guide, and see how RVs are carved out of HUD housing standards in the HUD RV exemption rule.
How The Build Type Drives Your Loan Choices
Foundation-Set Dwellings
If your plan is a small cottage on a slab, crawlspace, or piers with a recorded foundation, a standard mortgage may work. Expect a normal file: income docs, credit pull, down payment, appraisal, and local occupancy sign-off. Some buyers roll land, build, and permanent funding into a single construction-to-perm loan. Owners with equity can tap a HELOC or cash-out refinance to fund a backyard cottage or an accessory dwelling unit.
HUD-Code Manufactured Units
Homes built to the federal manufactured code carry HUD labels, ride on a permanent chassis, and must cross a size bar. Once placed on an approved foundation and retitled as real estate where state law allows, these units can fit conventional or government-backed programs. Where retitling is not possible, lenders may steer you to a chattel loan that treats the home as personal property. Terms and rates differ from a land-tied mortgage.
Movable Rigs On Trailers
When the dwelling sits on wheels, lenders often view it as an RV. Many banks and credit unions ask for RVIA or ANSI certification and a VIN. RV loans tend to run shorter than mortgages and carry mileage on the rate, but approval can be faster. If you plan to live full-time, read your loan documents; some RV programs limit use to recreational purposes. Where RV credit is not available, an unsecured personal loan can cover the purchase with a shorter payoff window.
Costs, Rates, And Repayment Windows
Rates and terms swing with loan type, credit, down payment, and whether land is part of the deal. Use these common ranges to plan conversations with lenders, then request written quotes built on your file and your market.
| Option | Typical APR Range* | Usual Term |
|---|---|---|
| Conventional Mortgage (Foundation) | Market mortgage rates | 15–30 years |
| Manufactured Housing Mortgage | Near market mortgage rates | 15–30 years |
| Chattel Loan (Home Only) | Above mortgage rates | 10–20 years |
| RV Loan (Certified Rig) | Varies by credit union/bank | 5–20 years |
| Unsecured Personal Loan | Higher than secured loans | 1–7 years |
| Builder Financing | Depends on program | Short-term, then refi |
*Ranges shift by market and credit profile. Ask each lender for APR with fees, not just note rate.
Pre-Approval Prep: Documents And Details
Lenders want a clean package. Pull recent pay stubs and W-2s or 1099s, two months of bank statements, and ID. For foundation builds, include stamped plans, permits, and a builder contract. For HUD-code units, include photos of HUD labels and the data plate, installation records, and any engineer’s foundation letter. For RV-style rigs, add the purchase agreement, VIN, build certification, and spec sheet. If land is part of the deal, include a copy of the deed and a survey.
Down Payment And Total Project Budget
Cash to close looks different across loan types. Mortgages on real property often use a low-to-mid single-digit down payment with mortgage insurance when needed. Chattel and RV programs can ask for more cash up front. Budget beyond the home price: site prep, utility runs, permits, delivery, crane or set fees, foundation work, skirting, porches, driveway, and sales tax on vehicles. For backyard builds, add impact fees where your city charges them.
Zoning, Code, And Why It Matters For Funding
Money follows compliance. A city that treats a small cottage as an accessory dwelling unit opens doors for standard lending. A town that bans living full-time in an RV can shut a file in underwriting. Ask your planning office about minimum size, setbacks, parking, height, and utility rules. Many states reference Appendix Q in the residential code for homes at 400 square feet or less, which streamlines lofts and stairs. Your builder and lender will both ask how the project will pass local inspections and who will sign the final card.
How Title Affects Your Choices
Title answers a core question: real estate or personal property. A deed ties a foundation home to land. A certificate of title and VIN tie a movable rig to vehicle rules. Some states allow you to retire a vehicle title after installation on a permanent foundation; others do not. That single step can change which lenders will review your file and how your rate and term look.
Pros And Trade-Offs By Path
Mortgage On Foundation
Upsides: Longer terms, lower rates, broad lender pool. Trade-Offs: Appraisal hurdles with small square footage; stricter inspections; slower timeline.
Manufactured Housing Programs
Upsides: Access to agency-backed routes in many markets; fixed-rate choices. Trade-Offs: Must meet HUD size and label rules; site and foundation specs add steps.
RV Loan
Upsides: Fast credit decisions; no real-estate closing. Trade-Offs: Shorter terms; use limits in loan docs; some parks and lenders ask for RVIA/ANSI tags.
Unsecured Personal Loan
Upsides: Speed and flexibility; no collateral. Trade-Offs: Higher cost; lower caps; tighter debt ratio checks.
Seven Steps To Lock Funding
- Pick a path: foundation, HUD-code, or movable rig.
- Confirm local rules and any size minimums before you spend on plans.
- Choose a builder with permits, insurance, and prior installs in your city.
- Collect documents early and keep a single PDF packet for lenders.
- Get three written quotes with APR, fees, term, and prepayment rules.
- Plan site costs with a line-item budget and a 10% buffer.
- Lock funding only after you have clear timelines from your builder and city.
Common Roadblocks And Simple Fixes
Appraisal Gaps
Small homes can lack clean comparable sales. Ask your lender to use appraisers with factory-built and ADU experience. Add a features sheet that lists energy gear, custom storage, and high-grade finishes so those items appear in the report.
Foundation Verification
Some programs need an engineer’s letter that the foundation meets the correct standard. Line this up early so your closing date is not pushed.
RV Use Limits
Many RV lenders restrict full-time living. If you plan to live in the rig year-round, ask in writing how the lender treats occupancy. Pick parks or land use that match the loan’s terms.
Title Retiring
States vary on retiring a vehicle title after installation. Your county recorder or DMV can explain the path. The decision touches lending, taxes, and resale.
Smart Ways To Lower Cost
- Pick standard widths and heights that match transport rules to avoid escorts or permits.
- Use a simple roofline and modest footprint to keep foundation and set costs down.
- Place the home close to utilities; long trench runs add thousands.
- Shop credit unions that know small-home builds; many offer RV and personal loans with fewer junk fees.
- Ask the builder about batch purchases and off-season slots for price breaks.
Who This Path Fits
If you want the longest term and the broadest lender pool, aim for a small home on a permanent foundation with a clean deed. If your plan is travel or seasonal use, an RV loan on a certified rig may fit better. If you need fast cash to finish a shell or buy a preowned build, a personal loan can bridge the gap while you plan a land-tied setup later.
Final Take: Pick The Lane That Matches The Build
Money follows classification. Match the build to the loan type, clear local rules early, and keep paperwork tidy. With the right lane, a small home can be paid for with predictable terms and fewer surprises.