What About a Tiny Home? - Ask the Loan Man by Hans Bruhner - January 2018

People ask me all the time about buying a piece of land and building a tiny home or something off the grid or some other wonderful idea that mostly I can’t help them with. I spend a good deal of these conversations figuring out exactly what the person has in mind so I can determine whether I can help steer them in the right direction.

As a jumping off place, let’s start by looking at land loans to place the tiny home on. Land loans typically require 20% to 40% down payment and have much shorter terms than home loans. Construction loans are more readily available, and you can get them for 10% to 30% down payment but banks like to finance more traditional homes with construction loans.

When you are talking about a tiny home, this is a completely different category as it is usually not on a permanent foundation and many times it is quite mobile and actually built on a platform on wheels. It does not really fit in with car financing because it is not registered with DMV like a trailer or mobile home. It does not fit with real estate financing because it does not have a permanent foundation.

I have recently spoken with Efrain Monico at North Bay Credit Union and they do things a little differently over there and could quite possibly help you with a tiny home financing project. They are happy to do agricultural loans and land loans and construction loans and they finance mobile homes in parks. A park mobile home is the closest thing to a tiny home and may just be a solution for some people interested in tiny living. Efrain told me that they would be able to look at specific projects on a case by case basis. If you call, tell him Hans sent you.

A lot of people I speak to about tiny homes are either having one built for them by a specialist or they are building one on their own. The rule book is being written and developed on these type of homes as we go along. When you look at a manufactured home or a modular home or a mobile home, they have HUD (Housing & Urban Development) approved specs and plans and are stamped and approved by HUD but tiny homes do not have these standards, so they do not fit in the box.

I honestly believe that the best way to make a tiny home work for you is to find a plot of land that you acquire or share with friends or family and then build it with your own money. This will allow you to not fit in the box and have complete and total creative freedom over your project.

As I said when I started, as a mortgage banker, I can’t help with the vast majority of these requests and many times I do not even have a good place to refer them for financing… BUT I love to have these conversations because most of the people thinking about moving in this direction are extremely creative and interesting and the more I discuss it, the more I have to offer the next person. Each situation is different and I have found some creative solutions so don’t be afraid to ask.

Need to know more? Please send me your real estate and mortgage related questions. I am happy to answer you and it may become the topic of a future article.