How to Finance A Tiny House

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How to Finance A Tiny House

There are two types of tiny homes: a home on wheels, which could qualify as a recreational vehicle, and a home built on a permanent foundation.

How to Buy a Foreclosed Home

Prices vary as widely as home styles. The average tiny house costs between $10,000 and $30,000 if you build it yourself, according to the tiny house blog The Tiny Life. Costs double if you hire a builder. The price can hinge on how many bells and whistles you add and may even reach six figures.

If you're planning to put a tiny home on your property, says Matthew Davies, founder and CEO of real estate management company Harmony Communities, "your first step would be going to your local building department, whether for the county or the city, and finding out the zoning regulations."

Home Equity Loans or Lines of Credit

If you already own a home and want to add a tiny house to your property, you may be able to tap your home equity to get the money you need.

Instead of a home equity loan or HELOC being secured by the new tiny house, it is secured by your primary residence. This means that if you have trouble paying back the debt, your main home could be seized to satisfy the loan.

Also, keep in mind that you may be limited in how much you can borrow. Many home equity lenders only allow you to borrow up to your combined loan-to-value ratio. This is the amount of debt between your first mortgage and home equity loan or HELOC, divided by your home's fair market value.

The terms of your financing can vary, depending on whether you choose a home equity loan or HELOC. Home equity loans, for instance, typically have fixed interest rates with repayment terms ranging from five to 30 years.

A HELOC often has a variable interest rate and a draw period when you can pay down your balance and borrow again from your line of credit, as with a credit card.

After this initial period, you'

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