Tiny homes built on RV trailers or chassis are increasingly popular for offering a compact eco-friendly housing solution. However financing these movable tiny abodes comes with unique challenges. Unlike traditional mortgages for stationary houses, RV loans cater to the special needs of tiny home buyers.
As a tiny home enthusiast, I’ve extensively researched the pros and cons of various RV financing options Here, I’ll provide an in-depth look at how to qualify for and find the best RV loans for financing your tiny home dream.
Overview of RV Loans for Tiny Homes
Recreational vehicle (RV) loans allow borrowers to finance new or used motorhomes campers, travel trailers and tiny houses on wheels. RV loans share qualities with auto loans, requiring less money down and offering faster approval than mortgages. However, they also differ in that RVs serve as homes and vehicles.
To qualify for RV financing, your tiny home must meet certain criteria:
- Built on a trailer with axles and wheels
- Less than 400 square feet
- Collapsible or stowable sections for easy transport
- RV certification from manufacturer
Additionally, RV lenders look at factors like your credit score, income, and down payment amount when approving loans.
Types of RV Loans for Tiny Homes
RV Dealer Financing
Most RV dealerships offer in-house financing through partnerships with lenders. This convenient method provides one-stop shopping—you can pick out your tiny home and apply for financing on the spot. Dealer RV loans often offer lower rates and flexible repayment terms. However, you’ll have a limited selection of loan products to choose from.
Bank/Credit Union Loans
Banks and credit unions provide a wide range of RV loan products with competitive rates. For example, several large banks now offer specialty lending programs catering specifically to tiny homes. Credit union loans offer exceptional customer service and lower rates for members. However, credit union membership eligibility requirements can be restrictive.
Online RV Lenders
In recent years, online-only lenders like RV Loan Calculator, RV Financing USA, and iRV2Go have entered the scene. Their fast digital processes make getting an RV loan easy from the comfort of home. Online lenders provide more options for borrowers with poor credit or unique situations. But it can be risky financing large purchases through unfamiliar companies.
What to Look for in an RV Lender
As you shop around, keep an eye out for RV loans that offer:
- Low interest rates and monthly payments
- Flexible loan terms up to 20 years
- Low or no down payment options
- Preapprovals and customized rate quotes
Reputable lenders approve borrowers with credit scores as low as 580 and debt-to-income ratios up to 50%. Also look for additional perks like extended warranty coverage.
RV Loan Requirements
Meeting the following eligibility criteria will help ensure RV loan approval:
Credit score: 600 and above for decent rates; under 600 may still qualify but with higher rates
Down payment: Typically 10-20%
Income: Minimum monthly income varies by lender; sufficient to cover payments
Debt-to-income ratio: Below 50% optimal; up to 60% may be allowed
Collateral: The RV/tiny home being financed
Full-timer insurance: Proof of insurance for full-time occupancy
Titling: Titled as RV, not real estate
Age of RV: New to 5 years old ideal; up to 10-15 years max
How Much Does Financing a Tiny Home Cost?
Tiny home RV loans of $50,000 – $100,000 with a 15-20 year term will have monthly payments around $400 – $1,000. Total interest paid over the life of the loan will range between $20,000 – $60,000 depending on your creditworthiness.
With a moderate down payment or trade-in RV, you can keep your tiny home loan below $75,000 to get more affordable monthly payments under $700. A higher credit score and shorter loan term will also reduce interest costs over time.
Tips for Getting Approved and Getting the Best Rate
Follow these tips to boost your chances of RV loan approval and get the lowest interest rate:
- Shop lenders to compare loan options and interest rates
- Check your credit and dispute any errors to improve your score
- Lower debt by paying down balances before applying
- Make a larger down payment, ideally 20% or more of the purchase price
- Provide proof of income through recent pay stubs or W-2s
- Choose a shorter loan term if you can afford higher monthly payments
- Enroll in autopay to score a lower rate with some lenders
- Add a co-signer with good credit to back your loan if needed
By taking these steps, you can maximize savings on your tiny home. For me, finding the best RV financing was crucial to making my compact living dreams a reality.
Financing Options For Tiny Houses
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Why I got denied a Tiny Home Loan for $65,000
FAQ
Can you use an RV loan for a tiny home?
What kind of loan can you get for a tiny home?
Can a tiny home be classified as an RV?
What credit score do I need to buy a tiny house?
Can you get an RV loan for a tiny home?
Among the other requirements to qualify for an RV loan is the need to certify your house as an RV. This is what organizations like the RV Industry Association do. You’ll also need a fixed address and good credit. Unlike a personal loan, the interest rates of an RV loan for a tiny home are relatively lower.
Where can I get an RV loan?
RV loans are commonly offered by banks, credit unions and online lenders. If your tiny home is certified by the Recreation Vehicle Industry Association, you may have an easier time qualifying for an RV loan. SunTrust Bank, for example, works with certified tiny home builders and sellers.
Can you get an RV loan if you live in an RV?
Anyone who’s traveled in an RV knows that they’re basically tiny homes on wheels. In some cases, mobile tiny homes may meet the standards to be classified as an RV, which would qualify them for an RV loan. However, you generally can’t get an RV loan if the RV is intended to be your primary dwelling.
Do tiny homes on Wheels qualify for RV loans?
Tiny homes on wheels may qualify for RV loans, but only if the vehicle is certified as an RV by the Recreational Vehicle Industry Association. Alternatively, home equity loans and lines of credit are available if you own a home and want to add a tiny house to the land as an accessory dwelling unit or buy a mobile tiny home.