The Tiny House: Steps and Tips on How you can build a tiny house quickly and save money (2016)
Chapter Five: Will I be able to get a loan for a tiny house? What about Insurance?
The cost involved in building a tiny house varies greatly from almost nothing if you can have all things donated and salvaged to $40,000 or more. In general, a tiny house will cost you anywhere between $20,000 to $25,000 in materials.
You will read a lot of things on the blogs on internet about people getting everything constructed and ready for a very meager amount. But not all such stories are true or hold any ground. If you are really think about living year on year, it will involve some money.
You should keep your ideas and parameters simple. You should ideally look at living in a home that is comfortable but does not involve you to pay loan principle and interest for the rest of your living life. You can save a lot of money by looking for reused or refurbished parts, but that involves a lot of time and effort to look for those parts which is not easy to do. Building your tiny house will involve a lot of time anyways so you could save precious time by buying the new materials instead of looking for used ones. This is especially important if moving to a tiny house is a necessity for you and time is of the essence.
If your tiny house will be on a foundation and meets all the building codes, it should not be very hard for you to get a construction loan or mortgage. Some banks, however, won’t give a loan unless the house meets a particular size requirement or a certain price. Generally, these are at least 600 square feet of space and at least $50,000 in price.
If your tiny house is on wheels and if you are buying it from certified RV builder, it is possible to get a RV loan. Terms of such loans are generally shorter and interest rates higher than for normal loans. If traditional construction, mortgage or RV loans are not available for you, you can also consider private peer-to-peer lenders like Lending Club, Prosper or Tiny House Lending. Unsecured bank loans are also an option for those who have sufficient income. The Lightstream division of Suntrust Bank offers such loans for people who earn well.
Insurance can be obtained easily for tiny houses built by certified and reputed RV manufacturers. If you are building your own tiny house though, finding insurance can be challenging. Before you start building your tiny house, it is advisable to contact potential companies. They may want to inspect your tiny house or see pictures of it being built.
In western USA, Lloyds of London provides limited insurance for residents of states like Arizona, California, Colorado, Nevada, Oregon and Utah. They are also trying to consider expanding to other states.
In Florida, Blackadar Insurance Agency is providing insurance for tiny houses on wheels or foundations even those that are owner-built.
Shelter Insurance has also expressed an interest to insure tiny homes in central states like Arkansas, Colorado, Illinois, Indiana, Iowa, and Kansas.