I recently read an article in the REALTOR® Magazine (“Why Can’t I Get a Tiny Home”) January/February 2017) about a couple that wanted to build a tiny home. They found a builder but could not find a bank willing to give them a mortgage. The main problem here is the appraisal.
In a normal transaction the bank will look at other like kind and similar properties around the area to find the market value. Since the number of tiny homes available is low, banks look at that as a risk. Should a default occur, will they be able to resell the property?
Optional ways to finance could be to work with a tiny home builder that is certified to build RVs. Then you may be able to get an RV loan. If you want to go the more traditional foundation route, you may need to borrow money with a secured loan.
I’ve found some resources that forgo the usual lending and instead offer peer-to-peer lending. In this type of lending you work directly with a lending partner.
For more information or questions please contact me.