Tiny homes are a popular route to home ownership, especially for those hoping to have less impact and a more intentional lifestyle. Unfortunately, mortgages are generally not available for small homes because they are not considered traditional real estate. For this reason, people often turn to one of three financing options: builder financing, personal loan, or RV loan.

There are tons of small home builders out there, each of which can offer in-house financing or work with a preferred lender. Instead of focusing on this side of small home loans, our list of the best small home loans highlights traditional and online lenders who offer personal and RV loans. We’ve looked at the available loan amounts, APRs, repayment terms, and eligibility requirements to find loans that meet your needs.

How do you finance a small house?

Personal loans are usually available from traditional banks and credit unions, but online lenders can streamline the application process and can offer more competitive rates and terms. If you are considering an RV loan, keep in mind that many RV loans cannot be used for full-time units or so-called park models that are not towable, such as some small homes.

How much do small home loans cost?

The overall cost of a small home loan depends on several factors, but the overall loan expenses are usually summed up by the annual percentage rate (APR). This rate, which can range from 2.5% to 36%, includes the interest rate on the loan as well as additional costs, such as set-up costs. Depending on the lender, a small home loan can include late fees, insufficient funds charges, and a prepayment penalty.

Can you get an FHA loan for a small house?

FHA loans are only available for homes classified as real estate, and homes on wheels, such as cottages and recreational vehicles, cannot be classified as real estate. So while you may think of your future small home as a real home, you probably won’t be able to use an FHA loan to buy a small home. With that said, an FHA mobile home loan can be used if the tiny home is no less than 400 square feet and is attached to a permanent foundation.

How we chose the best tiny home loans

Financing a tiny house can be difficult, so we looked at the options available to choose the best one for Treehugger readers. To do this, we looked at the minimum eligibility requirements, such as credit score and income, as well as the loan amounts, APRs, and repayment terms available.

Our overall best choice, LightStream, stands out with its competitive APRs, flexible repayment terms, and high available loan amounts. In addition, the lender’s customer support team is available seven days a week, and borrowers can receive the loan funds the same day they are approved.