Can I Finance a Tiny Home With an FHA Mortgage?
The publisher of a blog called The Tiny Life built his own tiny home for approximately $30 thousand according to some published reports. And there are plenty of others who have joined the tiny house movement, with more wondering how you can get a home loan to finance such a project or the purchase of a tiny home already built or built by a third party.
Can an FHA home loan pay for the purchase of a tiny home?
FHA mortgage loan rules in HUD 4000.1 do not, at the time of this writing include any specific references to tiny homes. But there are rules that can affect whether or not such a property is eligible for an FHA mortgage loan.
Any property, tiny or not, that is not on a permanent foundation or will not be affixed to a permanent foundation as a condition of the loan will never be approved for an FHA mortgage loan. The reason for this is simple; if your home is on wheels, it cannot be classified as real estate or real property under the law, and all properties purchased with an FHA mortgage loan must be classified as such.
That is why an RV cannot qualify for an FHA mortgage loan or refinance loan-there is no way to attach them to a permanent foundation based on the design of the RV as a vehicle. It’s also why houseboats also cannot qualify for an FHA mortgage.
Some borrowers may wish to attempt to get FHA loan financing to purchase a tiny home as a mobile home or manufactured home. Mobile home loans are referred to as Title I loans; depending on a variety of factors, this approach is far more likely to succeed than applying for an FHA 203(b) loan (used to purchase most typical suburban homes) for the same purpose.
But there are a variety of factors that may affect whether or not you can apply for an FHA mobile home loan to purchase a tiny home. The first is square footage. FHA loan rules say the mobile home or manufactured home purchased with an FHA mortgage must not be smaller than 400 square feet.
The home must be affixed to a permanent foundation as a condition of loan approval, and the home must meet all state/local building code requirements. Beyond that, the participating lender must be willing to offer a loan for the kind of property you wish to purchase.
As you can see, there’s no simple answer to the tiny home question when it comes to purchasing with an FHA mobile home loan. The best thing to do is to shop around for a participating lender who can tell you whether or not such a loan is possible depending on lender standards, the nature of the home itself, and state law.
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