I held off on posting this for a few days because it’s been a rough week. Here’s the update on the financing situation!
Well, I’m sheepishly realizing that after singing the praises of financing for tiny houses in my past post, I spoke to soon. We’ve been feeling frustrated for the past couple days. Just when we thought we had a solid plan in place, things fell through.
We had applied for an RV loan from USAA (where we do all our banking and insurance). While we didn’t get approved for the full amount, we did get a counter offer. Between that, and another tiny house loan from Lightstream we thought we had things covered. Before accepting both loans, we needed to solidify which builder we were going with. We did a little more research and found another company we liked a bit better than our initial plan.
With that in place, I called USAA to clarify that our RV loan would be for a tiny house on wheels that is custom built by an RVIA certified dealer. After 40 minutes back and forth with (pretty helpful) customer service, emphasizing that it qualifies as an RV and providing the builder’s website, the told us they could not provide the RV loan for a tiny house on wheels. Cue: me crying and curling up into a ball and Alonso silently sulking. After spending a couple days applying for various loans, calculating the terms and the interest and seeing if it would be doable for us financially, holding our breath waiting for responses, and then thinking we had pretty good chances, this was a big blow. They didn’t really provide an explanation when I asked directly, just stated it was just company policy (that seemed like it got decided while I was on hold). My understanding from the conversation though is that with RV loans once you accept the loan they do a “verification of collateral value.” This means they take the make and model of the RV and make sure the dealer is giving you a good price and that it’s really worth what they’re loaning you. Well, you can imagine that this wouldn’t exactly work for a custom tiny house on wheels.
Once I got a hold of myself, we started researching other options. Sure, there are multiple places to get personal loans, but they all had much higher interest and much shorter terms than the USAA loan. This meant that to take out a personal loan, the monthly payment for that combined with the light stream loan was just out of reach for us. Now, we have great credit scores, but we’re both pretty young, don’t have any collateral, and since I’m in grad school and only working part time we’re not currently making a lot of money. All that equates to making it very hard to qualify for a larger loan. No luck on that front.
So, if you’re looking for a tiny house loan, Lightstream is the way to go, but you’ll need a small affordable tiny house, or a solid down payment, or great credit score plus strong income to make it happen for a larger tiny!
It’s been a real bummer. Not gonna lie, there were some tears (mine) involved.
So, we’re back to the drawing board. At this point, we’re revisiting the idea of doing the build ourselves. We initially thought that would be cool but too time intensive, since I’m in grad school on the weekends and working a good chunk of the week. In addition, we were hoping to move in sooner, especially because our rent is due to go up $400 in April! The thing is, Alonso actually does have quite a bit of time on his hands. So, we’re thinking about teaming up with a local guy who built his own tiny home, one other one, and is launching his business. He’s interested in doing “collaborative builds,” so we could hire him to show us the ropes on each new complicated step, and then add in our (read: Alonso’s) sweat equity hours to complete each section. Seems like a good happy medium. If we get a little creative, we can probably make this work with the existing lightstream loan. They confirmed that for their tiny house loan you can use it for building, not just purchasing one.
So, have we totally lost our minds? Feels like it a bit! If you have experience building your own tiny house (especially as a novice), we’d love to know what resources you found helpful to learn, how long it took you, and whether you’d recommend it for folks who don’t know what they’re doing!