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Many Americans are finding tiny houses, or those that measure several hundred square feet in size, are a great way to live. They can be both economical and eco-friendly, and some people say they simplify life, which can bring many benefits.

If you’re curious about tiny houses or are currently contemplating one, it’s important to know that financing these dwellings may be different than securing a traditional mortgage. Here’s a guide to tiny houses and how to secure funds to buy or build one.

What Is a Tiny House?

A tiny house is often defined as a home that is between 100 and 400 square feet. In contrast, the median size of a single-family American home is currently 1,834 square feet as of October 2025, according to the Federal Reserve Bank of St. Louis data. That’s almost five times bigger than the biggest tiny home. Here are some other facts to know about this kind of dwelling.

•   Owners live in their tiny homes themselves, rent them out, use them as a small vacation home or even build them as an accessory dwelling unit (ADU) on the same lot as their primary residence. Tiny homes may be on wheels, or they may sit on a fixed foundation.

•   Prefab homes can be delivered complete to the site, or there are modular homes that require some assembly on site. Those who would rather build their own house can hire an architect or draw up plans to their own specifications. There are small homes in all kinds of styles, from a classic Colonial or Victorian to a ranch style or A-frame or ultra-modern design.

•   Local zoning rules will determine whether or not a person can build or move into a tiny home. And building codes will determine things like ceiling height.

•   Tiny houses may not have good resale value since they are such a specific type of home and are often highly customized. Before buying a tiny house as an investment property, it might be wise to consult a real estate investment professional.

Tiny House Pricing

In 2025, the average sales price for a single-family home was about $534,100, according to U.S. Census Bureau data. Tiny homes cost quite a bit less, with an average of $82,500. That price can vary up and down depending on the size of the home, materials used, and amenities (yes, some tiny homes have luxe, spa-style bathrooms, for example). The price of the building is not the only thing to consider.

Buyers of tiny homes must factor in the price of buying or leasing land on which to place the home if they don’t already own it, as well as the cost of hooking it up to utilities.

If the tiny home is on a foundation, there may be state and local property taxes to pay. If the tiny house is on wheels, though, there likely won’t be property tax assessed.

Recommended: Is Buying a House a Good Investment?

Financing the Land

If property needs to be purchased to have a place to put a tiny home, an option for financing is a land loan. There are three types of land loans: raw land loans, unimproved land loans, and improved loans.

•   Raw land loans are for land that’s completely undeveloped with no electricity, roads, or sewer access.

•   Unimproved land loans are for properties that have more access to amenities like utilities, but lack utility meters.

•   Improved land loans are for land with access to roads, water, and electricity.

The size of the down payment and the interest rate of the loan will depend on what type of loan is needed. For example, lenders may consider raw land to be a riskier option than improved land and require a bigger down payment and higher interest rates.

Mortgages for Tiny Homes

Qualifying for a home loan for a tiny home may be tricky. Some lenders may not be willing to offer first or second mortgages for tiny home financing. However, if a tiny home has a foundation and complies with local building codes, it may qualify for certain mortgages.

Tiny homes may also qualify for what is known as a “chattel mortgage,” a mortgage for moveable personal property. The tiny home acts as security for the loan, and the lender effectively becomes the owner of the tiny home until the loan is paid off and ownership is transferred back to the borrower.

This differs from traditional mortgages that are secured by a lien on the property. Because the size of the loans are typically small, chattel mortgages may have relatively short terms, though interest rates may be relatively high.

Personal Loans

A personal loan can allow individuals access to money that they can use for any personal, family, or household purpose, from paying off credit cards to an effective tiny house loan. Depending on the lender, loan amounts can range from a few thousand dollars to $100,000. When the applicant is approved for a personal loan, they’ll receive the loan amount in a lump sum and pay it back in installments with interest.

Personal loans may be secured or unsecured. Unsecured loans are not backed with any collateral, and the interest rates currently range from about 6% to 36%, depending largely on the borrower’s credit score.

Secured loans are backed by collateral, such as personal savings, a car, or another home owned by the same borrower. They typically come with a lower interest rate than their unsecured counterparts. However, it’s important to note that if a personal loan is defaulted on, the borrower’s assets could be seized by the lender to repay the debt.

Home Equity Loans

The equity someone may have built up in a home they already own can be tapped to finance a tiny home for use as a vacation home, rental property, or ADU. A home equity loan is a fixed amount of money secured by a borrower’s home.

Usually, up to 85% of the equity accumulated in a home can be borrowed, though actual loan amounts will also depend on the applicant’s income and credit history. The home equity loan is repaid with monthly payments over a fixed term. And if the borrower fails to repay, the lender can foreclose on the house.

A home equity line of credit (HELOC) may be another option to finance a tiny home. HELOCs differ from home equity loans in that the borrower doesn’t receive a single lump-sum payment from the lender.

Rather, a HELOC gives the borrower access to a line of credit that can be drawn down, paid back, and drawn down again, if need be, within a certain time period. The HELOC is secured by the borrower’s home, so as with a home equity loan if the debt is not paid, the lender can use the home as collateral.

Loans From Tiny House Builders

A tiny house builder or contractor may be able to help secure financing through unsecured loans based on an applicant’s credit score, or secured loans backed by the value of the tiny home. These tiny-house loans may have longer terms and lower starting interest rates than personal loans, but they may require a downpayment.

RV Loans

If the tiny house has wheels and is certified as an RV by the Recreational Vehicle Industry Association, an RV loan may be another option for financing. Online lenders, banks, and credit unions may all offer RV loans. In many cases, the tiny house will serve as collateral for the loan, the same way a car would serve as collateral in an automobile loan.

Recommended: Guide to Buying, Selling, and Updating Your Home

The Takeaway

If you’re in the market for a tiny house, you may need to think beyond traditional mortgages. Home equity, HELOC, and personal loans, among other options, may be available forms of financing that can set you on your way to owning the tiny house of your dreams.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

How big is a tiny home?

Tiny homes are typically between 100 and 400 square feet.

How much does a tiny home cost?

Currently, the average cost of a tiny home is about $82,500, but there’s considerable variation depending on location, size, style, and other factors.

How to afford a tiny home?

There can be several ways to finance a tiny home, including possibly a mortgage loan, home equity loan, HELOC, builder loan, RV loan, or personal loan.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOPL-Q425-029

The housing market is rising in some areas of America and falling in others. If you find yourself in a hot seller’s market, it can be challenging to buy a house, but doing so, even with a low down payment, is possible.

Lenders are willing to approve mortgages with lower down payment requirements if you qualify and are comfortable with paying mortgage insurance.

Read on for advice on navigating the real estate market if you have a small down payment but a fair amount of competition from other prospective buyers.

What Is Considered a Low Down Payment?

While many people believe you need at least a 20% down payment to buy a house, the average down payment by a first time homebuyer at the end of 2025 was 10%. And low-down-payment mortgage loans — even home loans with zero down payment — do exist.

Given the wide range above, what’s actually considered a low down payment? Popular mortgage programs out there may require as little as 3% down, and a couple of more specific home loan programs allow 0% down.

The reason why that 20% down payment figure keeps popping up is that any amount less than that will likely entail some form of mortgage insurance, an ongoing fee charged by most lenders.

💡 Quick Tip: You deserve a more zen mortgage. Look for a mortgage lender who’s dedicated to closing your loan on time.

Challenges of Buying in a Seller’s Market With a Small Down Payment

If you’re wondering how to buy a house with a low down payment, it’s important to acknowledge a painful truth in today’s housing market: There’s truth to the saying “cash is king,” and that continues to be evident in a seller’s market, where real estate investors who pay all cash frequently outbid prospective first-time homebuyers. All-cash sales have risen to a historic high of 26% in 2025, according to the National Association of Realtors. Be ready for these potential challenges if you intend to buy a house with a small down payment.

Longer Closing Time

Closing on a home with a mortgage-contingent offer to buy takes longer than closing with a cash offer. There’s often more paperwork, and underwriters will require time to ensure that your financials are in order before green-lighting your mortgage.

Lenders May Disagree With Mortgage Minimums

Just because a mortgage loan program allows for low-down-payment mortgage loans for qualified buyers doesn’t mean a lender will accept a down payment of 3%. Lenders have wide latitude to dictate their own terms, and it’s fairly common for them to set their own minimum down payment requirement somewhere above what the stated minimum for the program is.

Home Sellers May Be Nervous About Your Ability to Close

While it’s true that all funds from your down payment and mortgage transfer to the seller at closing, many sellers still buy into the old “bird in hand” adage when it comes to accepting offers. A higher down payment signals a buyer’s financial capacity and is, therefore, more attractive in the eyes of the homeowner.

If sellers accept a bid with a low down payment, they may run an increased risk of the buyer being rejected at the last minute by the mortgage lender.

In a deal involving a mortgage backed by the Federal Housing Administration (FHA), if the home is appraised for less than the agreed-upon price, the sellers must match the appraised price or the deal will fall through. FHA guidelines require home appraisers to look for certain defects. If any are found, the sellers may have to repair them before the sale.

Struggles With Competitive Offers and Bidding Wars

When your down payment is limited, you may find it difficult to compete in a bidding war. To help your case, if you are obtaining a conventional loan, seek out mortgage preapproval before beginning your home search in earnest. And consider writing a “love note” to the seller in your offer letter. Compliment something you especially like about the house and try to find some common ground with the seller that will appeal to their emotions. Thank the seller for considering your offer.

Recommended: Private Mortgage Insurance (PMI) vs. Mortgage Insurance Premium (MIP)

Types of Low-Down-Payment Mortgages

If you’re trying to score a home with a small down payment, there are some ways you can approach it to increase your odds. Some of the most popular low-down-payment mortgage programs are:

FHA Loans

FHA loans backed by the Federal Housing Administration, allow for a down payment as low as 3% to 5%. The government guarantee makes these loans more palatable for mortgage lenders and easier for a homebuyer to afford.

Fannie Mae HomeReady

Buyers who are within 80% of area median income for the census tract where a home is located can put down just 3% with this program. You don’t need to be a first-time buyer to take advantage of this program, however if all buyers are first-timers, you may be required to take a homebuyer education class.

Conventional 97 Loan

This loan allows first-time homebuyers of any income level to put only 3% down and finance the other 97% of their purchase with a fixed-rate mortgage with a term of up to 30 years. A credit score of 620 is required, although it will take a score of 680 to take full advantage of the features of this loan. At least one buyer must be a first-timer, and if all buyers are first-time homebuyers, a homeowner education course is usually required.

Conventional Mortgage

If you don’t qualify as a first-time homebuyer you can still obtain a low-down-payment home loan with a down payment as low as 5%. Conventional mortgage loans can be either fixed or adjustable rate, and you could take anywhere from 10 to 30 years to repay what you owe, depending on the mortgage term you choose. You’ll need a credit score of 620, and the higher your score, the better the interest rate you will likely be offered. If you put down less than 20%, you’ll need to pay for private mortgage insurance (PMI) with your monthly payment until you have 20% equity in your home.

Recommended: Home Affordability Calculator

Types of No-Down-Payment Mortgages

It is also possible to buy a house with no money down at all. Here are two common no-down-payment mortgages you may want to explore:

VA Loan

A VA loan backed by the U.S. Department of Veterans Affairs, allows eligible active-duty military members, veterans, reserve members, National Guard members, and certain surviving spouses to purchase a home with a zero-down-payment mortgage. If you think you might be eligible for a VA loan, your first step is to obtain a Certificate of Eligibility from the VA. Then you’ll obtain the loan from a lender (most will require a 620 credit score or better). While there is no mortgage insurance required, there is usually a VA funding fee.

USDA Loan

USDA loans are for low- and moderate-income buyers living in rural areas. The fixed-rate loan allows for the purchase of a new home but also allows borrowers to wrap some renovation costs into a home purchase. The loan can be used for modular or manufactured housing. There is no down payment or minimum credit score required for this loan.

💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

Pros and Cons of Zero-Down-Payment Mortgage Loans

There are both benefits and disadvantages to going into homeownership with no down payment. Here are a few points to think about.

Recommended: Home-Buying Process Checklist

How Down Payment Assistance Can Help

If you’re struggling to come up with a down payment and a zero-down-payment loan isn’t an option, you may be able to get help. Consider exploring both of these options:

Down Payment Assistance (DPA) Programs

Many governments and nonprofits offer down payment assistance programs for first-time homebuyers — those who have not owned a principal residence in the past three years. The funds may come in the form of a loan or a grant. Some lenders can even assist you in qualifying for these programs to help offset the upfront costs of homebuying.

Cash Gift for Down Payment

Finally, you can also ask a family member, or sometimes a domestic partner, close friend, or employer, to help with the down payment by contributing gift money. The money can’t come with any strings attached, and a gift letter will likely be required by the lender. This is a popular option for parents and in-laws who want to help their children buy a first home.

Low- or No-Down-Payment Considerations

Mortgage Insurance

Buyers who put down less than 20% on a home purchased with a conventional mortgage can expect to have to pay for private mortgage insurance until they reach 20% equity in their home. Those who finance their home with an FHA loan will need to pay an upfront and annual mortgage insurance premium for the life of the loan. Some other government-backed loans also have similar fees.

Higher Cost Overall

Home loans cost money, in the form of interest. And because more of the home’s price must be financed when you put down a low down payment (or none at all), the total cost of the home will be greater than if some or all of the home purchase was covered by cash.

Less Equity Initially

The larger the down payment on a home, the more equity the buyer has on move-in day. Of course, you will build equity with your monthly mortgage payments, but in a process called mortgage amortization, a greater proportion of your monthly payment goes toward interest in the early years of a home loan, with less going to pay down the principal. The balance shifts gradually over the years of your loan, but you build equity slowly at the outset of a home loan.

The Takeaway

Buying a home with a small down payment is possible, even in a seller’s market. With preparation and the right mortgage lender, you may be able to land a place to call your own even with a low down payment — or no down payment at all.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

What mortgage has the lowest down payment?

Homebuyers who qualify can get a VA mortgage (backed by the U.S. Department of Veterans Affairs) or a USDA loan (from the U.S. Department of Agriculture) with no down payment at all. For other loan types, the lowest down payment amount is 3%.

Are zero-down mortgages a good idea?

Zero-down-payment home loans can help you get settled into a home sooner, but there are a few things to consider: You will not have any equity in your home at the outset, and equity builds slowly in the earliest years of a home loan. Your zero-down-payment loan will also be larger than the loan you would have if you made a down payment, so over the long haul, you will pay more for the home. However, if buying with no down payment allows you to take advantage of low interest rates, it might be worthwhile.

Is it harder to get your offer accepted with a small down payment?

If a seller is considering similar offers, the buyer with the larger down payment might have an edge. Being preapproved for a home loan can give you an advantage, however. If you can’t make a large down payment, consider obtaining preapproval.

Can a low down payment affect your mortgage rate?

Lenders may perceive buyers with lower down payments to be a greater risk, so a low down payment can sometimes result in a higher interest rate.

Are there programs to help first-time buyers compete in a seller’s market?

There are both national and local programs to help first-time homebuyers, including first-time homebuyer loan programs and down payment assistance programs. While these programs are not designed specifically to help buyers in a seller’s market, they certainly can’t hurt.

Should I wait for a buyer’s market if I only have a small down payment?

Whether or not to wait for a buyer’s market will depend on how soon you wish to buy a home and which local market you’re searching in. If waiting will allow you to build money for a larger down payment or improve your credit score, it might be worthwhile. The same is true if you foresee any reason the market might cool in the future. But if you need to settle down now, consider exploring nearby housing markets that might be a little less heated. And line up your mortgage preapproval to position yourself for success.

Photo credit: iStock/sturti

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOHL-Q425-198

After attending college, you might have a hefty student loan you need to pay off, and you might also have some credit card debt you’re ready to eliminate.

Having two (or more) separate payments each month can get messy, and could negatively impact your credit if you don’t make all the minimum payments required. You may be wondering if it’s possible to consolidate student loans and credit card debt together to make things easier.

In this guide, we’ll look at the differences between debt consolidation and student loan consolidation, plus explore the options to lower your interest rates and possibly get one single payment for all your student loan and credit card debts.

What Is Debt Consolidation?

There are two different ways you can change what your debt looks like: debt consolidation and debt refinancing.

It’s important to understand that when it comes to student loans, consolidating is different from refinancing. Refinancing refers to changing the financial terms of a debt. Maybe when you took out your student loan, for example, interest rates were higher than they are now. You might be able to refinance your loan with lower rates or you could refinance to extend the loan term.

Debt consolidation, on the other hand, refers to combining more than one debt into a new loan with a single payment. Say you have three different credit card balances and you take out a new loan to pay them off. Now, those three credit cards have a zero balance and you’re left with a single monthly payment and a new interest rate and terms with the new loan.

Consolidating Student Loans

The U.S. Education Department offers what’s called a Direct Consolidation Loan, which consolidates all your federal education loans that qualify into one new loan with a single interest rate, typically the weighted average of the loans you’re consolidating. When you consolidate federal student loans, you keep federal benefits, such as income-driven repayment plans and student loan forgiveness.

Student loan consolidation may be useful if you have federal loans from different lenders and are making more than one payment per month. However, your interest rate won’t necessarily be lowered, nor will you be allowed to also consolidate private student loans or credit card debt.

Consolidating Credit Cards

Just like with student loans, you may have multiple credit cards each with their own balance, interest rate, and minimum payment due each month. This can make paying off all the debt next to impossible — and make you feel like you’re treading water as you pay the minimum amount due on each card.

With credit card consolidation, you take out a new personal loan and pay off all outstanding credit card debt. You then have one payment and one interest rate (which may often be significantly lower than some very high rates for credit cards). You’re now making one monthly payment for all your credit card debt.

How to Consolidate Student Loans and Credit Card Debts

As discussed, with a Direct Consolidation Loan, you can’t add credit card debt to the loan. Direct Consolidation Loans are reserved for federal student loans only.

However, if you’re wanting to consolidate both student loans and credit card debts, there are options you can consider.

Personal Loan

One way to pay off different types of debt is with a personal loan. However, be aware that personal loans typically have higher interest rates than student loans. The rates for personal loans may be lower than credit card interest rates if your credit is good.

By taking out a personal loan, you may be able to pay off all of your student loans and credit card debt. Your debt is then rolled up into one monthly payment with one interest rate.

The higher your credit score, the lower the interest rate you may qualify for with a personal loan. If you don’t get a good rate, you could extend the loan term to make your payments more manageable. But that will result in paying more in interest over the life of the loan. You can usually pay off a personal loan early without penalty, which can cut down on what you’d otherwise pay in interest.

Finally, it’s important to note that if you use a personal loan to pay off your federal student loans, you’ll lose federal benefits such as student loan forgiveness and deferment.

Balance Transfer

If a personal loan isn’t for you, you could check to see if you have a credit card with a balance transfer offer. Often, credit cards will offer a promotion of 0% on any balances from other credit cards or loans transferred. Take note though: Often these promotions end after a year, and then you’re stuck with the interest payment on the remaining balance.

A balance transfer may make sense if you know you can pay off your debts within a year. If you have a large amount of credit card debt or a high student loan amount, this may not be the best solution if you can’t pay it off quickly. Instead, you might consider transferring only the amount of your debts that you know you can pay off within the timeframe, or consider an alternative method.

Alternatives to Consolidation

If you’re hoping to consolidate student loans and credit card debt together, taking out a personal loan or using a balance transfer are two options to explore.

You might also look at a debt reduction strategy, such as the Avalanche Method or the Snowball Method.

The Avalanche Method

The Avalanche Method focuses on paying off your debts with the highest interest rates first. Once those are paid off, you put your money toward the debts with the next highest interest rates, and so on and so forth, until they are all paid off.

The Snowball Method

With the Snowball Method, you focus on the debt with the largest balance first. Put extra money toward paying that off, then when it’s paid off, you move to the debt with the next largest balance.

Continue Payments

Whatever strategy you choose, the key is to keep making payments on your other debts too. And if possible, pay more than the minimum amount due. Even paying an additional $25 a month on a debt will help you pay it off faster and reduce the total amount of interest you pay overall.

Student Loan Refinance Tips from SoFi

Because student loans are often the largest debts people carry, you may want to have a separate strategy for paying off student loans.

When you refinance student loans, you exchange your old loans for a new private loan, ideally one with a lower interest rate, which could lower your payments. Or you could opt for a loan that offers a longer time period if you want a smaller monthly payment. However, keep in mind that with a longer loan term, you’re likely to pay more in interest over the life of the loan.

Using a student loan refinancing calculator could help you see what you might save by refinancing.

Also, if you plan on using federal benefits like forgiveness or income-driven repayment plans, it’s not recommended to refinance federal student loans with a private lender. Instead, look into a Direct Consolidation Loan or refinance your student loans once you’re no longer using federal benefits.

The Takeaway

While it can be challenging to consolidate student loans and credit card debt together, it may be possible to do so with a personal loan or a credit card balance transfer. Using one of these methods allows you to transfer these debts into a single loan with a single payment and interest rate. However, there are drawbacks to consider, including losing federal protections on federal student loans.

If a personal loan or balance transfer credit card isn’t an option, you could consider refinancing your student loans to possibly lower your interest rate and save money each month. The money you save could then be put toward paying off your credit card debt.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

Do I lose my credit cards if I consolidate?

Consolidating credit card debt does not cause you to lose your credit cards. It merely wipes out the debt on each card you include in the consolidation (though you will have a new loan to pay off for all the debt on the consolidated credit cards).

Will consolidating my student loans lower my credit score?

If you use the Direct Consolidation Loan, this will not impact your credit score. However, if you consolidate your student loans with a personal loan or through student loan refinancing, it may impact your credit.

Can my student loans be forgiven if I consolidate?

If you consolidate your loans with a Direct Consolidation Loan, you’re still eligible for student loan forgiveness. However, if you refinance your student loans with a private lender, you are no longer eligible for federal benefits, including loan forgiveness.

Photo credit: iStock/PeopleImages

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.