Unconventional Mortgages: How to Finance Unique Homes

Cardinal Financial April 12, 2024 | 5 min read
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Getting a mortgage doesn’t have to mean committing to a traditional home. In fact, unique properties are often a more budget-friendly way to build home equity and avoid the downsides of renting. If you’re interested in financing a unique property like a tiny home or barndominium, you may qualify for an unconventional mortgage. So, what exactly is an unconventional mortgage? Let’s break it down (in an educational way, not a dance way).

Unconventional mortgages: Types of properties that may qualify

  • Condos/barndominiums
  • Tiny homes
  • Container homes
  • Manufactured homes
  • Cooperative housing (co-ops)

Condos and barndominiums

Condo living can be a great option when you want to start building home equity without having to commit to an entire house. Barndominiums function in a similar way, but refer specifically to living spaces that have either been built in the style of a barn or have been converted from an existing barn into a residential property. Depending on the specific condo or barndominium, you might be able to secure Conventional or government-backed home financing.

Tiny homes

Tiny homes come in a variety of shapes and sizes, but usually average out at just 225 square feet. Cost-wise, things vary. Prefabricated tiny homes could cost as little as $30,000, whereas custom-built tiny homes could cost as much as $150,000 or more. Still, even that cost is more palatable to some people than the average cost of a full-blown house. 

And thanks to a wider range of financing options, it’s easier to obtain a mortgage for a tiny home that can be placed virtually anywhere.

Container homes

Another rising trend? Container homes, or the refurbication of shipping containers, remodeled and rearranged in various ways to create truly unique homes. Like tiny homes, these options can cost as little as $10,000 if people forego finer details, but price tags can balloon upwards quickly for more in-depth configurations and customizations. Still, even the larger container homes shouldn’t cost more than $200,000 to build according to UpNest, a Realtor.com company. 

Pro Tip: While one container might feel like living in a studio apartment (or the aforementioned tiny home), two or three shipping containers can be laid out to feel more like a traditional house.

Manufactured homes

Manufactured homes are similar to container homes, in that they generally consist of prefabricated pieces that are arranged onsite. They’re also sometimes referred to as modular or mobile homes, and come with a number of advantages:

  • Quick to build
  • Fewer location restrictions
  • Less costly

That said, manufactured homes also come with some disadvantages. They’re typically harder to finance if they’re mobile, which means a mortgage lender may require the home to be permanently set in one location. 

Concerned about cost? Good news: like other unique homes, modular and manufactured homes range in price—with single-wide homes running an average of a little over $75,000 and double-wide homes tacking on another $100,000 to that figure. 

Cooperative housing (co-ops)

While it’s not common, in some cases you may actually be able to finance your co-op living with a home loan. Qualifying criteria is determined on a case-by-case basis, so unfortunately there’s no standard co-op scenario to stack the numbers against. In general, cooperative share loans are typically more involved than traditional financing, and it can be difficult to find lenders who provide this service. The good news? Cardinal Financial just so happens to be one of those lenders.

Types of unconventional mortgages

Okay, now that we’ve broken down a few different types of unique homes, let’s talk about the unconventional mortgages you can use to purchase them. 

One popular option is the MH AdvantageTM loan, which offers affordable housing alternatives to buyers nationwide so long as the unique home is built on a permanent foundation. The MH Advantage loan comes with flexible underwriting standards and reduced pricing for manufactured homes that meet specific construction, architectural design, and energy efficiency standards.

That means, if you like the idea of a modular home or a tiny home but aren’t thinking about traveling the country, you may be able to qualify for financing.

However, if—after reading through all of these unique home types—you’re thinking a conventional home may be more up your alley, consider the possibilities of building your own home with a one-time close loan. That way, if you’re struggling to find a home you want in the current market, you could create your own custom home that’s unique in its own way. With this loan option, you don’t have to pay for the land and the home separately, and you close before construction ever begins. Once the project is complete, the loan becomes a Conventional mortgage. 

Pro Tip: If a new build is out of your budget, Renovation loans are another streamlined way to customize a home, typically for less than a new build.

So, how do I get an unconventional mortgage?

Like a traditional home loan, most lenders will need standard information like your credit history, income, and tax forms to determine if you qualify for an unconventional mortgage. Luckily, you may be able to enjoy more flexibility with qualifying criteria on an unconventional mortgage since, by design, it’s a loan intended for a unique borrower situation. 

Regardless of what home type you choose to pursue, we’re here to help you find the right financing options. One of the best things you can do in your adventure toward homeownership is to obtain a rate quote and speak with a loan expert who can help you find what you’re looking for. 

Unconventional mortgages are a great way to finance container homes, tiny homes, and more unique property types while building home equity.

Ready to make moves?

One of our loan originators is standing by to assist you with your free rate quote.
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