There's more than one way to get a loan for a shipping container home. Here are some of your options for financing this unique and affordable type of home.
Shipping container homes have become popular in recent years as unique, eco-friendly, and affordable housing options. However, unique houses sometimes have unique financing challenges, meaning it can be more difficult to get a home loan to purchase them.
Not so with shipping container homes, though. Technically, shipping container houses are modular homes, and you can purchase a modular home with a Conventional loan. We’ll tell you how to get a loan for a shipping container home and why these properties have gained so much appeal.
Fairway offers financing for completed homes, including shipping container homes, not homes in the process of being built. You can use a Conventional home loan to purchase a shipping container home. This may be an option if the home is an existing property (one that is already built and installed on a piece of land) or you are purchasing the finished home after someone else has paid for the upfront costs.
The option to use a Conventional loan is particularly attractive because it’s a more widely available loan type, and there are low down payment options available.
You can qualify for a Conventional loan with:
One of the advantages shipping container homes have over other unique types of homes is that it’s considered a modular home. As such, appraisers can use stick-built and other modular homes when looking at comparable properties in the area, a key factor in getting approved for the loan.
Appraisers need to determine the fair market value of a property, and part of that process involves looking at recent sales of similar homes. If the house is of such a unique character that they cannot find comparable sales, it can cause the loan to fall through.
That’s why it’s sometimes difficult for homebuyers to get approved for a mortgage on another type of unique home: the barndominium. There just aren’t that many out there right now, and they aren’t considered modular the way shipping container homes are.
Related reading: How to Finance a Barndominium: Can You Get a Mortgage for These Unique Homes?
Now that you know how to get a loan on a shipping container home, let's go over the pros and cons of this option.
Shipping containers are a creative and affordable way to become a homeowner, according to Booth.
The total cost for land, labor, and materials for the couple he helped with their shipping container loan was $325,000, he said. That was in 2018, prior to the housing boom set off by the coronavirus pandemic. At the time, the total cost was still well below the average home price in the Boise area, Booth noted.
Another advantage to shipping container homes is that you’re using existing materials to build your home — and strong ones at that. Shipping containers are designed to be stacked on top of one another and shipped, so they make for strong, heavy frames for a house. Due to the nature of the building materials, there is less exterior maintenance on a shipping container home than a traditional home.
You can also use your imagination when it comes to the layout of the home. By combining multiple containers in different layouts, you can create the ideal floor plan for your lifestyle.
Check out these decked-out shipping container homes:
The drawback to having a shipping container home newly built is that you have to purchase the land on which it will sit, plus the construction costs. And if you choose to DIY the shipping container build, you won’t be able to get a traditional home loan to cover the costs of buying, moving, and renovating the containers that will be used.
If you purchase the land on which the home will sit, you’ll need to consider whether it’s already been cleared and whether it has utility hook-ups. Municipalities will require that the property have street access along with hook-ups for electricity and natural gas, if needed, as well as water and sewage services.
You can pay to have the land cleared and prepped for residential use yourself, but you’ll need to budget for those expenses, as well as secure the appropriate permits for building the home.
There’s also high demand right now for shipping container homes, so you may not be able to move as quickly as you might like if you go this route. If your builder is booked out several months, or even years, you’ll have to continue renting or find alternative housing while you wait for the home to be complete.
The hack for getting around these issues is finding a shipping container home that’s already been built and installed on a piece of land. You can purchase the home with a Conventional loan (assuming you meet the borrower criteria and the property meets all of the loan program requirements).
Related reading: Are Tiny Homes Worth It? 5 Things to Know Before You Buy a Tiny House
Shipping container homes offer many advantages to prospective homeowners, especially those interested in upcycling materials and building a home on a budget. Conventional loans enable homebuyers to purchase shipping container properties more easily than some other unique housing options out there.
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