Shipping container homes are growing in popularity, in part because of their low cost and fast build time. But finding a lender to finance a container home can get a little complicated.
What is a shipping container home?
A container home is a type of modular or prefabricated (prefab) home that is manufactured off-site in a factory environment. The modular unit is comprised of shipping containers that have been refitted for use as a home. The unit is then transported to the property location, where it’s either assembled by tradespeople or by the property owner. Shipping container homes can be customized to fit specific size and design requirements, and you can attach several containers together to make a larger home.
Are container homes safe?
Most new shipping container homes can weather almost any storm because they’re made of steel — which means they’re more stable than some houses. But used shipping containers can be riskier. If the container was exposed to chemical spills, the structural integrity can be weakened. Plus, containers built for shipping goods often use industrial paints and are sprayed with insecticides, which can be a health hazard.
Pros and cons of shipping container homes
Pros
Improved construction time. A container home has a relatively short construction time and can be assembled within a matter of months. The automated construction of prefab homes provides you with greater certainty as the construction process isn’t subject to delays by weather conditions.
Personal design. You can customize the size and design to suit your location and lifestyle needs.
Lower ongoing costs. Generally, a container home will require less maintenance as it will be resistant to extreme weather conditions and structural defects.
Carbon friendly. The automated production process and the structurally sound materials used to build a container home have a lesser impact on the environment, which can help minimize waste. For instance, most container homes are fully insulated with double-glazed windows which can help you lower your utility bills.
Cons
Transportation cost. Depending on the location and whether or not there is easy access, transporting the container home to the property site can be expensive. Depending on the nature of the job, the unit may need to be transported by a hydraulic lift, which can be expensive.
Difficult to access finance. Due to the unconventional nature of shipping container homes, many lenders will view you as a risky borrower and may impose strict guidelines for a construction loan. This can make it hard to access the funds you need to build your container home.
How much does it cost?
Depending on the size, structure and design, a shipping container unit could range from just a few thousand for an empty container that you plan to renovate yourself to hundreds of thousands for a large home made out of several containers. Compare several quotes before deciding on a shipping container provider to ensure that you’re getting the best deal.
How to finance a shipping container home
How you finance your home depends on how you build it.
Building a new container home
If you’re building a new shipping container home, you’d generally get financing through a home construction loan. There are two different types of loan available:
Construction-to-permanent. Your lender provides money for you to build your shipping container home, and the loan is converted to a permanent mortgage when the home is complete.
Construction only. Your lender provides money for you to build your shipping container home, and you must pay it back when the home is finished. You can take out a second loan to pay for the first, either with the same lender or with a different lender.
Buying a prefab container home
If you’re buying a container home that’s already fully built and is just being shipped to your land, you may be able to finance it as a manufactured home. This gives you several financing options depending on the size and permanence of the home. Read our guide to financing a mobile home to learn more. Consider speaking to a mortgage broker to help you understand your borrowing options. Provide as much detail as possible about your construction plans and consider approaching specialist lenders that may have more lenient lending criteria.
Is it hard to qualify for financing?
It can be challenging to qualify for finance to construct a shipping container home due to the limited options available. Lenders tend to be conservative with this type of construction and most banks won’t lend you funds for a property that isn’t permanently fixed to the site. While these types of applications are handled on a case-by-case basis, you may be able to qualify for finance if you communicate well with your lender, have substantial savings and a reliable income. Challenges associated with financing a container home include:
Strict lending guidelines. Unfortunately, most lenders have strict guidelines about when they can release funds for a modular home. Many lenders will not provide funds before a certain building stage has been reached, such as after the property is connected to services or once a certificate of occupancy has been issued by a surveyor. In some cases, a lender will only provide you with the funds once the home is completely installed.
Loan security. As banks have no collateral until the home is finished, they can be reluctant to provide progress payments to the builder. Offering up collateral, like a second home, can help you qualify for a loan.
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Shipping container homes are skyrocketing in popularity, but lenders are a bit slow to catch up to the craze. Compare mortgage lenders to find a provider who can help you build your dream home.
Frequently asked questions
If a shipping container home is already installed and you’re buying it along with the land that it sits on, you may be able to purchase it with a traditional mortgage. But it depends on the size and foundation of the home. Talk with your lender to learn more.
No, most shipping container homes are fully insulated for climate control.
Yes, some new homes are being built with both traditional construction and shipping containers. But these homes tend to be more expensive, and you’ll likely need to hire an architect.
Dawn Daniels is a freelance content strategist and SEO manager and former editor at Finder, specializing in investments and lending. Dawn has edited more than 50 published books, including personal finance titles that have become best sellers on the Amazon Top 100. She holds a BA in English language and literature from Cornell College.
Cornerstone Home Lending offers a standard list of mortgage loans with some portfolio options, but you have to contact a loan officer for rates and fees.
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