Can I get a personal loan to buy a house?

A personal loan can be used to finance a tiny or manufactured home, depending on the price point and physical structure of the home. It can also help you prepare your finance to qualify for a mortgage. If you have your eyes set on a traditional home, a mortgage is often the go-to and a personal loan is most often used for home renovations or improvement projects. With median home sale price at $422,400 as of June 2025, a personal loan won’t give you enough buying power.

Can you use a personal loan to buy a house?

While you technically can use a personal loan to buy a house, it’s generally not recommended. The largest personal loans don’t usually exceed around $100,000, with some lenders offering even smaller maximum amounts.

However, if you’ve got your eye on a mobile home or a tiny home, a personal loan could be a helpful financing option. Keep in mind that personal loans can come with high rates, especially if your credit is less than 700, so make sure your situation aligns with the following to avoid getting into high-interest debt:

• Your total home cost is well within the standard personal loan amount limits; typically between $1,000 and $100,000.
• You can afford the monthly payments and still have enough to save for emergencies each month.
• The home doesn’t need immediate or costly repairs that would likely require you to take out another loan.
• The interest rate you’re pre-approved for is competitive (not above the average rate of 12.57 percent).

Using a personal loan to buy a tiny home

Personal loans may be the right financing fit to buy tiny homes with prices averaging between $20,000 and $60,000. In fact, some lenders, like LightStream, offer loans designated specifically for tiny homes.

Mortgage lenders often shy away from loans below $100,000 because they aren’t profitable. In other cases, tiny homes don’t fit minimum property requirements. For example, tiny homes are typically less than 400 square feet, which is less than the Federal Housing Administration’s minimum.

Personal loans are typically unsecured, which means you won’t risk losing your home if you can’t make the payments. One disadvantage of a loan versus a mortgage is you can’t write off personal loan interest because it’s not tax-deductible like mortgage interest.

Using a personal loan to finance a manufactured home

As of March 2025, the average price of a double-wide manufactured home – also known as a mobile home – costs about $153,800. If you’re looking at homes at the lower end of this price range, a personal loan can be used to cover a majority of the price.

If you don’t plan to attach your home to land that you own, you may not be able to get mortgage financing, which makes personal loans a good option.

A personal loan may also be cheaper than a chattel loan, an expensive type of financing used to buy mobile homes that aren’t considered real estate.

5 ways you can use a personal loan to buy a house

If you’re buying a standard home and don’t qualify for a mortgage, a personal loan can be used to organize and pay down your existing debt. In rare cases, you may be able to use a secured loan to assist with a down payment or cash purchase.

• 1. Pay off high-interest-rate credit cards with a debt consolidation loan

  If you’re saddled with multiple credit card payments at high interest rates, you can use a debt consolidation loan to combine them all into one monthly payment. Just make sure that the rate of the new loan is lower than the interest rates of your credit cards. That way, you can take advantage of a smaller monthly payment and pay your debt down faster.

  Use a calculator to see if consolidating would save you money in the long run.

• 2. Get a better mortgage rate or lower closing costs

  You’ll need a credit score of 740 or higher to get the best mortgage interest rates with the lowest closing costs. You could see a big boost to your credit score if you pay off maxed-out credit cards with a debt consolidation loan. That’s because you’ll reduce your credit utilization ratio, which has a major impact on your credit score.

  Besides allowing you to qualify for a higher-priced house, a lower interest rate can save you thousands of dollars in interest charges over the life of a 30-year mortgage.

• 3. Improve your debt-to-income ratio by refinancing high-payment installment loans

  Any existing loan payments will affect your debt-to-income (DTI) ratio, which measures how much total debt you have compared to your income. The higher your DTI ratio, the lower the mortgage amount you can qualify for.

  If you’ve found your forever home but have been told your DTI ratio is too high, consider replacing an existing loan — such as a short-term auto loan — with a longer-term personal loan. Keep in mind that longer terms may mean paying more in interest, but the smaller monthly payment could lower your DTI.

  Use a personal loan calculator to see how different loan terms impact your overall interest.

• 4. Add monthly savings to a down payment fund

  If you don’t have enough saved up for a down payment for a house, consider putting the savings from steps one and two above into a high-yield savings account designated specifically for a down payment. The more you put down, the lower your monthly mortgage payment will be, and you’ll accrue money in interest. Plus, if you can swing a 20 percent down payment, you’ll avoid monthly mortgage insurance on a conventional mortgage.

• 5. Fast extra money for an all-cash home purchase

  If you’re trying to buy a home in a competitive market, your agent may recommend an all-cash offer, which may involve bidding more than the asking price on the home. If you’re short of funds to make an offer and need less than $100,000 a personal loan may be worth a look.

  Many personal loan lenders can get you cash within a day or two, which keeps you in the running against other cash buyers. If you want to pay the personal loan off once you’ve purchased the home, you borrow the funds against your home’s equity with a home equity loan, HELOC or a cash-out refinance.

Pros and cons of using a personal loan to buy a house

Pros

• Consolidate multiple debts with one easy-to-remember monthly payment.
• Improve your credit scores by paying off revolving credit card debt.
• No assets are required for collateral unless you choose a secured loan.
• Faster funding times than most mortgage products.
• Can use debt consolidation savings to build a down payment fund.

Cons

• Payment may affect your DTI ratio.
• Rates are often higher than home equity loan and HELOC rates.
• Shorter terms mean higher monthly payments than home equity products.
• Potential prepayment penalties and high origination fees.
• Personal loan interest isn’t tax-deductible for a home purchase.

Can you use a personal loan for a down payment?

The answer is a definite no if it’s an unsecured personal loan. However, as mentioned, if the personal loan is secured by an asset like a car, collectible, artwork or other asset, then lenders will usually allow the borrowed funds to count toward your down payment if you meet the DTI requirements.You’ll also need to provide paperwork to prove you own the asset and document the value with a third-party service (like Kelley Blue Book if your car is your collateral). And, of course, you’ll risk losing the asset if you default on the loan.

Bottom line

There are many different ways to potentially use a personal loan to buy a house. If you’re purchasing an inexpensive manufactured home or tiny home, a personal loan may be able to cover the purchase cost entirely. Whether you eliminate credit card debt to boost your credit score or you use a secured loan for a down payment, exploring the options may make a big difference in helping you become a homeowner.