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We’ve all heard the popular idiom, “the bigger, the better” — an expression that places value on how sizable something is. But oftentimes, small things can be just as, if not more, beneficial than their larger counterparts. Case in point: tiny houses.
If you’ve ever watched television shows like Tiny House Nation or Tiny House, Big Living, you know that tiny houses are more than just a passing fad. In fact, according to ComfyLiving, the trend of purchasing and living in tiny homes has increasingly grown since the financial crisis in 2008 — when many could no longer afford their mortgage payments. Tiny homes are not only a more affordable alternative to traditional homes, but they also have the added benefit of being more environmentally friendly and are even a way to offer shelter to the homeless.
With all the benefits that come with owning a tiny home, there are, of course, expenses that come with it and factors to consider. If you are interested in alternative housing, a tiny house might be exactly what you are looking for. Read on to find out how to plan for and buy a tiny house as well as explore why bigger isn’t always better.
The Tiny House Movement
In an effort to minimize and downsize, the tiny house movement has become increasingly popular over the last decade. With the rising costs of homeownership and increased concern around sustainability, more and more people are attracted to the philosophy of downsizing and simplifying their life. The tiny house movement promotes the idea that living with less will not only save you money and help the environment, but it can also grant you more happiness and financial freedom.
According to the International Code Council, a property is considered a tiny house when it is less than 400 square feet. In comparison, the average size of a single-family house in the U.S. is around 2,261 square feet. A tiny house is either movable and built on wheels or it’s stationary and built on a foundation.
How Much Does a Tiny House Cost?
While tiny homes are a significantly cheaper alternative to buying a traditional home, there are still a handful of costs to consider. The average cost of a tiny home is $52,000 in the U.S. But the actual cost of a tiny home can be considerably higher or lower than the average, depending on a variety of factors.
Things like location, size, features, amenities, and building materials will all factor into the price of your tiny home. In order to begin budgeting for a tiny home, the first decision you need to make is whether you will build or buy it.
How Much Does It Cost to Build a Tiny House?
If DIY is your jam, then building a tiny house could be a creative and cheap path to homeownership. It’s typically cheaper to build a tiny home than to buy one prebuilt, but don’t underestimate the work that goes into it. If you aren’t a skilled or knowledgeable builder, mistakes can cost you more money than you bargained for. Here are most of the expenses you’ll need to consider:
- Land — If you don’t already own land to build your tiny home on, you’ll need to buy land or lease a lot. The cost of land can vary dramatically depending on where you live in the U.S., so do your research. If your tiny home is on a foundation, you may have to pay property taxes. You’ll also need to factor in the cost of getting utilities to your property if you build your home on vacant land.
- Foundation — If you decide to build your tiny home on foundation, you’ll need to construct it. Pouring the foundation for a tiny home will vary in cost, depending on the type of foundation you go with. Your choices are typically poured slab concrete, basement, or crawl space. You can expect an average cost of $5,000 to $8,000 for the foundation.
- Building permits — If you build a tiny home on your own, you may need to pay for a local building permit. The national average cost of a building permit is around $1,321. The actual cost will depend on location and what that area’s rules and legalities are. If you plan to have your tiny house professionally built by a company, you’ll typically not have to worry about building permits. Most companies will take care of that on their end.
- Square footage — Excluding land or any extras, the cost, on average, of a tiny house per square foot is $300. This is about double the price per square foot that it costs to build the average traditional home because larger construction jobs make for more efficient use of resources. Keep in mind that the costs per square foot will vary depending on the size, materials, and floor plan. A custom layout, for example, will cost more per square foot.
- Materials — The cost of building materials might be the biggest expense when it comes to building your own tiny home. According to Tiny Home Builders, you can expect to spend a minimum between $18,000 and $25,000 in materials alone. To save on the cost of materials, it’s a good idea to shop around, but that doesn’t mean you should always opt for the cheapest option because this could ultimately raise the costs of repairs and maintenance.
- Amenities — The type of amenities you choose to include will impact the final cost of your tiny dwelling. Consider the quality of things like appliances, furnishings, and decor, as these will all make a difference when it comes to how much you are willing and able to spend. Think of ways to save money on amenities, such as opting for reclaimed materials or purchasing furnishings with dual purposes, like a sofa with built-in storage.
How Much Does It Cost to Buy a Tiny House?
As you can infer from the expenses above, building your own tiny home takes a ton of time and consideration, not to mention the physical labor involved. So it’s understandable if you’d prefer to simply purchase a prebuilt one instead.
One option is to go with a prefabricated tiny-home provider, such as Tumbleweed, that can be delivered straight to you. Although you’re saving significant time and effort by buying a tiny house over building one, most prebuilt homes will start at around $80,000 or more depending on the level of luxury and amenities included.
Another option is to buy a pre-owned or used tiny house. Buying pre-owned is usually cheaper than buying new because of property depreciation, and you may even be able to bargain the price with the current owner. However, buying pre-owned means the current property may not be set up the way you’d like, so you may have to invest money into re-customizing it to your preferences.
Other Costs to Consider
- Homeowners insurance — Getting insurance for a tiny home can be a challenge, especially if you built the house yourself. Details on how the house was constructed, how much it weighs, and how you plan to use it will all factor into the cost for insuring your tiny home. According to ValuePenguin, the average rate for a tiny house insurance policy was $852 per year. For mobile tiny homes, you’ll probably need RV insurance. For homes built on foundation, you’ll need manufactured home insurance
- Maintenance and repairs — No matter the size of your home, or if you built it or bought it, you’ll need to factor in the costs of ongoing maintenance and occasional repairs. Luckily the costs for maintenance and repairs on a tiny home will be a fraction of what you’d pay on a traditional full-size home. And remember that in order to keep these costs down, steer clear of choosing the cheapest materials to construct your home since they’ll most likely wear out sooner.
- Utilities — Utility costs will depend on the type of tiny home you have and where it’s located. You will typically have the standard utilities such as gas, electric, water, sewer, and internet. Because the space is small, these costs should be less than with a traditional home. One way to further reduce utility costs is by installing your own energy-efficient sources, such as solar panels or rainwater harvesting systems.
Tiny Home Financing
Now that you understand the costs associated with either building or buying a tiny home, it’s time to talk about financing. If you’ve actively been contributing to your savings account and have enough money saved up, you may be able to pay for your tiny home in full. If paying in full isn’t a possibility for you, then you’ll need to understand your financing options.
An important thing to know is that tiny homes typically don’t qualify for traditional mortgages because most lenders have minimum loan amounts that exceed the average cost of a tiny house. So for additional funding, most owners turn to personal loans.
Tiny House Loans
You can finance your tiny home with a personal loan from a bank, online lender, or credit union. To qualify for the lowest interest rates, you’ll need to have a good credit score. The same credit score range needed to buy a traditional house will apply when it comes to getting a loan for a tiny house (typically scores of 700 or above may qualify for the lowest rates.)
Keep in mind that most lenders will require that homes have a permanent foundation in order to qualify for a loan. If you have a tiny home on wheels, one thing you could do is get it certified as an RV with the RV Industry Association. Doing this might help you qualify for an RV loan with the stipulation that it must be your permanent residence.
You might also be able to secure a loan if you’re working with a tiny home builder who partners with a lender. These loans are either unsecured (based primarily on your credit score) or secured by the tiny house, meaning your house is the collateral if you can’t repay the loan. Home equity loans and lines of credit are also an option if you already own a home and want to add a tiny house to your land.
How to Find Affordable Tiny Homes
Ready to find the tiny home of your dreams? Try some of these methods to easily find a tiny home and keep costs to a minimum.
- Check real estate listings online and in-person — You can find tiny homes for sale in your area by searching local listings and national sites such as TinyHouseListings.com.
- Research tiny house communities — Similar to an RV park, a tiny house community is a designated area where tiny house dwellers live alongside each other. Living in a tiny house community is often a more affordable way to find tiny homes because you can bypass the challenges of locating undeveloped land for sale and can often easily hook up your utilities.
- Find a tiny house kit online — If you like the idea of DIY but want to do it in half the time and possibly at a fraction of the cost, you can purchase a tiny house kit online. Kit contents range from blueprints only to blueprints plus pre-cut wood and other items for your home’s construction. While you’ll likely need to hire a contractor to install plumbing, gas, and electrical systems, you can still save money, as kits tend to be less expensive than prefab tiny homes. You can even find basic tiny home kits on Amazon.
What’s the resale value of a tiny home?
Unlike traditional homes, tiny homes generally depreciate in value instead of appreciate. Tiny homes are pretty niche, and because of that, they can be difficult to sell down the line. Ultimately resale value will depend on several factors, including the location of the tiny house, what condition it’s in, whether it’s on a foundation or on wheels, and if it’s been well maintained.
How long do tiny houses last?
A well-constructed tiny house should be able to last just as long as a traditional house. How long a tiny house lasts will depend on several factors, such as regular maintenance, the materials used, whether it’s built on foundation or wheels (tiny homes on wheels tend to break down faster), and the overall craftsmanship of the house.
Which states allow tiny houses?
While tiny homes are not technically illegal in any U.S. state, according to the Tiny House Society, some areas are more tiny-home-friendly than others. The laws that pertain to tiny houses vary state by state and also county by county, so do your research before building or purchasing a tiny home so you’ll know how these regulations could impact you.
Ultimately, choosing to live in a tiny home doesn’t mean you can’t live large. In fact, opting for a tiny home can save you tons of money and allow you the financial flexibility to do more of the things you want. They can easily be built and customized to match your lifestyle and budget, so as long as you are ok with sacrificing space and possibly amenities, a tiny home can be the perfect fit for you.