There’s something to be said for living the simple life. In a world that is so often fixated on modern convenience and connectivity, transitioning to a minimalist lifestyle can be a breath of fresh air for many home buyers.
The most appealing factors of tiny home living are affordability, efficiency and eco-friendliness, according to a 2020 survey by Fidelity National Financial subsidiary IPX1031. But whether you’re interested in a tiny home to embrace minimalism, get closer to nature or purely to lighten the financial load of home buying, it’s important to understand how these houses differ from traditional homes beyond their smaller square footage.
Although Rocket MortgageⓇ doesn’t offer financing for tiny homes, we believe knowledge is power, so we’re here to walk you through everything you need to know about buying or building a tiny house.
How Much Is A Tiny House?
The average cost of a tiny house ranges from $30,000 – $60,000, though the cost to build a tiny home can be up to $150,000 depending on the upgrades and amenities added.
Other factors that impact the cost of a tiny house include the size of the house, whether it’s built on wheels or a foundation, the type of building materials used and the building permit costs in your area. But on average, you can expect to pay about $150 per square foot.
Is It More Expensive To Build Or Buy A Tiny House?
Building a tiny house will almost always be cheaper than buying one pre-built, but that doesn’t always mean it’s the right option. Building a tiny home often requires a specialized skill set most average homeowners don’t possess, so it’s important to balance the value of your potential savings against the risk involved with building a house yourself.
Most tiny house builders spend $20,000 – $60,000 on building materials, depending on the material’s quality and demand. Tiny homes on wheels are typically more affordable than those fixed to a traditional foundation, as the foundation alone can tack on an additional $5,000 – $8,000 to the overall project price.
If you aren’t ready for the responsibility of building a home from the ground up, prefabricated tiny home kits can be purchased for as little as $4,000 for a basic shell with no amenities. Or you can opt to go all-out with a more extensive model, which will come with everything you need but could cost $150,000 or more depending on your taste.
Cost Of A Traditional Home Vs. Tiny Home
The median home sale price was $356,900 in 2021, according to CNN. This is a 16.9% increase from 2020, so it’s no surprise to find more and more people considering a move to non-traditional housing like tiny homes, which average around $45,000.
But of course, it’s important to remember the reason for the significant difference in cost between a traditional home and a tiny one. Yes, traditional homes cost more – but for good reason. Not only are you getting more space, but you’re also making a long-term investment that should appreciate over time.
On paper, some tiny homes aren’t even seen as homes, and are instead treated as personal property. This means that tiny homes will not experience the same increase in value over time as traditional property.
In addition to the difference in cost, you’ll also find that the process of buying a tiny house is different than buying a traditional one. This is because you can’t purchase a tiny home with a traditional mortgage.
Mortgage lenders have a minimum amount they are willing to lend, typically higher than the cost of a tiny house, so you’ll have to find financing elsewhere. Common alternatives for financing a tiny home build include construction loans and personal loans.