How Much Does A Tiny House Cost?
Owning houses has always been the American dream. However, as prices of traditional homes become costly for many due to the price increases, people have turned to smaller and smaller living spaces to afford the costs. The tiny home is a micro-dwelling that has an exponential growth in popularity in the past ten years, due not only to the lower cost of living but also to the more sustainable approach.
Despite across-the-board lower prices, you'll still see a wide variety of prices when looking into how much a tiny home costs. The amount you'll be paying for tiny houses will depend on the quality, size, and other aspects of the home you choose. The basic cabin kits could cost as little as $6,000-$8,000, whereas the custom-designed tiny house that includes all the bells and whistles could easily cost $100,000 or more.
However, HomeAdvisor estimates that a typical tiny home costs about $45,000. If you compare this to the average price of a home in the US which was close to $298,000 in 2021, it's simple to see why a tiny house is an enormous cost-savings opportunity.
Nonetheless, you'll need to prepare to adjust your lifestyle if you choose to go with a tiny house. The majority of tiny homes are around 400 square feet or less. While there is a way to maximize storage space in a tiny home, it's totally a different way of life than the one offered by a larger, more traditional home.
The biggest factor regarding the cost of a tiny house is whether you buy a prefabricated/premade home from a kit or hire a professional to custom design the home for you. Of course, a custom-designed home is always more expensive, and there are a lot of extras that you can add too, which we'll cover in the next section.
What Is the Cost in Building a Tiny House?
While building a tiny house is the cheapest alternative, you'll still face significant upfront costs to manage. If you're building your tiny house, it's essential to physically, mentally, and financially prepare yourself for the journey ahead.
In reality, tiny home builders will spend between $20,000-$60,000 on materials, and even more, based on your personal preferences or the materials available. Building permits typically cost about $1,350 across the country, but larger floor plans and customized materials can raise that price.
Tiny homes on wheels can cost lower, considering that the foundation is only $4 to $7 per square foot, increasing from $5,000 to $8,000 to the overall project cost.
The Unforeseen Costs of Tiny Homes
Alongside the obvious costs, like land acquisition and construction supplies, there could be a few potential hidden costs in your tiny home that you must plan for.
- Taxes and Building Permits
In particular, when you're building a tiny house as a DIY project, you'll need to ensure that you have all the required permits ready. Consult your local city hall if you're unsure. They'll guide you in the right direction if they can't help.
If you're planning on having your tiny home built by a professional, you may not have to worry about the permits, as many companies take care of those but you'll still have to pay for them. Permitting could cost anywhere between a couple hundred and a couple of thousand dollars, depending on the location and particular rules in the area.
It's no secret that the cost of land can vary drastically based on your location in the U.S. This is a major factor to consider when discussing the price of a tiny house.
For instance, in Alabama, the cost of an acre of land is approximately $2,000; however, similar land isn't available for the same amount in New Jersey or New York without spending $13,000. Consider this if your home is located on a permanent foundation. You'll not only have to buy the land, but you'll also have to pay property taxes in addition.
- Square Footage
Although the cost of a tiny house per square foot will vary, it is generally around $150 per square foot. This price is for the structure only and not the land or extras.
Tiny homes nowadays range from minimalist wooden cabins to fully upgraded, state-of-the-art micro-dwellings. You will often find tiny homes with walls covered in reclaimed barn wood, small upgraded appliances, granite countertops, and hand-scraped wooden flooring.
Although you will pay more for these items, many people consider it a fair trade-off to get a home, far less costly than a traditional one. We recommend you know what you want from your tiny home and include any amenities you want in the tiny house cost you're willing to pay.
The foundation is a crucial factor to consider before calculating the cost of building a tiny house. Building a tiny house on a foundation will cost between $52,000 to $55,000. On the other hand, a tiny house foundation will cost between $5 and $7 per sq. foot, and additional costs can add $5,000 to $8,000 to the project price.
If you plan to build your tiny house on a foundation, then you will need to pay for the land. The good news is that you won't need much land because your home is small. You can expect to pay $510 for the services of a surveyor if you require them.
If you are not interested in putting down roots, a tiny house on wheels typically costs between $60,000 and $80,000. If you are looking for a trailer, the cost of a trailer will be similar to the cost of laying foundations ranging from $4,500 to $9,000. However, it's important to remember that if you plan on moving your tiny house from place to place, you'll also need a vehicle that is able to tow it.
The Financial Step-By-Step to Building Your Tiny House
From finding the right piece of land to building or buying your house, there are many steps to creating your tiny home.
1. Finding the Right Land
The first step in building a permanent tiny home, not placed on wheels, is to find and purchase the land. Although it's easier to lease land for a manufactured home, this is a risky investment that will depreciate in value over time. It is necessary to locate land in the area you desire to live in and to consider local zoning laws that could limit your ability to build.
2. Taking Out a Land Loan
A traditional mortgage is not an option for tiny houses, but there are many other financing options available. A common alternative is the land loan.
A buyer can obtain a land loan in the same manner as a mortgage loan. However, a house for sale may have a dollar amount assigned to it, so it could be more difficult to calculate the value of the land if there is no property collateral. That makes land loans a higher risk for lenders, which results in larger down payments and higher interest rates than a typical home loan.
A land loan is used to finance the purchase of a piece of land to either build a home or utilize it for business purposes. There are three types of land loans: raw land, unimproved land, and improved land loans. The location of the land and the purpose for which you plan to use it will determine what type of loan you need.
A significant down payment and a good credit score are required to be qualified for a land loan. Lenders can make it difficult to obtain these loans because of the potential risk. This is why it is so important to create a detailed plan that outlines how you plan to develop the land.
3. Tiny House Price Shopping
Stick-built tiny homes are the most expensive. They are built on a foundation and are most similar to traditional homes. However, if you don't want to start from scratch and build your own tiny home, you can purchase a tiny house shell. This has a finished exterior with an unfinished interior, which allows you to customize the space to suit your needs. A standard shell costs between $17,000 and $37,000 without add-ons such as plumbing and electrical.
Kit homes are also available that typically cost less than $10,000. These kits include blueprints, a customized trailer to build upon, and all the list of supplies you need. It might be a good idea for some people, but we don't recommend that you DIY your home without having some construction experience.
You might also consider modular and manufactured homes depending on your budget when looking for the perfect tiny home.
4. Financing Your Tiny House Construction
A construction loan is a good option for those building a tiny house. It is a short-term loan that can cover the cost of building a custom home. Once the home has been built, the borrower must apply for a mortgage to pay for the completed home.
There are many types of construction loans. The type of financing you require and the nature of the project will determine which loan you choose. For homeowners who have equity in their homes, a cash-out refinance might be an option to unlock the equity and free up funds. If you are building a house within a tight budget, there are additional ways to save.
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