Tiny Homes, Tinier Down Payments!

What if you could build a home for yourself for just $23,000. According to the Home Advisor website, homeowners report the average cost of building a home at around $282,588. $23,000 is almost 92% cheaper than that average. It can be done, however, through the tiny home movement. In research for her article “Recession-scarred Millennials fuel growing interest in tiny homes,” USA Today’s Charisse Jones found that as many as 10,000 tiny homes have been built throughout the United States. Typically, residents of tiny homes are younger single people or couples looking to find a way to cut down on living costs. However, even at the fraction of the cost of a traditional home, tiny houses still cost more than most young people have in their savings. Over half of Americans between the ages of 18 and 34 have less than $1,000 in savings according to most estimates. How, then, is anyone supposed to finance any home, tiny or otherwise? This week, we’ll explore the costs associated with tiny homes, the financing options available to those who want to build one, and how living in a tiny home changes your lifestyle.

Tiny Homes Costs

Most stories of those who live in tiny homes build them by hand. Most of the costs associated with them, then, go to building materials or, in some cases, trailers with units on top of them. To meet most building codes, tiny homeowners are required to lay a concrete foundation, so costs exist there as well. As most tiny homes aren’t tethered to existing electrical grids or water systems, generators and water pumps are also necessary. Even after adding all of these costs, tiny homes still come in at a fraction of the price of a traditional home.This is even truer if you decide to buy an already assembled tiny home. A quick internet search will find tiny homes in many areas as low as $12,000. So, if you choose to buy a tiny home, what kind of loans can you expect to get?

Financing Options

One way to finance your tiny dream home is through any lender who finances mobile homes. Mobile homes will have similar traits to a tiny home (even sometimes the travel aspect) so lending for the two will be similar as well. FHA and VA loans are perfect for individuals who are looking to offer a large down payment. Remember, even 20% of that $12,000 tiny home is only $2,400, so the term “large down payment” is relative. FHA loans can be refinanced as quickly as one year after you sign mortgage papers, so you can get a shorter term and have full ownership of your home in just a few years. Refinancing a VA loan with a VA IRRRL would be similar to the FHA streamline refinancing process: a small mortgage loan, a speedy refinance, a short term, and BOOM! You own a tiny house.

Factor in Your Lifestyle

Before committing to a tiny home, be sure to think about your lifestyle. For couples looking to have children soon, tiny homes may not offer the space you’re going to need in the future. However, for individuals or couples not looking to have children any time soon, the tiny home option is a great way to own your home quickly, save money on utilities, and declutter your life by living minimalistically. The choice to live in a tiny home is not for everyone, but if those who already have them are any indication, they can be the perfect choice for many throughout the United States.