The Pros and Cons of Owning a Tiny Home

Houses are expensive. There are mortgage payments and utility bills to worry about—and let’s not forget those pesky maintenance costs that seem to pop up out of nowhere.

Add all these fees up at the end of the month, and that’s a significant chunk of change taken out of your income. Tiny home advocates say that their unique style of downsizing is the solution to these concerns.

Occupying an average of 400 square feet of space, tiny homes require much less energy than conventional houses, which means you spend less on utilities like electricity and gas.

And, if you build your tiny home yourself, there’s no monthly house payment to fret over.

Tiny homes aren’t perfect—but, then again, neither are the “big” homes we’re accustomed to. For those interested in this alternative style of housing, we’ve outlined a few pros and cons so you can make an informed decision about tiny houses for yourself.

Pro: Tiny homes cost less to build

If you’re building your tiny house yourself, you can expect to shell out somewhere in the neighborhood of $23,000.

That’s right—for the cost of a 20-percent down payment on a normal home, you could probably build a cozy little shack of your own.

Con: It’s almost impossible to get a mortgage for a tiny home

As we mentioned in a previous post, properties valued at less than $100,000 aren’t generally going to sit well with traditional lenders.

Plus, if your tiny house is on wheels, you’ll probably be rejected outright, as homes that aren’t anchored to a foundation aren’t considered real estate.

There are alternate routes of financing to explore, like taking out a personal loan or raising all of the capital to build the tiny home yourself, but those can prove more than a little tricky.

If you do succeed in obtaining a personal loan, be aware that the interest rates associated with that loan can be pretty steep, with some as high as 10% to 11% or more. Another option: you might just qualify for an RV loan, if your tiny home is on wheels.

If you're in this situation, then it might be worth your while to explore financing through new lenders like LightStream, a division of SunTrust Bank that offers loans with relatively low interest rates for tiny properties.

Pro: You’ll have a healthy savings account

Imagine how much money you pour down the drain making sure your sprawling, 1,000+ square foot home is air-conditioned during the summer. Now imagine cutting that electric bill in half, right down the middle, when you transition to a tiny home.

These kinds of savings accumulate over time and can lead to a very robust bank account if you’re savvy enough with your money.

Con: Land purchases are just as pricey as real estate purchases

Tiny homes have got to sit someplace, and usually, that someplace requires a deed and a title in order for you to legally be there (unless you’re the outlaw type).

Land can be expensive, especially if you’re purchasing multiple acres of property. Plus, if you’re not zoned to build a tiny house, or there isn’t a septic system in place—or any number of other hidden restrictions and guidelines—you could face some difficulty in getting your tiny house built.

However, if you're a veteran, you might be able to use your VA loan benefits to buy land for your tiny home. 

Pro: Less clutter, and more quality moments with family

Clutter can pervade every aspect of our lives if we let it.

But living in such close quarters with your partner and family, or with Fido, will (hopefully) inspire a greater degree of cleanliness and organization among you and your cohabitants.

Another lasting benefit of tiny homes: there are more opportunities for meaningful moments between you and the members of your household.

You may sacrifice a bit of your privacy and personal space in the process, but those serious about making memories will recognize it’s a small price to pay for the lasting bond this kind of home will forge between you and your loved ones.