What Is a Tiny Home? Here Are the Basics

Tiny homes can be a great option, but they're not for everyone.

As the prices of traditional homes hit an all-time high, many people are looking at a tiny home as an alternative. But what is a tiny home and how do you know if it is right for you? A tiny home is more than just a smaller living space. It costs a fraction of a traditional home and it is perfect for those that want to live a minimalist lifestyle.

What is a tiny home?

A tiny home, as the name, suggests is a tiny home! Where the average size of a traditional home is 2,261 square feet, a tiny home ranges from 100 to 400 square feet. There is no set maximum, but tiny homes rarely go over 500 square feet.

How much do tiny homes cost?

The price of a tiny home varies based on your location and the type of amenities you want. The average cost is $45,000, ranging from $30,000 to $60,000. A tiny home can cost as low as $8,000 and be as high as $150,000.

A 144 square foot tiny home can be purchased for $25,000. A professionally built tiny home of 206 square feet is closer to $60,000. Want to save even more money? Savvy DIYers who get free building materials can lower their cost by about $10,000. DIYers will typically spend $12,000 to $35,000, about half the cost of an average tiny home.

What are the benefits of a tiny home?

There are a number of financial benefits and mental benefits of owning a tiny home. A tiny house costs a fraction of a traditional home, and 68% of people who live in one are mortgage-free. That is one huge burden to not worry about. Plus, 55% of tiny home owners also have more savings than the average American. In addition, maintenance and upkeep costs are lower, as well as utilities and property taxes. Since tiny homes are much smaller than regular homes, monthly expenses (including a mortgage) can be as low as $600.

There are also other benefits of owning a tiny home. A tiny home is more sustainable, and you shrink your carbon footprint. A minimalist lifestyle and less physical clutter can lead to a less stressful life. Tiny homes can also offer greater freedom since many are built on wheels and can be transported easily.

What are the disadvantages of a tiny home?

Tiny homes have less living and storage space, so you'll probably need to downsize your belongings or get a storage unit when moving in. Carving out some private time in a tiny home can also be difficult as you will have a lot less space to work with. It may take some time to balance out your living habits to accommodate living in a tiny home.

Financing a tiny home may also be difficult. Traditional mortgage lenders typically do not offer mortgages on tiny homes. You may have to find alternative sources of financing to purchase a tiny home.

If you want to move to a different state in your tiny home, there can be extra expenses such as gas, truck insurance, and permits, and you have to find the right place to live. You will need to ensure you abide by the zoning codes of the area you want to live in. Another expense to consider is purchasing a vehicle to tow your home with. These vehicles can be pricey.

A tiny home can save you hundreds of thousands of dollars, but choosing to live in one isn’t just a financial decision -- it is a lifestyle decision. Before you take the leap, understand that downsizing is a big step and there are other unique challenges you may face.