86% of Americans Would Live in a Tiny Home. Should You Buy One?

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  • Many Americans would consider living in a tiny home for its affordability.
  • Find out if this living situation is right for you and what you need to know about financing.

Living in a tiny home may seem like a good idea, but do you know how to finance one?

Around the United States, home prices continue to climb. For many people, traditional homeownership may feel out of reach. But what about living in a tiny home? Would this living situation work for you? A recent survey found that 86% of Americans would live in a tiny home.

Home listing prices are sky-high, and many sellers are accepting offers well above the asking price. For most people going through the home-buying process, it's a constant struggle to find a home within their budget and a buyer who will accept their offer.

But traditional homeownership isn't the path for everyone. Some people may want to explore the idea of living in a tiny home. While the living space is a lot smaller than most houses, this living situation can be more affordable.

Affordability is the most appealing aspect of tiny homes

Tiny homes have continued to be popular in recent years. A recent HomeAdvisor survey found that 86% of respondents would be willing to live in such a home. Baby boomers were least likely to want to do so when compared to younger respondents.

Of those surveyed, 56% found affordability the most appealing aspect of living in a tiny home. A smaller footprint could result in cheaper living expenses, including utility costs.

But not everyone would buy a tiny home. Only 30% of those surveyed said they'd consider buying one. Many liked the idea of renting a tiny home on a short-term basis. Purchasing this kind of home would require a bigger commitment and investment.

How to buy a tiny home

Unless you have a lot of extra money sitting in your bank account, you'll need to figure out how to finance a tiny house. Financing a tiny home is different from financing a single-family house and it can be trickier.

Whether your home is on wheels is one big factor that could determine the kind of loan you can get. Most traditional mortgage lenders won't finance a tiny home.

Instead of taking out a traditional mortgage to finance your purchase, you'll likely need to look at other loan options. Personal loans, RV loans, and loans offered through tiny home manufacturers may be options to explore.

It's worth mentioning that some loans, like RV loans, may have higher interest rates. Taking out a personal loan is a common way to finance the cost of a tiny home, and you may be able to get a reasonable rate if you have little to no debt and a high credit score.

What to consider before financing a tiny house

Review the terms and interest rates before agreeing to take out a tiny home loan. Do the math to see how much interest you'll pay over the life of the loan to make sure the loan fits in with your personal finance goals.

You should also figure out all of the costs associated with buying a tiny home. The house may be affordable, but the structure itself is not the only expense.

If you don't already own land or have a family member or friend willing to let you place your home on their property, you'll also need land. Plus, if you're not buying a pre-made home, you need to figure out how much it will cost for building supplies, labor, and home plans.

Would the tiny home lifestyle work for you?

Moving into or buying a tiny home is a big decision. The idea of living in a smaller home might appeal to you. But first, consider how this living situation would impact your life.

You'll probably live a simpler life and pay lower living costs, but you'd also have to adjust to living in a much smaller space. You'd want to keep clutter to a minimum, so you may need to downsize some of your personal items. Smaller home living isn't ideal for everyone.

If you're thinking of purchasing a tiny home, you may be wondering what lender to use.

Lightstream is one lender with personal loans for tiny home purchases and related expenses like land purchases. Rates vary, but this lender offers loans up to $100,000.

Want to learn more? Review our best personal loan providers to find other lender options.

Our Research Expert

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