It May Be A Tiny Home, But Is It A Tiny Price?

Jason Pruett

It’s a tempting fad if you think about it—being able to purchase a beautiful new house for half the price and only have to clean half of a house. With home prices continuing to soar, and home inventory becoming less readily available every day, Reality TV shows focused on finding the right Tiny Home are starting to plant the seed in more and more home buyers’ minds that maybe they COULD give up some of the convenience that comes with the size of a traditional home. However, before you jump onto the Tiny Home bandwagon, there may be a couple surprising hurdles that you haven’t thought of.

Zoning Laws: On the surface, it does seem like tiny homes could offer a great alternative to traditional homes—the less fortunate may be more likely to afford a tiny home, and even more practically, a tiny home takes up much less real estate so in a congested city, you could fit many more homes in a much smaller geographical radius. However, state and local laws have not quite caught the “tiny home fever” yet. If you are considering purchasing property with plans to place a tiny home on it, be sure to check out the zoning laws as well as the restrictions on that specific property before you purchase it. There is a good chance that residential zoning regulations on a piece of property intended for a traditional home could prevent you from placing a tiny home on the property outright, or they could simply state that newly constructed homes within certain areas must meet minimum square footage requirements. Additionally, land-use restrictions may prevent mobile homes or campers to be placed on the property or they may also have minimum square footage requirements, both of which could easily prevent a tiny home from being placed on the property.

Financing: While it is true that tiny homes are much less expensive, the cost of buying a tiny home can still range anywhere from $50,000 – $130,000, depending on the size, complexity, and “chic-ness.” When spending that kind of money, most people will still need to borrow in order to afford the tiny home. Again, the home-lending industry hasn’t quite caught onto the tiny home wave just yet, so you will likely have to either get a personal loan or an RV loan rather than a mortgage in order to fund your tiny home, both of which come with a much higher interest rate than a traditional mortgage. Generally, tiny homes are considered mobile, but mortgages are intended to be for permanent residences. Also, one of the primary reasons you are able to get a mortgage with a low interest rate is because the lender knows that they will be able to able to get their money out of you in the long run—but that wouldn’t be the case if they only lend you $50,000.00 to buy your tiny home.

If you have any questions or concerns regarding local zoning laws and how they may impact your future home purchase—whether it’s a tiny or traditional home—contact an attorney at Black, Slaughter & Black, P.A., to assist you.