How much to buy a tiny house

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David Chang

The Motley Fool

As the cost of buying a house has surged thanks to low inventory and rising inflation and mortgage rates, homes have become more unaffordable.

As a result, many home buyers are looking at alternatives such as tiny homes and mobile homes. What's the difference between the two and which one is cheaper?

First, let's set a definition for what a tiny home is. Tiny homes range from 100 to 400 feet, about 5% to 20% the size of a traditional home of 2,261 square feet. There is no set maximum size limit, but they are rarely larger than 500 square feet.

How much does a tiny home cost?

The average cost for a tiny home is $45,000 and they typically range from $30,000 to $60,000. Tiny homes can be as little as $8,000 and as much as $150,000. The nationwide average cost of a tiny home is $300 per square foot, which is double that of a traditional home cost of $150 per square foot. But tiny houses are still cheaper to build.

However, traditional lenders typically do not offer mortgages on a tiny home. You may have to use alternative financing to purchase a tiny home. Builder or contractor financing, personal loans, and RV loans are the most common ways to finance a tiny house.

Tiny home 101:  What you need to know before you buy one

What is a mobile home?

Mobile homes, also known as manufactured homes, are homes that are built offsite and to the federal Manufactured Home Construction and Safety Standards known as the "HUD code." They are then transported to the home site. The difference between a mobile home and a manufactured home is when it was built. If it was built before 1976, it is technically a mobile home. If built after 1976, it is a manufactured home.

Many people however still call a manufactured home a mobile home. There are generally two mobile home sizes: single-wide and double-wide, but they can also come larger. The average size of a single mobile home is between 480 and 1,440 square feet. The average size of a double-wide mobile home is 640 to 2,560 square feet. Mobile homes that are a triple-wide type can range anywhere from 960 to 3,600 square feet or more.

Meet the new mobile home:  Manufactured houses deliver the American dream amid tough housing market

How much does a mobile home cost?

A mobile home costs on average $128,000. Single-wide mobile homes are on average $87,700, or about $90 per square foot, and double-wides are $156,300, or about $61 per square foot. The cost of mobile homes also vary by region as well as the amenities you add.

There are many alternatives for financing a mobile home. There are a growing number of financial institutions that are providing conventional and government-insured financing plans. The most common way to finance a mobile home is through a retail installment contract. Mobile homes are eligible for government-insured loans offered by:

• The Federal Housing Administration (FHA)
• The Department of Veterans Affairs (VA)
• Rural Housing Services (RHS) under the U.S. Department of Agriculture

Comparing the two

Based on overall cost, a tiny home is less expensive than a mobile home. However, they are much smaller than a mobile home. The average cost of a tiny home per square foot is $300, 3.3 to 5 times more expensive than the average square-footage cost of a mobile home. The average cost of single-wide mobile homes are about $90 per square foot and double-wides are about $61 per square foot.

If you are happy to live in a house as small as 150 square feet and want flexibility, then a tiny home may be for you. If you want to get the biggest bang for your buck and want to live in the largest space for the lowest cost, then a mobile home may be for you. Although the average mobile home is almost 3 times more expensive than a tiny home, they are over 13 times larger.

Both tiny homes and mobile homes can offer financial benefits to homeowners. Choosing the right one for you will be based on your priorities.

'Print' your next home: A possible solution to the affordable housing crisis

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