tiny home cabin in open yard

How To Build A Tiny House: Getting Started

Katie Ziraldo6-Minute Read
June 10, 2022

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If you’re looking at downsizing your living space and perhaps lowering your cost of living, then it might be worth checking out the tiny house fad.

It’s easy to see the appeal: the idea of swapping thousands of residential square feet – and a bunch of stuff – for the freedom and cost-savings that tiny houses can offer. According to The Tiny Life, 55% of people who live in tiny homes have more money in the bank than the average American, and 65% of tiny-house residents carry no credit card debt at all.

In this guide, we’ll walk you through how to build a tiny home from start to finish.

Building A Tiny Home: Step-By-Step Guide

Buying a house is a huge financial investment, so it’s no wonder that tiny homes – with their smaller price tags – are becoming more popular. While many people are becoming interested in this alternative housing, far fewer people know where to start. Let’s map out the build of your dream tiny house, starting with where you want it to sit.

Step 1. Where To Put Your Tiny House

Most tiny houses fall within the range of 100 – 400 square feet, so you can pretty much build it anywhere and take it anywhere, right? Well, not necessarily. How and where you construct a tiny home will affect your building options, pocketbook and lifestyle in a big way.

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How To Build A Tiny House On Wheels Or Land

Begin by deciding if you want the house on a foundation or on a trailer.

Permanent foundations like concrete slabs give you more control of the floor plan. You aren’t limited to the dimensions of a trailer, and you can add features like a crawlspace. Of course, building on a foundation also requires you to buy land to build a house, but you can manage this higher upfront cost through applicable financing options, such as personal or land loans.

Building on a foundation may also require local permitting, so it’s important to check with the local building department. Building permits run homeowners $452 – $2,101 on average.

The biggest advantage of building on a trailer is mobility. You won’t be subject to building codes in most areas if you build on a trailer, but the unit might take on RV status and make it subject to RV regulations. And like with an RV, you’ll be limited to RV hookups for utilities.

It’s also important to note that real property and RVs don’t appreciate the same way over time. In general, tiny houses aren’t guaranteed to appreciate in value in the same way as traditional homes, although homes built on foundations have better odds.

A tiny home can even depreciate in value over time, especially if it’s on wheels or highly customized. These homes also fall into a niche market, so it may be more difficult to sell your home down the line.

Zoning

Many states don’t have zoning specifically for tiny homes. Check with your city or county to be sure you aren’t violating any zoning laws by having a tiny home on a site. For example, it’s illegal in many areas to place your tiny house on a friend’s or family member’s land for free.

Some zoning laws also have minimum square footage requirements on the parcel. Other areas may have covenants limiting the length of time an RV can remain on a site. If your tiny house is built on a foundation and meets the minimum square footage requirements in your area, it may be legally considered an accessory dwelling unit or ADU.

Building Codes

While zoning regulations impact where you can build these unique houses, building codes impact how your tiny house is built. Building codes are primarily in place to protect public health and safety. Both zoning and building regulations vary between locations, so it’s crucial to check the guidelines in your area before planning your project. You can typically find this information online by visiting your state’s website.

Step 2. Make A Budget For The Cost To Build A Tiny House

How much does it cost to build a tiny house? Well, tiny houses can cost less than $12,000. If you buy a new one, most sell for $35,000 – $80,000, and if you build your own, the average price for materials hovers between $20,000 and $30,000.

In most cases, the average cost per square foot is more (and often much more) than that of a traditional home. The nationwide average cost of a tiny home is $300 per square foot compared to a traditional home’s $150 per square foot.

However, this doesn’t account for the fact that traditional homes typically cost more to finance and maintain. In the end, you can own a tiny home flat-out for the cost of a down payment on a traditional house. But many other financial factors are important to consider.

The Cost Of Land

Per the USDA in 2021, the average cost of land outside of city limits (all land and buildings on farms) is $4,420 per acre. The closer you get to civilization, the higher the cost. In some cases, purchasing an investment property may be a cheaper option than buying undeveloped land – as long as it’s legal for you to place and live in an ADU on the property, because this opens the door to using more traditional forms of financing.

Tiny House Construction Materials

Tiny homes might not be big, but the list of construction options is long. However, you have just two basic options for a builder: you or someone you contract to build the home.

Building your tiny house is undoubtedly cheaper than buying one prebuilt, and there are several routes you can take if you decide to build it yourself. If starting from scratch isn’t for you, there are tiny house shells, which provide a finished exterior with an unfinished interior that allows you to still personalize the space for your needs.

Another option is a kit home, which typically costs less than $10,000 and comes with blueprints, a customized trailer to build on, and a list of needed supplies. You can even look into building a shipping container home!

No matter the house style you’re thinking of choosing, the costs associated with that style almost certainly will affect your decision. For example, you might want to bolster your tiny home if you go mobile.

A metal roof is recommended over shingles to handle wind and could cost up to three or four times more for installation. Let’s say you build on a foundation in the countryside and forego the power grid. You’d need an alternative, and off grid solar systems – a popular choice – can tack on $8,000 to your bottom line.

With the limited space, you won’t have a lot of large items to purchase. However, you may want some amenities like a patio or deck, unique decor and storage that increase the size of your investment.

The Build

Even if you’ve never built a home before, you may be able to build your tiny home. Plans and cost lists are plentiful on the internet, and this is a great idea for some people. However, we typically don’t recommend a DIY approach to building your home if you don’t have some sort of advanced construction experience. Small mistakes could lead to high costs.

According to Tiny Home Builders, you’re looking at a cost range of $12,000 – $61,000, but your price largely depends on whether you just want the shell or the whole house built.

Step 3. Finance Your Tiny House Build

Now that you have your budget ready, it’s time to finance your build. Depending on your needs, there are several different routes you can take to obtain financing, from financing through a tiny home builder to getting an RV loan.

If you’re building your tiny home, construction loans may be a good option since these short-term loans function very similarly to mortgages but cover the cost of custom home building. Rocket Mortgage® doesn’t offer most construction loans, but if you’re looking to add an ADU to an existing property, a home equity loan or cash-out refinance could help you access equity and free up funds for your project.

Fund your renovations with a cash-out refinance.

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Step 4. Prepare To Downsize

Since space is more limited in a tiny house, it’s wise to think creatively about storage and features. But first, evaluate what’s  in your current home and the features of the home itself.

What must you bring with you and have in your new tiny home? What can you live without? Chances are, you’ll need to make some tough decisions and fashion your space around the essentials in your new life.

Creative ways to save on space in a tiny home include sleeping in a loft space above the rest of the home or in a hide-a-way bed if you use a loft for storage.

If you want to maximize space, a good rule of thumb is to furnish your tiny house with multifunctional furniture, like couches that become shelves and window blinds that turn into racks.

You can also add a small shed to the side or back end of the unit or make use of space under a floating floor or bench seat.

Step 5. Time To Think Design!

Once you consider location, cost and creative ways to house everything you need, it’s easier to start imagining how your tiny home could look. From wallpaper design to the indoor plants you use to decorate your new home, you can make your tiny house interior design very unique.

The Bottom Line: Building A Tiny House Takes Time

When building a tiny home, it’s important to trust the process. It may take a bit of time, but the end result will be a new home that reflects you and your personal tastes. It’s easy to become consumed with financing a tiny house build or finding the right tiny house design aspects to incorporate, but when you see the finished product, it will hopefully all be worth it.

Ready to learn more about the home-buying process? Check out the Home Buyer’s Guide from Rocket HomesSM for more information and tips on becoming a homeowner.

Get approved to see what you can afford.

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Katie Ziraldo

Katie Ziraldo is a financial writer and data journalist focused on creating accurate, accessible and educational content for future generations of home buyers. Her portfolio of work also includes The Detroit Free Press and The Huffington Post.