floating houses on a river

Buying, Financing And Living In A Floating House: What You Need To Know

Erica Gellerman4-Minute Read
January 13, 2021

What Is A Floating House?

Thanks to housing shortages — and the desire to be creative — alternative housing has become a hot topic. A floating house is one type of alternative housing.

A floating house is a building, ranging from a tiny house to four-story homes, that floats. Unlike a houseboat, a floating house is meant to be moved just once, placed on a floating foundation and permanently connected to public utilities.

Buying a floating house is similar to buying a condo. The floating home is secured to a permanent structure, called a moorage. The owner of the moorage sells or rents a space for the floating house and provides other services, like utility hookups. A floating home owner pays HOA fees (and rent if renting) in order to have their floating house there. Some moorages might also have rules, similar to that of a condo HOA, like no pets or no short-term rentals.

How Much Do Floating Homes Cost?

There is a range of costs to consider when purchasing a floating house. The first cost, purchase cost, can range from as little as $35,000 to over $1 million. If you need to purchase or rent a slip in a mooring separately, that will be another cost to add onto the total.

It’s also important to note that there are long-term costs that floating home owners need to be aware of. For example, if the weight of the floating home gets heavier (from additional furniture, fixtures, or renovation), you’ll need to add more pieces of flotation to the bottom, to bring the house back up to the appropriate water level.

Other long-term costs to consider include monthly HOA fees and rental fees if you rent a slip in the moorage.

How To Finance A Floating House

Financing a floating house can be tricky. A floating house isn’t eligible for government-backed loan programs, so you won’t be able to use an FHA or VA loan to finance your property.

Lenders willing to offer a loan for a floating house might have some additional restrictions. For example, they may require a minimum down payment of 20%, charge a higher interest rate, or require that the floating home be in a certain condition.

If you’re looking for floating home financing, it’s best to talk with an experienced agent who can help you through the financing process. Not all lenders offer floating home financing, and an agent may help you identify the best options for a loan.

Are Floating Homes A Good Investment?

Looking to buy a floating home as an investment? There are some things you should consider before you do. While floating homes can appreciate in value, they can take longer to sell. It’s a unique home and not every buyer is looking for alternative living.

One way that a floating home can be a good investment is if it is cheaper than a traditional home (which it usually is). If you can use a floating home as a way to live for less and save money to meet your personal or financial goals, a floating home can be a good investment.

Is A Floating House Right For Me?

Now that you know a bit more about floating homes, it’s time to decide if they are the right option for you.

Pros Of Floating Homes

  • Utilities are permanently connected: unlike some other alternative living options, you’ll have permanent utility access, similar to what you would have with a traditional home.
  • Stronger community than even land-based neighborhoods: floating home communities tend to attract people who have similar interests, so communities can be stronger than what you’ll find on land.
  • Likely cheaper than land-rooted homes in expensive coastal cities: if you’re looking to save money in an expensive city, a floating home can help you do that.
  • Safer than beachfront properties in small storms: floating homes can weather small storms better than some coastal homes as they are able to rise with water levels to avoid flooding.
  • Beautiful views: beachfront homes are often some of the most expensive homes thanks to their great view. A floating home offers those striking views but for a fraction of the price.

Cons Of Floating Homes

  • HOA fees: while a floating home is usually a cheaper option than a traditional home, be prepared to pay a significant monthly fee for your HOA. This should be factored into your budget.
  • Difficulty getting a mortgage: finding a lender to finance your home purchase can be a challenge and you may be left with a worse interest rate and other terms than you would if you were financing a traditional house.
  • Cell and internet coverage varies: most floating homes have good amenities, though access to internet and cell phones can be spotty, depending on the location.
  • Property damage: if there is a large storm, you could be looking at costly property damage. In addition, the gentle rocking waters that you’re used to could become harsh, leaving it difficult to sleep or do other tasks.

The Bottom Line

Floating homes can be exciting alternatives to traditional homes for the right home buyer. If you love the water (and related watersports) and you live in an expensive city like Seattle, San Francisco, Portland, or Los Angeles, a floating home can make a lot of sense. Before you start your floating home search, connect with an agent who knows the floating home market in your area.

Get the right home loan for you.

Erica Gellerman

Erica Gellerman is a CPA, MBA, personal finance writer, and founder of The Worth Project. Her work has been featured on Forbes, Money, Business Insider, The Everygirl, The Everymom and more.