floating houses on a river

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

Erica Gellerman4-Minute Read
February 28, 2022

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 that more home buyers are starting to consider. Read on to learn more about this unique type of housing.

What Is A Floating House?

A floating house is a residence, ranging from a tiny house to a four-story house, 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.

If you’re thinking of buying a floating house rather than a home on land, there are a few things you need to know.

Buying A Floating House Is Unique

Buying a floating house is similar to buying a condo, even though the home is a stand-alone building. 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. The owner of a floating home pays homeowners association (HOA) fees (and rent, if renting the moorage space) in order to have their floating house there. Sometimes, the moorages themselves 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, the purchase price for the floating house itself, 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 to the total.

It’s also important to note that there are long-term costs for floating home owners. 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. If the siding gets damaged from excess moisture, it will need to be replaced to keep the structure in good shape.

Other long-term costs to consider include monthly HOA fees and rental fees if you rent a slip in the moorage. All of these maintenance costs can add up, so make sure you review your budget in detail before you commit to buying a floating home.

How To Finance A Floating House

Financing a floating house can be trickier than financing other types of homes. You’ll need to find a lender that’s willing to issue a loan for floating homes, not just those on permanent foundations. Floating homes aren’t eligible for government-backed loan programs, so you won’t be able to use a Federal Housing Administration (FHA) loan or Department of Veterans Affairs (VA) loan to finance your property.

Lenders willing to offer a loan for a floating house might have additional requirements or restrictions in place before you’ll qualify. For example, they may require a minimum down payment of 20%, charge a higher interest rate or require that the floating home be in move-in-ready condition.

If you’re looking buy a floating house with a mortgage, it’s best to talk with a Home Loan Expert 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?

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.

Since floating homes are usually cheaper than traditional homes on land, they can be a good investment for some buyers. You can use a floating home as a way to live for less and save money to meet your personal or financial goals. However, if you’re planning on living in the home for a short time and want to sell it for a profit a few years down the road, you’ll likely be better off buying a traditional house.

Is A Floating House Right For Me?

Buying a floating home isn’t for everyone but it can be a great option for people looking to live a unique lifestyle. Here are a few pros and cons to consider before you start looking at a floating house.

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 may 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 the 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 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, work with a Verified Partner Agent who knows the floating home market in your area.

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.