Tiny House in forest with lights inside and walkway

The Tiny House Movement: Tiny Home Ideas And Hidden Costs

Lauren Nowacki6 minute-read
October 28, 2021

Today’s young adults who want to own a home are having trouble finding a way to do so with high student loan debt, a shortage of affordable home sizes in the United States, and a societal and moral call to be more environmentally conscious. Homeownership is a big accomplishment, but it can come with more debt to pay off, more commitment to stay in one spot and more investment to update it for our Earth’s needs.

How can you enjoy the perks of homeownership without the sacrifice that comes with it? Enter the tiny house movement: a social trend based on simplifying your lifestyle with smaller accommodations and more financial freedom. Tiny house living can be a way to reduce debt and allow you to save money or spend it on other things like travel, education or unique experiences.

If these ideals are important to you, read on to learn more about this lifestyle and if it’s right for your life goals.

What Is The Tiny House Movement?

The tiny house movement is a cultural effort to support downsizing and living a simpler lifestyle. The belief is that living with less will bring more happiness and freedom than living in big, expensive homes.

To be part of the movement, you must live in a tiny house. A structure is considered a tiny house when it is less than 400 square feet. While much smaller than a typical home, a tiny house provides most of the comforts of larger homes, including a full- or queen-size mattress, a bathroom, a kitchen and a living room – but on a much smaller scale.

How Much Does A Tiny House Cost?

There are different tiny home costs, ranging from the costs of the building materials and labor, but there are other hidden costs to the building process and beyond.

The average cost of a tiny house is $30,000 – $60,000, but a tiny house can cost as little as $8,000 or up to $150,000. One of the appealing things about building a tiny house is that you can choose how many frills you want to include. The cost of a tiny house is highly dependent on building materials and amenities you choose.

For example, a $10,000 house will likely be lacking basic necessities like a bathroom, which is often required by local building codes. Tiny homes that are priced higher – usually over $50,000 – typically include more luxuries, like granite countertops, stainless steel appliances and other high-end finishes.

Even still, the cost of building a regular-sized house is just over $290,000. So, with a tiny house, you may be able to get the bells and whistles in a home for less money. However, it comes at the cost of less space.

The Hidden Costs Of Tiny Homes

With prices lower than a normal size home, tiny house owners may think they’re getting quite the bargain, but there are hidden costs and other factors to consider before you downsize for a deal.

DIY Tiny Home Expenses

While many people decide to build their own tiny house, the costs of leaving a job to do it can actually be more expensive. Even if you decide to keep your full-time job and build outside of your 9 – 5, you could be sacrificing your work-life balance or wasting time you could be spending on a side hustle to earn extra money.

You’ll want to consider the costs of human error too. If you are not a skilled builder, even one mistake could cost you extra time and money. There’s no shortage of tiny home builders who have expertise in building efficient dwelling units.

Zoning Laws

Depending on where you live, you’ll have to follow the local zoning laws. These laws prevent homeowners from putting their tiny house wherever they want without paying for it. For example, tiny houses cannot be placed on a friend or family member’s land for free.

Several tiny house communities have organized in pockets of the country without zoning restrictions. Often, these micro communities will offer communal spaces like firepits, fitness centers or outdoor picnic tables to accommodate eco-conscious mindsets.


To have a livable space, you’ll have to meet some basic needs with utilities like water and electricity. Depending on the location of your tiny home, you may need to hook utilities up to a water line, an outlet and a city sewer or a septic tank. If your house is located off-grid – meaning there’s no access to utility sources – you may need to collect rainwater or dig a well, use solar panels and install a septic system.

Wherever the location of your home, utility hook-ups can be an expensive part of a tiny house.

Financing Obstacles

Buying a mini house doesn’t mean it comes with a mini mortgage. Most tiny homes will not qualify for a traditional mortgage, so owners either pay cash out of pocket or take out a personal loan to pay for their home.

Whether your mini house is manufactured as an RV or is converted, like a van, be sure to look into reclassifying your home as an RV with your local DMV. An RV classification opens up some RV loan options, which will typically have lower interest rates and longer loan terms than a personal loan.


If you can’t downsize your life and all of your things to fit your new lifestyle and home, you may have to rent a storage unit to hold it all.

Resale Value

Tiny houses are not guaranteed to appreciate in value the way a regular home will. In fact, tiny homes can actually depreciate in value, especially if it is customized to your wants and needs. Tiny homes also fall into a very niche market, so it may be harder to sell your home.

Affordable Tiny Home Ideas

Are you thinking about buying or building a tiny home? Here’s some inspiration and what you can expect at various price points.

Tiny Homes That Cost Under $25,000

Grey tiny house

These tiny houses on wheels will likely be some of the smallest ones – usually 100 to 200 square feet – since you pay by the square foot. They may not include a bathroom and will be the most bare-bones structures of them all.

Still, you may be able to buy a higher-tier tiny home that has already been lived in for less money.

Tiny Homes That Cost Under $50,000

Tiny house kitchen.

Tiny homes under $50,000 typically use inexpensive materials and offer less space. However, these homes typically have a bathroom and separate space for sleeping.

Tiny Homes That Cost Under $75,000

Tiny house interior

Tiny homes in this price range will be a little bigger and come equipped with everyday conveniences, like a more spacious kitchen and living area and almost a full bath – a whole three-quarters!

Tiny Homes That Cost Under $100,000

Rustic tiny home interior.

With a tiny home under $100,000, you’ll start seeing more customized features, additional rooms and high-end fixtures. The materials used are more expensive in this price range too.

Tiny Homes That Cost Under $150,000

Modern, sleek interior of small home.

These homes will most likely have the maximum square footage of 400 and be tricked out with all the luxury that can fit in the small space. That includes things like granite counters, custom-built appliances, posh lighting and a spa tub.

Is A Tiny House Right For Me?

Tiny house living brings plenty of challenges and may or may not be the right lifestyle for you. It’s definitely not for the claustrophobic.

For others, it could be the perfect option. Here are a few pros and cons a prospective buyer should consider before moving to a very small space:

Pros Of Tiny Homes

  • Ownership: You can own a home without taking on a large debt.
  • Lower housing expenses: It can help you save money and pay off other debts.
  • Energy efficiency: Tiny houses have a lower environmental impact because there is simply less space to heat, cool and light.
  • Customizable: Tiny houses may allow for more customization.
  • Less maintenance: There are fewer rooms and surfaces to clean.
  • Freedom to travel: If your tiny home is on wheels, you can pick up and move whenever.

Cons Of Tiny Homes

  • More structural wear and tear: Wear and tear is more frequent with occasional bumps from moving around in such a small space.
  • Limited privacy: If you live with a partner, you get very little privacy.
  • Staying tidy: Any untidiness can feel like a huge mess.
  • Limited storage space: You’ll need to downsize, which may include getting rid of sentimental items.
  • Entertainment restrictions: You can’t have many guests over at one time.
  • Unrestricted odors: It can be difficult to avoid smells without walls to separate the kitchen, bedroom or bathroom.

The Bottom Line: Tiny Living Can Give As Much As It Takes

A tiny home can help you pay off debt, save money and lower your environmental impact, but you may need to sacrifice your space, privacy and comfort to do so. While tiny houses are typically less expensive than a normal-size home, you may not be able to get a mortgage to pay for them.

If you’re unsure whether this lifestyle is for you, take tiny home living for a trial run by staying in one for a vacation or weekend. You can find them on sites like Outdoorsy.com. Tiny homes are just one of many access points to smaller starter homes.

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Lauren Nowacki

Lauren Nowacki is a staff writer specializing in personal finance, homeownership and the mortgage industry. She has a B.A. in Communications and has worked as a writer and editor for various publications in Philadelphia, Chicago and Metro Detroit.