Ready for a Tiny Home? What You Need to Know Before You Build

There’s no denying that tiny homes are a hot item for potential home buyers right now — and there’s a lot to like.

Tiny homes can be built in a variety of design styles, they can be mobile and they are often more affordable than other types of homes. There’s also the appeal for many of a simplified lifestyle or living off the grid with a small eco-footprint.

If you’ve decided the tiny home life is for you, there are some things you should consider before diving into a purchase. As with any new home purchase, you need to do some homework first.

Location, Location, Location

Land is one of the biggest issues facing anyone wanting to build a tiny home, according to Jason Kahle, co-founder of Small House Solutions in Austin, Texas.

Unlike what you may see on TV, you can’t just park a tiny home anywhere you want. You’ll need a piece of property, whether you buy or lease, but you could face some challenges due to your city’s zoning restrictions — many cities don’t allow tiny homes on wheels, considering them essentially RVs. And certain subdivisions may have deed restrictions against the placement of tiny homes in those neighborhoods.

A tiny home may qualify as an accessory dwelling unit (ADU), aka granny suites or garage apartments, if your municipality has approved ADUs, but again, it’s important to know the regulations, especially if you want a mobile tiny home. Finding rural property may be easier, but permit requirements and other local regulations can still apply, such as sewer installations or driveway right of way.

Having guidance from a builder can be invaluable in negotiating the maze of permits and regulations.

“We help clients work through the regulatory process and connect them with Realtors to help find land,” Kahle says.

A tiny home may qualify as an accessory dwelling unit (ADU), aka granny suites or garage apartments, if your municipality has approved ADUs, but again, it’s important to know the regulations, especially if you want a mobile tiny home. Small House Solutions focuses on building modular small houses that, at 399 sq. ft., are larger than the typical tiny home on wheels and are semi-permanent, meaning they can be moved, but require a professional to do so.

Clayton Homes recently introduced its Designer Series tiny homes, available in select locations across the country, in response to a demand for smaller spaces, and like Small House Solutions, takes the client step-by-step through the design and building process.

“Many people are looking at living a different lifestyle with a smaller footprint,” says Jim Greer, Clayton home building group’s National Tiny Home Brand Manager. He concurs that proper due diligence by prospective tiny homeowners is essential.

“Before building a home of any size, a homeowner should always consult with their local planning office for zoning and building code information on a specific piece of property,” Greer says.

Clayton currently offers two tiny home floor plans, the Low Country at 464 sq. ft. and the Saltbox at 450 sq. ft., both designed by world-renowned architect Jeffrey Dungan. The homes are not mobile and that’s by design.

“After researching building codes, we decided to build our Designer Series tiny homes to state and local codes so we could provide a home to be lived in year-round,” Greer says. “Building to state and local codes also helps homeowners meet many more zoning requirements, where a tiny home on wheels may not.

Financing and Insurance

Other factors you should consider before building a tiny home is the financing — how you will pay for it — and insurance. Kahle points out that financing a tiny home can be tricky because lenders and appraisers may not have the necessary data to make an appropriate evaluation regarding market value.

There are financing solutions to be found, however, and Kahle says that clients have gotten financing through RV loans (using a local credit union), a mortgage refinance for an existing home, a home equity loan, a renovation loan or a construction loan. You may have to talk with several lenders to find one that best understands your needs.

As for insurance, again, it’s best to talk with your agent about potential options. Tiny homes on wheels may classify for RV insurance, provided the home is built by a certified RV manufacturer. For semi-permanent or permanent homes, insurance carriers are starting to provide more tiny home-specific homeowner’s policies.

Because of the quick rise in popularity of tiny homes, the housing industry is in many ways still catching up to the demand, so for now, that means that you, the prospective homeowner, need to be proactive in your research and in finding a trusted building team to work with. That way, once your new home is ready, you’ll be able to enjoy your tiny home lifestyle to the fullest.