How To Figure Out Your Personal Budget For a Mortgage On a Tiny House or Cottage

Written by: Arron J. Staff writer @ Hyggehous.com

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Are you thinking of getting a tiny house but you can't afford it outright?

There are some great options for mortgaging or financing a tiny house that will make it super affordable for you and your family. First off, tiny houses are very affordable and can be less than the price of a new car depending on the style, type and size of the tiny house you buy. Usually, for a family tiny house, it will cost around $80,000 which is a bit more than the price of a brand new car, but that also means a smaller mortgage on your home too. Shop Tiny Homes So you don't have to come up with a huge down payment, and you'll own a home that you don't have to pay rent on at all. The other thing people often look into is buying a small cottage for a vacation home which can be a great investment and can give you a place to rent out or sell when the time comes. So if you're thinking of buying a tiny house to live in full-time or a tiny house to use as a cabin, you'll first want to consider your personal budget and what type of tiny house mortgage will work best for you. Typically, banks don't do mortgages on tiny houses on wheels because they are not considered real estate, so for tiny houses on wheels, you'll either have to own the property you're parking it on, or you will have to do financing instead of a mortgage. There are a few options including using your credit cards or lines of credit to pay for your tiny house or seeking a private lender who will do tiny house financing for you.

If you are building or buying a tiny house on a foundation on a piece of land, the options are more wide open.

Usually, these mortgage rates will be similar to those for regular sized houses, except, they will be less because the square footage of the home is less. So you will have a smaller down payment and smaller monthly mortgage payments on a tiny house or cottage. Think about what you are paying in rent currently and then think about all of your utilities and other expenses. Make a list of them all and add them all up to get an idea of what you are spending each month. Then, you will be able to assess if you can afford more, less or the same as what you are currently paying to put toward mortgage payments. Always add on at least 40% to the mortgage rate you're considering because there are always other expenses like property taxes, insurance and utilities, plus all of the repairs and maintenance costs associated with homeownership. The nice thing is, with a smaller home, these costs will be lower than they would be for a regular sized home. Heating bills will be substantially less, and if you have a wood burning fireplace and can collect your own wood, it could even be free.

Once you've figured out what you can afford for a mortgage or financing on a tiny house, you can go and see what options are available to you when it comes to loans and mortgages.

Of course, always be aware that banks and brokers may try and give you the highest rate you can afford, but stick to the budget that you have outlined for yourself, so you know you'll be able to afford it. Also, never be shy about negotiating with lenders about the mortgage rates and do some research on the different types of mortgages so that you know exactly what you're getting into beforehand.