FHA and Tiny Homes
The Federal Housing Administration (FHA) insures residential mortgages. Tiny homes, typically not considered standard residential mortgages, are not eligible for FHA insurance because they do not meet the FHA’s minimum size and foundation requirements. For a home to qualify for an FHA loan, it must be at least 400 square feet and affixed to a permanent foundation.
Types of Tiny Homes
There are two main types of tiny homes:
- On wheels (trailers)
- On skids (fixed foundation)
Durability and Maintenance
With regular maintenance, a tiny house can last 30-50 years. Durability depends on materials, construction quality, and maintenance.
Loan and Financing Information
FHA Loans
FHA construction loans can finance the building of a qualifying home from the ground up, with FHA requiring a one-year builder’s warranty against defects in materials or workmanship.
An FHA appraisal ensures the property meets minimum property standards. Materials must resist weather, rust, fire, and moisture. Key features like windows, doors, siding, and gutters must be durable.
Alternative Paths for Financing
Consider FHA condos if priced out of single-family FHA homes. Recent policy changes increased the availability of FHA-approved condos, offering more affordability and inventory.
Tiny houses on wheels, meanwhile, depreciate similarly to RVs over time.
State Regulations
California’s climate and focus on sustainability make it the most tiny house-friendly state. If built without permission, counties may require adjustments to meet codes, so it is essential to understand your local rules on tiny homes.
Living in a Tiny Home
Tiny homes may provide financial freedom from mortgages and high rents, promoting sustainable or remote living with the flexibility of mobility.
Costs and Approval
- On a $400,000 home, a 30-year FHA loan at 7.125% interest involves a monthly payment of $2,646 plus a $176 mortgage insurance payment.
- To get approved for a tiny home, seek a lender specializing in such properties, considering size, location, and mobility.
Understanding FHA Loans
FHA loans are used in over 25% of home purchases, with key guidelines including a 580 minimum credit score, 3.5% down payment, and two years of work history. They best suit those lacking 20% down payments or with lower credit. The minimum FHA credit score is 500 with 10% down or 580 with 3.5% down.
Tiny Home Costs and Codes
Snug Living tiny homes, built on a 25m2 steel chassis, cost about as much as hotel rooms, ranging from $30,000 to $100,000. When building, the American Tiny House Association can be a resource for state-specific regulations.
At less than 400 square feet, movable tiny houses challenge traditional building permit processes. Consult planning, zoning, and building codes to ensure legality.