Tiny House Q&A: What does it cost to build a small house?

Q: What does it cost to build a small house?

A: The simple formula to determine the cost of building a small house is to multiply the cost per square foot by the number of square feet you plan to build. It’s said that the national average is $125 per square foot. So, a 300 square foot home should cost $37,000. It’s simple math. Yet, in reality it’s a bit more complicated.

Factors Influencing Cost Per Square Foot

However, the cost per square foot for new construction of any home (large or small) varies widely depending on where you are building since the cost of materials and labor depends on the local economy. Another factor to consider is the quality of materials being used. Higher quality materials will cost more.

Smaller homes are more dense. For example, a 2,000 square foot home, with large open spacious rooms, uses very little material in those large open spaces. In a small home, there is much more wood, shelving, and possibly built-in furniture. So, more materials are used per square foot than in a larger home. This makes small homes potentially more expensive per square foot.

This is why you might find some small homes for sale that exceed the $125 per square foot average.

Building a Quality Home

Some people choose to build small, because they can stay within their budget while still choosing the highest quality materials for construction and selecting the best quality appliances and amenities. For these people, the cost per square foot may be much higher, and the ultimate cost of their small home may seem very high, yet the quality is what matters most to these builder/owners.

Building a Cheap Home

Small houses on wheels are not as closely scrutinized by local building inspectors. In fact, most municipalities don’t care what kind of camper, RV, or cottage on wheels you park in your driveway. They aren’t going to come inspect it (unless a neighbor complains about something). Small houses are also easy to setup in rural areas, far from anyone who might be critical of their size or construction.

For these reasons, it’s possible to build a small home with cheap materials and save lots of money. The cheapest homes are basically a shed made of plywood without much concern about quality or attractiveness. They are built to provide basic shelter and that’s about it.

If using used, reclaimed, and repurposed materials, it’s possible to build a ‘home’ for several thousand dollars.

Working with a Contractor or DIY

If you have someone build your home for you either delivered to you or build on-site, the costs may be higher since you’ll have the labor costs on top of the cost of materials. See our list of tiny house designers and builders for examples of cost for buying new tiny homes.

Those who build a home on their own, are often surprised with how much time it actually takes to construct a quality home. When people calculate the cost per square foot to build tiny homes, they often forget to include the value of their own labor. Even if they work ‘for free’ the opportunity cost of what they could have earned at a job needs to be considered.

14 thoughts on “Tiny House Q&A: What does it cost to build a small house?”

  1. Hello
    I wanted to build a 700 square foot house on my own land and I was amazed at the cost! Taken into consideration with all the site work: my driveway, the septic, the well.. The land I wanted to buy was $50,000 for one acre. Yes it’s an expensive area. I had a builder tell me that the cost would be about $150,000 not counting the well and septic as I told him I had help with that.. Even a modular home was looking to be close to that as well..So I’m going to look for a smaller existing home..

    1. Yes, that’s a very good point. People don’t realize that the land cost, water/well, electric service, gas/heat, and other aspects are the same cost as a large home. So, if you put a tiny house on expensive land, and go to sell it, the ‘cost per square foot’ for the home could end up being $300 or more per square foot. It might not seem like a good deal. Yet the property purchase/value needs to take into account all that’s part of the purchase.

  2. As im a studying architect….does the building codes for water and wall and r values still apply…..why not use aluminum studs fr decreaseing weight??????

    1. An accessory dwelling unit (ADU), DIY shed/studio, or RV/camper need not comply with housing codes for electric, water, wall strength, insulation, etc. However, those building tiny houses typically seek to build them well and want them to be durable. So, it’s not uncommon for tiny houses to exceed residential and commercial-grade specifications. Aluminum studs might be a good idea.

  3. It would appear all the stories I heard about how inexpensive these small houses were is false….better to build a larger house, it’s cheaper. I heard people were building small house out of recycled materials for under $20K – putting them up for the homeless. Guess that was a fallacy.

    1. Hi Carol, The article attempts to paint a realistic picture of what the small house experience will be for the average person who isn’t a designer and builder. It’s true, if you can find free or inexpensive used materials, or get people to donate, and if you don’t care a lot about amenities or making a place look really fancy, then you can build less expensive. As the article states: “If using used, reclaimed, and repurposed materials, it’s possible to build a ‘home’ for several thousand dollars.” So, the cost can vary widely from one home to the next.

  4. Just built a stand alone 300 square foot (counting a loft) mini for under 4K. I already had water and septic on site. By this summer the plan is to have it off the local power grid. That’s where our cost will be. My son and I did the work ourselves and we used new materials from the local hardware store. Now we are thinking of building them for a living. Our next project will be designed to look like a log cabin.

  5. Do you ever build tiny houses for someone that has been lived in abusive relationships/divorces and lived alone for the last 11 years. She raised her children alone and finally ended up on disability at the age of 46 due to the abuse. This is just the tip of the story. I don’t want anything fancy it is just for me and to be able to move when I need to in order to assist my son and his family due to both he and his wife are attending school and must move for his PhD program and they have three young children they need assistance with. I have good credit but did not accomplish my dreams. I have a stroke caused by 3 small brain bleeds that made me pull out of college after my Associates degree. Then high blood pressure and migraines and after testing I have to have a stent placed in an main renal artery stent. I want to have a home before I leave this world to have accomplished something to my children and grandchildren.

    1. Hi Pamela, Thanks for your comment/post. We’d suggest working with someone locally to help build a tiny house. You’ll want to find a location where you can put it. We’re not currently in a position to make homes for people, but we can try to guide and assist them in getting the support they need.

  6. I’m a Realtor and there are some factors that all of you are overlooking. If you are building a home and you don’t have ALL the cash to pay for it you will have to take out a loan. In doing so your bank or lender will require that the value of your home whether large or small will have to be able to appraise. So you cant just go building with all the best materials; ie, aluminum studs just because it is lighter or just because you want to. No, you will have to build it to the standard that other homes in your area or neighborhood are selling for. Not what they are listed for but what they have sold for. This is why you go into a nice neighborhood and all the homes are similar in size and value because of covenants which help maintain the value of the homes. That is why you small homes are built out in more rural areas because their are no covenants.
    Also, the national average that a family or person stays in a house is 13 years. Either by choice or just unexpected life changes people move. When you do, you don’t want to be like the elderly couple whos home I just viewed. They have spent over 800k on their home and have it listed for 592k. It will probably sell close to 500k. That is a net loss of 300k. And where I come from that is a lot to lose. They overbuilt for their neighborhood. I understand that people like to do things on their own like buy or sell their own house. But we go to school to study our field, become licensed, study the market daily and take pride in what we do so we can aid buyers and sellers not make those costly mistakes.
    The moral is, before you buy or sell your next home, consult your local Realtor, explain what you are wanting to do, and let them advise you accordingly. We are here to help!

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