Tiny Houses: A Mortgage Free Housing Solution

Every now and then I run across an example of someone living an ultra-frugal lifestyle and it really appeals to me.  This was the case when I saw a video at Living Off the Grid about people who build, and live in, tiny house.

Now, our idea of a tiny house might be two bedrooms instead of three, or anything less than 1,200 square feet.  Most in and around real estate would agree.  However, I’m referring to extremely tiny houses – in the neighborhood of 100 square feet.  We are talking just enough room for small couch, kitchen and loft with a bed.  Upscale versions feature indoor plumbing.

The benefits of living in such a tiny house are captured in the interview with Peter King, a tiny house builder in Vermont.  Imagine being able to construct one of these tiny homes in a couple weeks, pay cash for it (no mortgage), and live off the grid thanks to a solar panel.  Sounds like my kind of place!

Now back to reality.  There is obviously no way my family of four (five if you include a dog  that weighs as much as some people) could occupy such a tiny house.  However, there are some valuable lessons here for those of us who are not single.

My wife and I have kicked around the idea of downsizing our home.  We decided to stay put for now, but examples like this always get my downsizing juices flowing again.  I start dreaming of a cheaper mortgage payment, lower utilities, lower taxes, and less stuff. Even thought we can’t move into a 100 square foot home, that doesn’t mean we couldn’t look at downsizing to a smaller home than the one we are in now.  And we could enjoy many of the same benefits, though admittedly to a lesser degree than those who live in tiny houses.

Benefits of Buying a Smaller Home

  • Lower monthly mortgage payment
  • Lower taxes
  • Easier to pay off mortgage completely in a shorter time
  • Less space to fill with furniture
  • Smaller lot (maybe) to maintain
  • Significantly lower utilities

So what’s holding us back?  Well, there’s the idea of moving, which sucks the energy right out of my body.  To add to it, there’s the realization that we would need to do a little work to our house to get it ready to go on the market.

At the moment, I don’t feel like doing either one – moving or fixing up! And, to be perfectly honest, we’ve sort of grown into our current space, and would need to get rid of a ton of stuff from all rooms before we could even consider moving into less space.  Still, it is something we will continue to consider, particularly if the right house with the right deal comes along.  In the mean time, I’ll live vicariously through people like Peter King and other ultra-frugal friends.


  1. I think its definitely much harder to downsize than to never buy the bigger house in the first place- like you said, we definitely grow into our space. The key is never to buy the clutter in the first place, or at least to keep it to a small enough level that you don’t end up needing to upsize to store it all. I know I’ve never managed to keep my possessions from expanding to fill all available closet space, something I’m working on without much success.

  2. Some react with derision to ideas like this. But I think it’s great to be open to thinking about such things. There are all sorts of good reasons why a particular person might not want to pursue the idea. But there’s a benefit even for those who don’t benefit from it in discussing all the possibilities. The benefit is that it broadens your thinking in general. When you give one seemingly crazy idea some consideration, all sorts of other once-seemingly crazy ideas begin flooding into your head.

    I’m not going to follow up on this myself. But I am glad to know that there are people out there doing it. I am happy to have the option available to me just in case. And knowing that this is an option makes it harder to resort to that old excuse that “I’ve already cut out everything that I can possibly cut out!” You’ve never really cut out everything that you can possibly cut out. And you don’t do yourself any favors persuading yourself that you have.


  3. I am all about green living. This takes it a bit too far for me, but that’s just personal choice. I must admit I’ve seen them and thought “Hmmm… that would be interesting.”

    But I don’t think I could do it. 🙂

  4. I’d been checking out the tumbleweed tiny houses for the past year or so. I got a lot of great space-saving design ideas from them while I was remodeling my 1010 sq ft house. Tumbleweed also has some designs that are more family friendly – such as 600 sq ft with 2 bedrooms.

    The thing to watch for if want to build a tiny house is your local building codes. Where I live, the house HAS to be 1000 sq ft or they will not issue a building permit for permanent live-in housing, except in already designated mobile home parks. Plus, to be a house, it has to be hooked to water, and sewer or septic. In my rural county, those things make it impossible to build a tiny house to live in fulltime unless it meets all the building codes, including inside plumbing.

    And speaking for myself, I couldn’t manage a sleeping loft too much longer – my old knees have problems with just my attic stairs! 🙂

    My small 1010 sq ft house tho is great for efficiency, no mortgage, and small utility bills. My electric bill averages about $40/month, and I go thru 2 cords of wood a year with my super efficient wood stove. The main thing to remember about smaller homes is to use the space efficiently – and to go vertical on your storage – Lots of wall space – so use it all!

  5. “And, to be perfectly honest, we’ve sort of grown into our current space, and would need to get rid of a ton of stuff from all rooms before we could even consider moving into less space.”

    That’s a big part of the reason downsizing appeals to me. 🙂

  6. Actually, once my wife and I move to Australia, I’m super-interested in the possibility of living aboard a boat. This would be very similar in a lot of ways to the video and what you are talking about!

    Either way definitely gets you thinking!

  7. We have four kids. We bought and sold along the way starting with a 2500sq ft house, moved to 2000 and then to 1600. The big leap came in 2005 when we moved to Mexico. We sold and gave away nearly everything. We each took just a backpack and one box (per person) to Mexico (no car). After a year in Mexico we moved to Buenos Aires and bought a 900sq ft apartment. Now with the kids independent we are moving to a 500 sq. ft. place. Being liberated from “stuff” and cars opened the world to me and my family.

  8. I’d love to do this, but like you, with a wife and a son and 2-75 lb dogs it would never happen.

    Sometimes I walk out to our backyard, look at our shed and wonder what it would be like to live in something that size or slightly bigger. Maybe someday!

  9. Hey thanks Frugal Dad for mentioning our Tiny House post. I’d love to have you guest post for the site on ways to save money while you’re trying to build up enough in the bank to pay cash for land, or to pay off your debt so you can go live off grid on less.

    Let me know if you’d be interested, of course with a big ad and a link to Frugaldad.com from the by-line if you want.

  10. We just moved from a 900 sq ft duplex to a 2000 sq ft house. All of a sudden it seems like we have to buy more stuff because the house seems so empty. I think we will grow into it very quickly. It seems like every time we move, we accumulate more and more stuff.

    I love my college days when I can pack everything into a car and just make one trip when I move. Though the thought of a tiny home appeals to me, I don’t think that would ever be part of my future.

  11. While I think this is an interesting idea, I admit I couldn’t live in a house that tiny. I like my space. I don’t have a large house, but it’s not small. It’s a good size for my family. If we ever had to rebuild, then we would build it smaller with only 2 bedrooms. I also wouldn’t have two hallways. This is house is efficient that we have 22 windows in total. I have 8 just in my living room so I can open curtains during the day to let the light inside. That saves me on electricity. I am saving so we can use solar energy for the future. I love having my acre of land. It’s allowing me to have a nice size garden and plant numerous fruit trees and bushes.

  12. One more advantage of moving into a smaller house (not an ultra tiny one like the video but just a smaller one) is that you can live in it for your whole life. When your kids grow up and move out, you are not stuck with a McMansion that you need to sell. A smaller house can take you through all phases of your life. Also, by not moving around so much, you also save a lot on moving expenses, closing costs, etc.

  13. I just mentioned to a friend that my ideal retirement home would be an RV or house boat. Like a tiny house on wheels…or on the water!
    Thanks FD for a wonderful, enlightening post!

  14. My house is about 800 square feet. It is perfect for us (myself and my two sons ages 11 & 5.) My only real wish is for a bathtub, as we only have a shower, but otherwise our house is great. We have 2 small bedrooms (10 x 7 and 7 x 11.) We have a living room, eat in kitchen, and bathroom. We also have a washer dryer by the back door (a stackable.) Our utilities average $100 a month for electricity and $115 a month for gas. (Old house, no insulation makes for a higher gas bill.)
    I actually want to knock this house down (it is falling off foundation, it is about 90 years old.) and rebuild only adding about 5 feet off back to have a full tub in bathroom.
    However I do not think we could go any smaller. We homeschool and do need space for all our school stuff.

    However the view from those tiny houses is amazing. I could understand wanting to live there.

  15. I live in a NYC apartment that is just a bit over 500 feet. One bedroom, one bath and it also serves as my home office.

    I crave space like nothing else I can think of and had I known how much it mattered, I would have moved to a bigger space a long time ago (I’ve been here over 20 years.) Now, I can’t afford to move.

    I truly do not get how people, especially a family of four or more, can live in say 1,000 square feet and just be happy.

    People need room to move around and have private space (beyond shared bedrooms, which is the case in most places of 1,000 feet or less).

    People need personal privacy.

    They need to be able to do things that might be noisy without disturbing others.

    I guess we city folk, while not desiring McMansions, still want some just plain old walk-around space.

    I wonder how much time folks in tiny places actually spend at home. How much time is spent out of the home (work, etc.) and outdoors.

    Cause those teeny places are just claustrophobic to even look at for me.

    Sorry. No way.

    To each his own.

    FYI: My mother’s room in an ALF was bigger than some of those places. Of course she needed it to, for things like a wheelchair, etc.

    I wonder how these spaces will work as people age and can’t go outside as much or get around.

  16. Every time I see new and old videos on these tiny houses I’m tempted. Oh am I tempted, but it’s never gonna happen.

    It just seems like too far of a jump for me…maybe for a summer or a couple of months it would work out. But for good? Kudos to those people.

  17. Wow, now I feel like I live in a mcmansion! I think it might seem a little bit much for people who live in the big city, but once you get used to a simple and tranquil lifestyle, I think you would enjoy the more simple things in life more and lead a more fulfilling life away from urban distractions.

  18. Just read your aricle on Downsizing Our House. I am greatly concerned with the number of people who are in foreclosure on their homes and have no idea where to turn. I am a dealer for Derksen Portable Cabins. We know that if people can just “let go” of “stuff”, they might be able to live in one of our 12X32 lofted barn cabins very comfortably. (about 450 sq. feet) When they add our composting toilet, and rain water harvesting system, they can probably be out of debt within 4-5 years verses a 30-40 year mortgage, be able to move their entire house at anytime without leaving behind money they have invested in installing a septic system, and be able enjoy life wherever they choose to live in a more free, and economical way. Feel free to direct people who are in this situation, or just want to get out of a mortgage to our website for more creative ideas on how to downsize. Thank you for your article, it was great! http://www.showcasesheds.vpweb.com or email showcasesheds@yahoo.com

  19. this sounds like a great idea. i am a college student so i am always broke. i can definitely see myself doing something like this. I’m going to do some research on it but i wonder… if i built one and i ended up needing just a little more space, could i max out on the technicalities and have two tiny houses next to each other but since they are two different houses, it still isn’t taxed and all that because technically they are under “whatever” square feet? just a thought lol

  20. has anyone who feels that they cannot live in one of these tiny homes ever thought of possibly having multiple units?
    think of them as seperate rooms with a connecting common area perhaps?