As housing prices rise throughout the U.S., more and more Americans who desire to become homeowners are burdened with large and lengthy mortgages. Earlier this year, CBS News indicated median housing prices have risen by at least 17.3 percent from 2012-2014.
Despite the price of homes increasing, the U.S. median weekly wage has only increased by a staggering 1.3 percent. Having a lower income makes it harder and nearly impossible to secure an ideal home let alone pay off the mortgage in time.
Even if your household income is average or above the median amount, depending on where you live, it could still be difficult to close on a house that you can truly afford. Non-traditional housing options may have piqued your interest just like me.
Table of Contents
The 30% Housing Rule
A good rule of thumb is to never spend more than 30 percent of your income on housing. You’ve probably heard it from a parent, financial advisor, lender, friend etc. because it’s very important to avoid spending a majority of your income on housing expenses. Aside from housing, there are still so many other expenses that we all have to cover in a given month.
When it comes to taking out a mortgage, you want the lowest interest rate possible which is why it’s best to have a good credit score. If you’re planning on getting a mortgage, first check your credit first for free on CreditSesame and try to get preapproved. It’s best to avoid borrowing up to your approval limit and choose a home with a mortgage that you can truly afford.
Related: How I Raised My Credit Score By 150 Points
How to Check Your Credit Online For Free
Regular readers probably know that I am very adamant about keeping my housing expenses low without compromising all the basic qualities and values I desire (hence my low rent rate). I always strive to keep my housing costs low because it allows me to free up more of my money to reach other financial goals like saving more, paying off debt and breaking out of the paycheck-to-paycheck cycle. You may even want to consider moving elsewhere if the average apartments are renting for more than you budgeted for. Apartments to rent in Denver CO may be slightly more expensive than apartments in a nearby suburb but if you could give up your car, that would factor into your overall cost.
When it comes down to it, I spend a very limited time at home during the week and I’d much rather spend my money paying for experiences and investing in things that will help me get ahead in life.
However, it is a goal of mine to become a homeowner one day, but taking out a super huge mortgage for a traditional single family home kind of scares me. If I did take out a mortgage, I’d want to pay it off in way less time than 30 years in order to get my financial freedom back.
Related: Yes, We’re Paying Off Our 15-Year Mortgage in 5 Years or Less
I’ve been thinking about alternative housing options a lot lately for my small family and I’ve come up with quite a few.
Tiny House
I first heard about the tiny house movement after watching a documentary on Netflix about a man who attempted to spend a summer building his own tiny home on a flatbed. The documentary was called TINY: A Story About Living Small and shared his journey through the process and profiled others who happily owned tiny homes.
When watching the documentary, you can’t help but become mesmerized by the idea of downsizing everything and living simply and affordably by rejecting the ‘American Dream’ and creating your own out of a 300 sq. ft. home.
The tiny home owners who were interviewed in the documentary seemed content, optimistic and at peace. They didn’t have to spend 50 or 60 hours a week slaving a way at a job only to get off work each evening, spend 3 hours enjoying their home, then go to sleep and do it all over again.
To me, they were living the American Dream. Simple things like being able to wake up without feeling rushed to do tasks or pressured to pay bills, having the ability to work as little or as much as you want, and being able to engage in special leisure projects really appeal to me.
Whether you build a tiny house yourself or get someone to build and design it for you, you’d still spend less on the entire project than you would if you purchased a traditional house. So yes, I too even contemplated and fantasized about owning a tiny home and living the simple life.
Living in a tiny home may not be easy though. You have to give up your personal space and a lot of your belongings that might hold a sentimental value to you if you want to make it work.
Having a child makes it extremely difficult to pull off living in a tiny house as I did not see any children in the documentary I watched. Most tiny house owners were couples or single people. With one child, I believe it could be possible but I’m not sure whether or not I’ll have any more kids and I believe that could greatly affect the ability to live comfortably in a tiny home.
Shipping Container Home
Homes comprised solely of shipping containers are another traditional housing alternative and these homes often have much more space than tiny homes. You may have come across some of those articles online featuring breathtaking shipping container homes all over the world as this form of housing is rising in popularity.
Shipping containers can cost anywhere from $1500-$5000 with some priced as little as $800 each. In addition to the price of the container, there are also the costs involved with shipping them to your desired location.
While shipping container homes look amazing, the only things that concern me include the costs involved with the entire construction process including insulation, plumbing, electrical work, and remodeling, along with determining what the shipping containers were used for beforehand.
If you’re interested in building a shipping container home, it’s crucial that you determine what was inside the shipping container prior to purchasing it. Many shipping containers are used to transport toxic chemicals inside of them, and that’s not something you’d like to use to create a home to reside in each day.
If you’re not construction savvy (like me) many manufacturers design prefabricated shipping container homes for $15,000 and up which is not bad. Shipping container homes can easily cost six figures though but in my opinion, it all comes down to how you want to design and furnish your home.
If you’re looking for something that remains economical but is still visually appealing and comfortable, you will definitely spend less than if you were trying to create a magazine-worthy luxury home.
Mobile Home
Mobile homes have always been an affordable housing solution but they have increased in quality and sustainability over time. According to BBC News, an estimated 20 million people live in mobile homes and these homes make up 6.4 percent of the U.S. housing sector.
I would be lying if I said I didn’t acknowledge the negative stigma that’s attached to the idea that families who choose to live in mobile homes in the U.S. are poor, uneducated or just unfortunate. It’s sad that some people are so closed minded, but the facts tell a different story.
According to the Manufactured Housing Institute, about 57% of the heads of mobile home households are employed full-time and the other 23% are retired and the household median income is only a little over half the national average.
I’ve seen really nice mobile homes in nice-looking trailer parks and I’ve also seen some pretty dingy looking mobile homes as well.
Overall, mobile homes have come a long way since they originally surfaced in the early 1930s. They often range from basic narrow structures to spacious homes with hardwood flooring, recessed lighting and skylights, walk-in closets, a fitted washer and dryer, an island breakfast bar in the kitchen and other features. Brand new homes start around $55,600 and used homes start around $10,000.
Multi-Family Home
Buying a multi-family home like a duplex or triplex isn’t necessarily ‘non-traditional’, but it’s definitely a cheaper alternative to purchasing a traditional single family home.
As someone who wants to get into real estate one day, purchasing a multi-family home first would be a great opportunity to rent out the other unit(s) while my family lives in one of them.
I personally don’t have a problem living on the other side of someone else especially if they are paying me rent that covers the mortgage each month. Many multi-family homes are often available in affordable neighborhoods and I like how this housing option doesn’t have to be permanent and allows you to still have your own space.
Buying a duplex or triplex for my first home is an idea I’ve been playing around with as it will allow me to become a property owner, break into real estate investing and still live comfortably without struggling financially.
For me, I’m confident that I can make a home out of anything and it’s all about being free from having housing debt and expenses weigh me down; even if that means thinking outside of the box at times and going the non-traditional route.
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What does your ideal home look like? Is becoming mortgage debt-free some day one of your goals? Do you lean more toward traditional housing options or non-traditional?
P.S. – I created a new Facebook community for My Debt Epiphany readers so we can discuss all things money and personal development on a more personal level. Click here to join the group and I’ll approve your request ASAP!
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kirsten says
I read a story once about a couple who couldn’t afford a house in their expensive area. They bought a used house boat and fixed it up and pay a fraction of the typical mortgage for their area, even including the marina fees!
Choncé says
I heard a similar story. It sounds fun, but I know I couldn’t live on a boat long term. Ray and I did a cruise last week for a few days and we were so nauseous the first night, then it got better afterward but it’s a nice vacation idea.
Tonya@ Budget and the Beach says
I love the idea of tiny homes and container homes, but couldn’t see myself doing that. I’d rather live in an apt with a bit more space…at least that’s my thought process right now. Since I do live in an expensive area and could not see purchasing a home here unless I had a HUGE jump in income, I try not to even think about it. I love seeing all the cool designs though.
Choncé says
I love looking at the pictures too. And it was weird to actually try to realistically determine how/if I could live like that. I need my own personal space hands down, but as I get older I’m realizing that I don’t need a ton of space because that just paves the way for clutter and causes me to spend more of my time cleaning and organizing.
believeinabudget says
I’ve had my home for a little over 10 years on a small, family home. I couldn’t imagine furnishing such a big place or cleaning it 🙂 Even though I was approved for more, I found a really inexpensive home where I knew my payment would be small and not overwhelming. As I’ve gotten older, the idea of a townhouse with a small backyard sounds pretty good. I hate throwing rent away each month.
Choncé says
Getting something that you could comfortably afford was smart on your part. I’m not a fan of renting but I’m content with it for now. The responsibilities associated are owning a home are just too much for me right now but I can still still plan and prepare for what I think will be ideal.
Hannah says
Our single family home only cost $65K and we are renting out the basement (which would cover a modest mortgage if we had one). I would say that adding a renter to the mix is probably my favorite “housing alternative” especially if you want to buy a little more than your needs in the hopes of expanding your family later on.
Choncé says
That sounds like a really good price and it’s great that you’re able to rent out extra space as well.
SavvyJames says
I’ve been following the Tiny House movement for a couple of years now. I have seen the documentary you mention – along with some others – and I occasionally watch the show ‘Tiny House Nation’ on FYI network. While interesting, I don’t see it as a viable option for most people – the lack of space is simply not practical for most, particularly those with children – and definitely not for the me and the wife.
Choncé says
I didn’t know they had a recurring show about it, I might have to check that out. I agree that it’s near impossible to pull off with kids and when I break out of my fantasy about tiny homes I realize that I require a certain amount of my own personal space in order to function properly. Living in a tiny house might disturb my family’s harmony for sure.
Jessica says
Housing is so expensive in Los Angeles that I think it’s hard for most people to find a house, or even an apartment, for only 30% of their income. There are some very nice pre-fab/mobile homes that overlook the ocean in Malibu and Pacific Palisades that my husband and I researched. Some of them still cost up to $2 million! I have also noticed some tiny houses and micro-apartments popping up around here as well. Unfortunately, I just don’t see myself living in non-traditional housing just because of my need for space so that I don’t feel cramped and can find time alone.
Choncé says
Wow a mobile home for $2 million?!?! I can’t even imagine, haha. I would hope that salaries and wages are higher on the west coast though to help match the housing prices.
Prudence Debtfree says
The one negative I hear about tiny houses is that they aren’t good for children. There is a heritage site an hour or so from where I live that features real houses in which real families used to live about 150-200 years ago. One is a one-room house in which a broom-maker lived … with his wife… and their 10 children. It was a pretty tiny house, and somehow people a couple of centuries ago could manage it, so why not today too? That being said, I think your idea of investing in a triplex is brilliant.
Choncé says
Yeah it’s interesting how people used to do it no problem back in the day. I’m sure there were underlying issues but it’s not like they has a choice. I can’t own the idea of wanting to invest in multi-family housing because I’ve been researching and reading up about it online lately and it’s given me some great ideas of how I can make it happen.
Jennifer @ WanderlustWallet says
I’m fascinated by alternate housing options, including tiny homes. I agree there are some unconventional options that seem to offer tremendous freedom. I could possibly see myself doing something like that in 20 plus years, maybe after having and raising a child or two. I also read about straw bale houses at one point, which I thought seemed interesting.
Choncé says
It’s probably near impossible to raise kids in a tiny home so I understand why it’s probably only a good option for couples or singles who are older and looking to downsize but nonetheless it’s still fascinating to watch how people make it work.
anumyoon says
I just wrote an article about this last week! I love love love the idea of modular houses and tiny houses. I feel like so many people choose to be house poor just to keep up with appearances and trends – even when they really don’t need to. Thanks for the great read! I’m seriously considering the more unconventional options of becoming a homeowner (when that time finally comes, haha)
Choncé says
It’s crazy how some people choose to become house poor. That’s no real way to live. If you want to live within your means and be comfortable, you just have to stop caring what others think about your decisions and do what’s best for you.
DC @ Young Adult Money says
I definitely look for more traditional housing. I am not opposed to tiny homes and I think they work well for some people, I just would struggle living in one….especially during those cold Minnesota winters when you get stir crazy being inside all the time.
Choncé says
Yeah the location of where the tiny home would be would matter most to me. Living in an area with cold winters, fierce storms or tornado warnings would not be a good idea.
ModerateMuse says
My husband and I are actively looking into building a home out of shipping containers. We want our house to be about 1200 square feet, part shipping containers, and part berm house. I love those tiny houses, but we won’t be able to live that small until our kids are out of the house. I hate how much money we spend every month on housing costs.
Jason @ TheButlerJournal.com says
Those are some interesting alternatives. I need space so the tiny home would be a no go.The container house looks interesting though.
Choncé says
A lot of people are just fascinated with the idea of a tiny home but naturally, it goes against everything we require in a home (the obvious one being space). I would love to try 30 days in one just to see how I do but I’m pretty sure I wouldn’t last long-term.