The Benefits of Buying a Small House

Tiny homes have become quite popular, especially with younger adults. According to the National Association of Home Builders, at least 63% of millennials prefer to buy a smaller home. Even though you’re not quite sure about owning a home, considering a smaller house can be beneficial. Let’s find out why.

A smaller home can benefit your happiness and finances. Most homeowners who downsized did it to lessen their expenses and save money, which is the most significant advantage of owning a small house. Here are the top reasons why considering a small house can be beneficial.

rental property

Lower Sales Prices

Opting for houses with smaller square footage can have a massive impact on your pocket. For your reference, the average price per square foot for the 2020 median home listing starts from $153. However, smaller square footage doesn’t always mean lower costs. You’ll still have to consider other factors such as the number of bedrooms and furnishings.

If you are going to look for a home with fewer bedrooms, chances are you’ll be able to find your dream home sooner. Houses with fewer bedrooms are typically cheaper, and they will most likely fit your budget. Moreover, affordable houses also tend to bring down your other expenses like the mortgage rate, size, and dealing costs.

Better Cash Flow and Lower Mortgage Payments

Before buying a home, it’s important to remember that the bigger the house, the bigger the housing cost. One of the most common mistakes of buyers is not contemplating if the cost of their mortgage payment will affect their cash flow. As a result, they struggle financially.

As stated by theU.S. Census Bureau, the considerable amount of a housing cost must only take30% of the household income. Any amount higher than 30% will cause you a financial burden in the future. If you’re going to buy a house, you’ll have to take note that you will have to pay for other expenses apart from paying mortgages. So it’s vital that you only allocate 30% or less of your monthly income to mortgages.

Other Costs Are Lower

A small home will not only downsize the cost of the home loan. Mortgage payments include other essential expenses like property taxes and insurance. What you need to know is that an escrow account holds your house mortgages. Service users do this to ensure that all necessary payments are always paid.

But why do you have to pay for property taxes and insurance? Home insurance is essential in mortgaged homes. It protects you and the house seller from financial uncertainties as it covers the fees for damages caused by fire, vandalism, or natural disasters. Meanwhile, property taxes are real estate taxes enforced by the law.

Energy Efficiency

Let’s move on from mortgages and house payments. Another thing that would cut down your expenses is lower energy bills. A small house is more energy-saving than a bigger house because it doesn’t require much energy to make a small space more comfortable and temperature-controlled.

In addition, smaller houses have fewer appliances as well. You can also make a few adjustments to save more energy. For instance, upgrade your windows, so they are more energy-efficient. You can also replace the insulation if you prefer.

Data shows that small homes can save $300 to $740 of energy costs annually compared to bigger homes. Here’s a brief comparison of yearly energy costs among different home sizes from the U.S. Energy Information Administration:

  • All homes- $1,856
  • 1,000 square feet below-$1,126
  • 1,000 to 1,499 sq. ft.- $1,569
  • 1,500 to 1,999 sq. ft.-$1,919
  • 2,000 to 2,499 sq. ft.-$2,088
  • 2,500 to 2,999 sq. ft.-$2,282
  • 3,000 sq. ft. above-$2,631

Cheaper Maintenance and Renovation Costs

Smaller homes are easier to clean and maintain. Keeping things neat can also be less time-consuming. For individuals who like to clean, this is probably one of the most favorable benefits.

Furthermore, maintenance costs, improvement jobs, repair, and labor and materials are a lot cheaper for small homes. The guideline for budgeting for house repairs is $1 per square foot annually. The most costly repair is roofing or roof replacement, calculated based on the roof’s square footage. Hence, the bigger the roof, the bigger the costs as well.


Choosing a smaller house can help you achieve your dream of becoming a homeowner sooner. Additionally, it would cut down your expenses and allow you to save more. One of the most significant benefits of being a homeowner of a small house is a more affordable mortgage payment, which results in lower utility costs.

Aside from paying less, you also get to get your money’s worth. Big houses often end up with empty rooms and spaces, but you can maximize your space with a small house. Opting for a small home can help you financially in so many ways.

About Carson Derrow

My name is Carson Derrow I'm an entrepreneur, professional blogger, and marketer from Arkansas. I've been writing for startups and small businesses since 2012. I share the latest business news, tools, resources, and marketing tips to help startups and small businesses to grow their business.