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What is considered a small home?

With rising housing costs and changing lifestyles, small homes have become increasingly popular in recent years. But what exactly constitutes a small home? There is no single definitive answer, as the concept of a “small home” is somewhat subjective and depends on factors like location, number of occupants, and personal preferences.

Square Footage

One way to define a small home is by square footage. Though there are no hard and fast rules, most consider a home under 1,000 square feet to be small. By this definition, small homes may include:

  • Tiny homes – Typically under 400 square feet
  • Small starter homes – Around 600 to 900 square feet
  • Compact 1-2 bedroom homes – Up to 1,000 square feet

Of course, square footage requirements for a “small home” can vary greatly depending on location. What is considered small in a major metropolitan area may be quite spacious in a rural setting.

Number of Bedrooms

Another way to classify small homes is by the number of bedrooms. A small home typically has 1-2 bedrooms. This includes:

  • Studio and 1-bedroom tiny homes
  • Cozy 1-2 bedroom starter homes
  • Compact 2-bedroom homes and mother-in-law suites

The number of bedrooms often correlates with both square footage and the number of occupants. Small 1-2 bedroom homes are usually tailored to singles, couples, and small families.

Number of Occupants

A small home is generally meant for 1-2 occupants. This may be:

  • A single person
  • A couple
  • A small family with 1-2 children

Tiny and small homes maximize space efficiency for a minimal number of occupants. More occupants may make a small home feel overly cramped.


To utilize space efficiently, small homes often have compact or combined living areas with minimal amenities, such as:

  • A combo kitchen/dining/living room
  • A loft for sleeping rather than separate bedrooms
  • A ladder to access a loft or bedroom
  • A compact or half bathroom
  • Multifunctional furniture like murphy beds
  • Outdoor living space instead of large indoor areas

Larger homes tend to have more defined living spaces and amenities like multiple bedrooms, full-sized appliances, large entertainment areas, and spacious bathrooms.


Population density and home sizes can vary greatly depending on location. A 1,200 square foot, 2-bedroom home might be considered quite spacious in Manhattan but very modest in a rural town. Some guidelines by location:

  • Urban areas: Under 1,000 square feet
  • Suburban areas: 1,000 to 1,500 square feet
  • Rural areas: Under 2,000 square feet

So a “small home” in the countryside could be twice the size of a small urban apartment.

Alternative Housing Types

Some alternative small housing options include:

  • Tiny homes on wheels – Typically under 400 square feet
  • Cabins – Rustic, minimalist homes under 1,000 square feet
  • Cottages – Quaint smaller homes, often in a village or community setting
  • Accessory dwelling units (ADUs) – Also known as granny flats or in-law suites, under 1,000 square feet

These housing types embrace the small living concept in different ways, but all emphasize efficiency and minimalism.

Interior Design

To make the most of limited space, small homes often employ clever interior design features like:

  • Multifunctional and convertible furniture – e.g. murphy beds, pull-out tables
  • Built-in and space-saving storage – e.g. under stair storage
  • Expandable/movable walls – e.g. pocket doors, accordion walls between rooms
  • Compact and small-space appliances – e.g. combo washer/dryers, mini fridges
  • Taller ceilings – To create an open, airy feeling
  • Lots of natural light – Via ample windows and skylights
  • Neutral color palette – To make rooms feel more spacious
  • Open concept floor plan – With few interior walls

Creative interior design allows small homes to feel much larger than their square footage!

Benefits of Small Home Living

While small homes aren’t for everyone, they have many enthusiasts who cherish the lifestyle benefits, including:

  • Lower housing costs and maintenance
  • Greater energy efficiency
  • Minimalism and living with less clutter
  • Creative use of space
  • Freedom to relocate the home if needed
  • Sustainable living with reduced environmental impact

Small homes can promote a simpler, more intentional lifestyle focused on things other than square footage.

Drawbacks of Small Homes

However, small home living does come with some potential drawbacks to consider:

  • Lack of privacy and personal space
  • Not enough room for hobbies, entertainment, hosting guests
  • Challenges fitting larger furnishings
  • Not suitable for larger families
  • Difficulty finding a place to legally park/build tiny homes
  • Risk of feeling cramped or claustrophobic

Small homes require some sacrifices and won’t suit every lifestyle. Carefully assess your needs before committing to a tiny or small home.

Average Small Home Cost

Here are some average price ranges for small homes:

Small Home Type Average Cost
Tiny home $45,000 – $150,000
Prefab tiny home $50,000 – $100,000
Tiny house shell (DIY finishing) $25,000 – $50,000
Small 1-2 bedroom home $150,000 – $300,000
ADU/guest house $80,000 – $150,000

Of course, costs vary widely based on location, size, features, and whether the home is custom-built or prefabricated.

Financing Small Homes

Small homes often cost substantially less than traditional site-built homes. However, financing can still be challenging:

  • Difficult to get a traditional mortgage for tiny homes on wheels
  • Need to pay cash or finance as an RV for tiny homes under 400 square feet
  • Easier to get lending for small site-built ADUs and cottages
  • May need a construction loan or personal loan for custom small homes
  • FHA, VA, and USDA loans available for qualifying stick-built small homes

Work with a loan officer experienced in unique properties to explore your small home financing options.

Bottom Line

There is no definitive threshold that makes a home “small.” Typical guidelines are under 1,000 square feet, 1-2 bedrooms, and 1-2 occupants. But a small home can take many forms ranging from tiny houses to cottages to compact starter homes. Ultimately, it comes down to your lifestyle needs and sensibilities. Just be sure to carefully consider the pros and cons before committing to a pint-sized living space!