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Alternative Housing Options on the Rise
What you'll learn: What to know about unconventional housing options that are rising in popularity.
EXPECTED READ TIME: 4 MINUTES
April 12, 2024
Owning a home may still be a vital aspect of the American dream, but these days, the white picket fence is optional. Low supply and high prices have many young homebuyers thinking outside the walls of traditional homes and looking into alternative housing options. Whether you are looking for a house that helps you live an eco-friendly lifestyle or affordability is your main concern, a more unconventional approach can be a great path to homeownership.
And as the popularity of alternative housing continues to rise, it is worth knowing what options are out there and why buyers are choosing them. That way, you can decide if an alternative home is right for you.
What is alternative housing?
Alternative living spaces are various types of homes that are built or designed in contrast to the traditional single-family home. The main idea behind the surge in alternative housing trends is that almost any structure can be converted into a house.
Why are people choosing alternative homes?
Unconventional housing is not a new phenomenon, but the trend has grown in popularity in recent years for a number of reasons, including:
- Low conventional housing inventory
- High interest rates
- High cost of living (and homes or rent)
These home types offer a compelling alternative to conventional homes, allowing homebuyers more flexibility for their lifestyles and a unique way to reduce their carbon footprint. For other homebuyers who want to reduce household costs, alternative housing can be the most affordable way to financially sustainable living.
Alternative housing options
There are a variety of alternative housing solutions to choose from, so it is important to understand your options and their differences.
Tiny homes
If you are looking for an affordable path to homeownership, or you simply want to downsize, a tiny home may be the right alternative for you. You have most likely heard the term before, as many millennials entering the housing market are increasing the tiny home’s popularity.
By definition, a tiny house is typically between 60 and 600 square feet in size. They can be built up from the ground, on a trailer, or even made from the structure of a shipping container. The cost of a tiny house will depend on its location, size, and the building materials.
Accessory Dwelling Units
Accessory dwelling units, typically referred to as ADUs, are secondary living spaces on a single-family residential lot. They are not standardized structural forms. Detached new construction, garage conversions, bump-outs attached to the conventional home, or basement conversions are all types of ADUs. Though they come in many forms, all ADUs share some common characteristics, such as:
- It is an accessory or adjacent build on the primary housing unit
- Commonly smaller than the average U.S. home
- May be one of two units owned by the primary home’s occupant
Co-living spaces
This model of alternative housing commonly features private bedrooms with shared common spaces, including kitchens, living rooms, laundry facilities, and outdoor spaces. In some cases, you will find that an owner or operator manages the space and provides cleaning and maintenance services. In other cases, co-owners or resident communities are responsible for the co-living space maintenance.
Off-grid homesteads
Whether you want to get away from the hustle and bustle of city or suburban life, or you are interested in living sustainably off the land, off-grid homesteads may be a great housing option to consider. For the most part, an off-grid house is disconnected from public utilities, making them self-sufficient. You will find that most of these homesteads are located in rural areas where land is more affordable.
However, it is important to note that this option is not recommended for green homeowners unless they have prior experience living off-grid.
Houseboats
Despite the name, houseboats (or floating houses) are not meant for travel. These homes are typically moored to a dock, but function as a home with all the traditional amenities in a more contained space. They may feature the most up-to-date appliances, multiple bedrooms, and even hot tubs. The only limits are your personal preferences. You’ll likely find houseboats in calmer waters, like lakes, rivers, or bayous.
Is alternative housing right for you?
The rise of alternative housing reflects a growing shift in how many homebuyers define home. Taking the time to do your research and keeping an open mind will increase your options when you are looking for a house. It is also important to talk to your lender to see what loan options might be available for these various alternative homes. Depending on your personal preferences and lifestyle, an alternative home may be just what you are searching for!
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Home Buying Steps
Mortgage Products
Disclosures
1Conventional Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.0 discount point, which equals 1.0 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 75%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
2FHA Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.0 discount point, which equals 1.0 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 96.5%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
3VA Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.125 discount point, which equals 1.125 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $450,000; loan-to-value ratio of 95%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of $995.
4Jumbo Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 0.625 discount point, which equals 0.625 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, non-conforming, fixed-rate loan. Loan amount of $1,009,000; loan-to-value ratio of 70%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
Fixed Rate Advance Lock-In You may lock in an Annual Percentage Rate for Advances during the Advance Period. During your Advance Period, you may choose to have three separate Fixed Rate Advances locked in at any one time, with a maximum of two new Fixed Rate Advances per calendar year. Each Fixed Rate Advance must equal or exceed Ten Thousand Dollars ($10,000.00) and you may not request a Fixed Rate Advance that would cause the amount you owe to exceed your Credit Limit. The only term option for your Fixed Rate Advance is 240 months (“Fixed Rate Advance Term”). However, the term of your Fixed Rate Advance cannot exceed your Repayment Period.
Routing #256078446
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