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What It Costs to Build a 500 Sq Ft House

Building a new 500-square-foot (46.45 sqm) house can cost as little as $20,000 dollars if you opt for a pre-constructed accessory dwelling unit. If you go for a traditional new construction, it can cost up to several hundreds of thousands of dollars and beyond.

What Is the Cheapest House To Build per Square Foot?

The cheapest way to build a 500-square foot (46.45 sq m) house is to invest in a pre-constructed, shippable modular home and, depending on local regulations, keep it at a trailer park along with other mobile and manufactured homes. This approach may cost as little as $20,000 or even less. 

Building a Small House

Tiny cottage wood frame home

Before you build a small house, you need to consider a few things.

Land To Build Upon

Every home needs to be situated upon a plot of land. 

While many new home constructions purchase outright the land onto which the home will be built, it is also common to own trailer homes or manufactured homes in larger communities where the homeowners rent the land upon which their home sits.

Related How Big of a House Can Be Built on .25 Acres.

Permits To Acquire 

The local government would need to authorize permission to commence a variety of components to the home-building process, including the following:

  • Building permit
  • HVAC system permit
  • Electrical system permit 
  • Plumbing system permit


Contractors are hired to complete the building of the house, including both the exterior and interior features and systems. 

Typically, there is a general contractor who oversees the progress and quality control of the subcontractors. These are specialists focused on completing a small part of the finished product.

Foundation for the House 

Newly constructed traditional homes would require a type of foundation for the home to be fixed upon, whether it is a simple slab of concrete, some extent of crawl space, or an impressively extensive basement.

For mobile homes or manufactured homes situated within trailer parks, a foundation would not be necessary due to the mobile or compact nature of the home itself. This can be a great cost saver that also supports mobility for homeowners. 

HVAC, Electrical, and Plumbing Systems 

HVAC is the acronym for Heating, Ventilation, and Air Conditioning systems combined together as one of the major features of a home for the safety and well-being of its occupants. 

The electrical systems support the operation of household appliances such as stoves, washing machines and dryers, dishwashers, hot water systems, and climate control. 

The plumbing system is important to ensure that sanitation needs are in good working order and that occupants won’t have to resort to public bathrooms. 

Exterior Essentials 

Exterior essentials include features such as pavement, driveways, roofing, walls, doors, windows, landscaping, fencing, swimming pools, and patios. This would also include things like mailboxes, carports, or walls for a future vineyard. 

Interior Details 

Determining interior design is a highly variable component of building a new home. 

Whether your kitchen countertops are made out of stone, square tiles, granite, marble, pure gold, or anything in between is something that will make a big difference in the total cost of the new home

Likewise, fancier versions of household staples are a tradeoff between enjoyment and financial expense that you should clearly quantify before making any legal commitments. 

Breakdown Analysis of the Expected Costs

A small wooden frame house with a porch

While it is important to keep in mind that every situation is a little bit different, a new traditionally-built 500-square foot (46.45 sq m) house may cost as little as $62,500 or less or up to and exceeding $350,000, depending entirely on the particulars of the house being constructed.

While Synergy Homes calculates that a 500-square foot (46.45 sq m) home may cost anywhere from $62,500 to $72,500, combining a variety of resources into a single cost breakdown yields the following table, which features the running total cost of the house in the right-hand column. 

ComponentCost of Component Cumulative Cost of House
Plot of Land$0 ~ $17,000$0 ~ $17,000
Permits$2,200 $2,200 ~ $19,200
Foundation$2,000 ~ $12,500$4,200 ~ $31,700
HVAC, Electrical, & Plumbing$30,000 ~ $52,500$34,200 ~ $84,200
Exterior $40,000 ~ $60,000$74,200 ~ $144,200
Interior $50,000 ~ $175,000$124,200 ~ $319,200
General Contractor Fee10% ~ 20% of total cost $136,620 ~ $383,040 

Pre-Constructed Shippable Homes 

While building a small home may not be as expensive as building a full-sized one, you can still be cost-efficient and save a bit of money.

Lately, there have been a wide variety of startup companies that market and sell pre-constructed, shippable modular homes for a fraction of the cost that a traditionally built new construction would run for new home-seekers. 

One such company that is currently open to new investors is Boxabl. While they have not yet released pricing details for their Casitas, modular homes typically start at $10,000. 

A great benefit to owning a pre-constructed home is that they surprisingly retain their resale value very well, even after occupants have been living inside them for some time.

Tiny Homes

3d interior overhead rendering of a small house

“Tiny homes” are gaining quite a following. But what exactly is a “tiny home” and how much does it cost to build one?

The definition of a “tiny home” is any home under 500 square feet (46.45 sq m). 

Thus, a 500-square-foot (46.45-sq m) house would just narrowly miss the categorization as a tiny home and would likely be regarded as a “smaller” home that size-wise sits in-between tiny homes and a typical single-family home.

Higher Costs Per Square Foot 

Did you know that a “tiny home” costs, on average, approximately $400 per square foot (0.09 sq m) to construct? This is potentially a dealbreaker for value-oriented homebuilders, as a traditionally-sized home, on average, only costs around $150 per square foot (0.09 sq m) to construct. 

This phenomenon suggests that, much like the electronics for phones and computers, making things very small can drive up costs due to the increased functional demands per square foot.

Bottom Line 

The kind of house you build should depend on your values and priorities of what you are seeking.

Luckily, prospective homeowners who are looking for something smaller have a full spectrum of price ranges and possibilities to choose from—whether simple and functional or ornate and awe-inspiring. Today’s smaller-sized homes can be virtually whatever you need them to be to accommodate your lifestyle.

For more, check out How To Figure Out Your Home Lot Size (13 Easy Methods).