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You don't have to be a millionaire to own a house on the water, so long as you are willing to live in a home that floats.
If you can picture yourself waking up to the sound of seagulls in the morning, love a relaxed lifestyle and don't mind walking a few extra steps to carry your groceries down to the dock, a floating home may be an option to consider when shopping for a house.
Floating homes can sell for as little as $100,000 or more than $1 million, depending on the location and home size. In some parts of the country, many first-time homebuyers find it cheaper to buy on water than land, says Denise Carlson of Seattle Metropolitan Credit Union in Seattle, home to some of the largest floating-home communities in the United States. Many are younger, she says, and get down payments from their parents. (Bing: Where are the most popular floating-home markets?)
Houseboats versus floating homes
Carlson works with borrowers who seek financing to buy houseboats and floating homes. There is a difference between the two: A houseboat is actually not a house. It's a vessel, and it moves. When you get financing for a houseboat, it's normally a recreational vehicle loan. It's almost as though you are financing a car.
A floating home, which may look more like a house, is a stationary structure that sits on water and cannot propel itself. A floating-home loan is an actual mortgage that allows you to finance the property over a longer period. RV loans generally have shorter terms, but some lenders offer 20-year financing on houseboats.
Getting a mortgage
Financing a houseboat or getting a mortgage for a floating home may not be as much of a hassle as it seems. But you'll have to look harder for lenders because few offer these loans. Real-estate agents who specialize in selling these types of homes should be able to refer you to lenders. Homeowners associations can offer referrals, too.
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Loans used to purchase floating homes or houseboats will have higher interest rates than a traditional mortgage.
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"A lot of banks don't understand or don't want to deal with these loans," says Stan Barbarich, president of the Floating Homes Association in Sausalito, Calif., "and because of the lack of supply, the lenders that do offer them charge you more in interest."
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Expect to pay one or two percentage points more for a mortgage on a floating home than on a loan for a house on land. For houseboats, you'll likely pay three percentage points more.
Unlike with traditional mortgages, lenders can't sell loans on floating homes to Fannie Mae and Freddie Mac. Banks view these loans as a long-term commitment because they have to keep them on their portfolio until you repay, so they charge more.
For floating homes, some lenders will offer 15-year fixed mortgages or 15-year balloon loans with payments spread over 30 years.
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Most lenders will require a minimum 20% down payment and a minimum credit score of 680, Carlson says.
"There's no such thing as a zero-down payment" for houseboats or floating homes, she says.
Other costs to recognize
It's also important to consider other costs associated with this unique lifestyle, says Graham Marden, a real-estate broker in Portland, Ore., who specializes in water homes.
When buying a houseboat, you'll likely have to pay a monthly fee for the slip. Sometimes, the slip or the dock is included in the purchase. Often, however, you'll have to pay rent. If you're buying a floating home, you'll probably have to pay something similar to a homeowners association fee. These monthly fees can range from a few hundred dollars to more than $700, Marden says.
There are costs associated with maintenance and repairs. A house that sits on water will have more wear-and-tear issues than a home on land.
"Living on water is very attractive to some people, but you have different challenges to consider than with a regular home," Carlson says.
So why do people choose to live on water?
Living on water is a lifestyle you love or hate, says Rachelle Dorris, a floating-home resident and an agent with Frank Howard Allen Realtors in Marin County in the San Francisco Bay Area.
"When I first moved in, I thought, 'This is a pretty cool place. Maybe I'll stay here for a couple of years,'" she says, referring to the Waldo Point Harbor, a floating-home community in Sausalito.
That was 30 years ago. Since then, she has moved six times to different floating homes in the same area.
What has kept her there all these years?
"The living style," she says. "You know your neighbors. If you are sick, they bring you chicken soup. We have nice informal get-togethers with other people on the dock. Plus, you're right there with nature."
Having the bay as her "backyard" also helps. Birds, seals and sea lions are just some of the creatures she gets to see from her bedroom.
"I watched a leopard shark swim around about a half-hour once," she says. A downside to living on the water, she says, and something many residents complain about, is that "you have to carry your groceries all the way down the dock, but it's totally worth it."
