It really depends on what the laws are where you live. Until you know those, you can only do some preliminary planning. Also, are you planning on buying some land to put this house on? There can be further restrictions there, especially if the property is in an area with an HOA.

If your town has building codes and inspections, it will cost a LOT of money to build a house, even a tiny one. That's why many tiny house dwellers build on a trailer, so that it is exempt from all the requirements. You really need to find property that is in an area that doesn't have any such rules, or at least doesn't have any one to enforce them.

Codes require size minimums, structural minimums, exhaustive plumbing and electrical requirements, HVAC requirements, insulation and other 'green' requirements; the list goes on and on.

The work around is to either build your tiny house on a trailer (if your town will let you get away with it) or find an area with no requirements. If you build on a trailer, you are essentially camping on your land, which may or may not be allowed.

In our town, if you go to a county area the codes change. Even a trailer in town limits requires your living in an existing trailer park. Don't forget you need to buy land too. And, in the county the prices of homes are less.

I hadn't thought about where all the tiny houses are located. They show them all over, but a great deal of information is lacking as to how owners accomplished this.

I'm with you though. I had visions of living in a sufficiently sized one room log cabin when getting older. Didn't/couldn't happen.

Don't give up. You may be able to find a way to get your dream. There are many who have had to find "their" way. Am sorry you are having to go through becoming a single mom.

At least in my area many of those restrictions are on renters-NOT home owner occupied. For example, especially if you're getting any kind of rent assistance, you can't put a boy and a girl in the same bedroom. I'd certainly investigate further. My guess is since you're a SINGLE Mother, it's OBVIOUS that you will need help (old assumptions die hard). Being a single Mom, I faced those ideas way TOO MANY times.
Good luck.

Why don't you consider buying a small used mobile home and put a few thousand in it to fix it up? A $1000 goes a long way in a mobile home. I can't imagine squeezing kids into one of those tiny houses. Really? Not trying to rain on your dream, but those things are expensive for what you get. Check into putting a used mobile house on a couple of acres in the county. You can make it into a nice little home.

Don't stop dreaming. I believe if you continue to research the possibilities you could get your dream. As for the sheds at HD, a similar one is much cheaper to build than buy. Habitat for Humanity builds very small homes in many places, usually a community of them. They probably have unique agreements to do so through their organization. My first thought would be to find a small piece of land and go from there regarding requirements. Find a friendly house inspector, they know more and would give you information personal to your needs, rather than dealing right now with the city.

I am seeing many old neighborhoods of tiny houses which are restoring their environment. They are becoming unique small groupings which are a joy to watch evolve. You may be surprised at the low cost to get in one and even though they probably need work, still could be less than starting from scratch. These neighborhoods may not look like an area of interest, but keep an open mind and watch for transformations.

Where do you live and how many children?